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In accounts submitted to Companies House, Costco UK has recorded turnover of £2,545m for the year to September 2018.  This is up an estimated 9.9% on an equivalent 52-week basis with 2017.  Profitablility improved with gross margin for the year edging up to 2.8% from 2.7%.

Fuel a key driver

With two further fuel forecourt sites added to existing warehouses (Edinburgh and Glasgow) in the year (bringing the total to 13), fuel sales provided a major incremental component of performance.  Costco estimates that two thirds of the total growth in the year derived from fuel and the business plans to continue the roll-out of forecourt to the majority of its sites in the medium to the longer term.  Since year-end the fourteenth has already been opened at Leicester.

Warehouse number 29 opening in July

With its most recent opening (Wembley) all of three years ago, Costco's rate of new site opening has slowed notably in recent years.  It will open its 29th warehouse at Stevenage in Hertfordshire within the next month, but further developments beyond that are presently unclear.  A site planned for development at High Wycombe in Buckinghamshire has now been cancelled, and the company states in its accounts that 'The short term focus of our strategy is to continue growing our business profitably through existing warehouses.'

Online still growing quickly

Turnover at Costco's online operation in the UK reach £75.5m in 2017/18, up 14.4% on the year.  Though still representing less than 3% of the total Costco business, this remains a significant opportunity for future growth, and Costco continues to position the online offer as something complementary to the warehouse ranges, with many of its products not available in-store. 

Costco has announced that it will open its first store in New Zealand.

Auckland's Westgate chosen for first store

The new 14,000 sq m membership club store will be located at Westgate on the north western edge of Auckland. It will provide a new retail destination for the city, with 800 parking spaces and include groceries, electronics, homewares, plus fuel, a tyre centre, an optometrist and a hearing aid service. Construction of the store will start once all regulatory consents are obtained.

New Zealand and Australia business will be closely linked

Over the past 10 years, Coscto has steadily built its network in Australia, with 11 shops trading to date. Although not having had significant impact on the total market, Costco has given shoppers more choice and proven incredibly popular, with some of the stores proving to be the busiest Costco's in the world. The move into New Zealand is another significant step for the retailer and will bring a new dynamic to the competitive landscape. It is expected that the New Zealand branch will work closely with its Australian arm to aid efficiencies and share learnings.

After the successful launch of Metro Wholesale Myanmar’s online store in March, the retailer plans to open in more locations.

Strong performance leading to ambitious target

The retailer opened an online store targeting corporate customers in March. The operation already has more than 300 HoReCa (hotels, restaurants and caterers) customers, with Metro delivering fresh and high quality food to them daily. Jens Michel, CEO of Metro Myanmar, said “the market response to our launch has been absolutely phenomenal. We have experienced huge customer interest in what we are doing and have seen an enormous amount of new customers coming.” The retailer is looking to expand to Mandalay, Nay Pyi Taw, Taunggyi and other prominent cities in the next few months.

Investment for market leadership

There are more than 2,500 products are available in the store and the retailer plans to double it in the next few months. “We help customers to spend more time on their own businesses, focus on their own vision and strategies, while we take care of all food and non-food items they require as well as delivery to their business,” said Michel. Metro will continue investing in technology to drive for market leadership in ecommerce as well as physical expansion.

 

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Presentations

12/06/2019
Ecosystem based retail has emerged as one of the new buzzwords and operating models in the sector. In this report we introduce the ecosystem model and what suppliers need to consider as a priority.
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01/03/2019
We review the outlook for Costco over the next five years and identify the company' top growth markets, including US, Canada, Mexico and UK. We look in-depth at its global strategic objectives across its wholesale and club store estate and how it is investing in its ecommerce operations, enhancing its technology and developing its range as it looks to grow revenues beyond US$200bn by 2023.
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We profile the recently formed Unitas Wholesale buying group, created by the merger of Landmark and Today's.

We share five key themes from the IGD Wholesaling 2017 conference, identifying the influences shaping channel engagement both now and for the future.

Wembley is Costco's 28th, and latest UK, warehouse, offering an excellent showcase of how the wholesaler targets a mixed customer base with a focus on value and quality on bulk goods.

6-7 November, London
IGD Live, the new home of our wholesaling event

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An energising one day workshop designed to offer practical help in planning and preparing joint business plans, whether you are new to this way of working or just need to take time out and look at what you do in a different light.