Costco has opened its 100th store in Canada, hitting the major milestone with a new club in Edmonton.
One of Costco’s most successful international markets
Canada continues to be a major success for Costco, with the retailer opening seven new clubs last year, its fastest pace of new space development for several years. Costco continues to see significant opportunities for further growth in Canada. Having initially expected to open around 80 clubs in the country, it anticipates operating a minimum of 120 clubs over the medium term. Recently, it started testing a new two-day grocery delivery service in southern Ontario which, if successful, could be expanded and support sales growth going forward. Costco could also look to launch a same-day grocery delivery service, replicating its successful partnership with Instacart in the US.
Source: IGD Research
Business Centre launch expands market potential
Its Canadian ambitions were boosted last year with the opening of first Business Centre in the country, providing it with an additional route to growth. This format focuses exclusively on the needs of small to medium sized businesses. This includes restaurants, convenience stores and professional services such as doctors’ offices. Operating with a slightly smaller footprint than the core format, it does not offer services such as optical, bakery and butchery, while clothing, toys and sporting goods are not sold.
Competing with a broad range of formats
Costco faces limited competition in the channel. Its main competitor is Loblaw’s Wholesale Club format, which has grown to just over 50 stores. While there are similarities with Costco’s model, it does not charge a membership fee and offers a broader range of grocery items. However, Costco’s appeal extends beyond the club channel. Its investments to improve and expand its fresh food ranges, broaden its range of natural and organic products and promote its value credentials ensures that it’s a formidable competitor for all major grocery retailers in Canada.
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