It has been revealed that US-based global warehouse club operator, Costco will open a further two depots in the UK during 2013 taking its total number of units in the country to 25. This will make 2013 something of a bumper year for Costco. In its twenty years of operating in the country new openings have averaged little more than one every twelve months.
Depot twenty-four for Farnborough, Hampshire
Following the opening of Costco's twenty-third depot in Leicester in November 2012, construction has already begun on its next opening at Farnborough, which will open its doors in June this year. As a location of dense suburban development Farnborough presents a strong catchment for Costco, including good road links to maximise its catchment reach. The new 140,000 sq ft depot will conform to Costco's uniform format, representing an investment of some £10.5m.
Site availability remains a brake on expansion
Costco's measured rate of new openings has always been due to the difficulties of securing the right sites, with the relevant permissions, rather than any lack of ambition. Long-term, the business holds to its belief that the UK has potential to support up to 50 Costco depots. Its recent submission to the Competition Commission Inquiry into Booker's acquisition of Makro reveals that Costco has had discussions with Metro over acquiring Makro itself, but considered that "many of the buildings were unsuitable for Costco's purposes".
Successfully adapting to the downturn
Though its growth was slowed by the downturn, especially in big ticket categories such as electronics, management has acted to bring greater focus to faster moving categories including food in particular, and sales momentum has been recovered. In its last reported results (ending August 2011) Costco posted turnover of £1,503m, up 4.5%, though the changing emphasis in the sales mix had some impact on profitability, with its gross margin slipping from 3.0% to 2.6%.
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