Costco Opens in China to Overwhelming Crowds; Four Reasons Why

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One thing is for sure, Costco is off to a good start……..maybe too good. The crowds were so big that the new Shanghai store was forced to close eight hours early.

Major retailers like Tesco, Amazon, Carrefour, Home Depot, and Best Buy have entered China and withdrawn. So, why was Costco's opening so successful? Its an interesting question, particularly in light of the current trade war taking place between the United States and China.

I have done some research, and it seems to boil down to four factors:

1.    Costco is new to China but not to Asia. They have been operating in Taiwan, Japan, and Korea for some time. As a result, Chinese consumers had at least a tangential awareness of the brand.

2.    Chinese consumers were very aware of Costco's Kirkland brand before the store opening. The reasons being Costco's wise decision to sell their house brand, for the last five year, through Chinese e-commerce providers.

3.    Costco's unique business model is brand new to China, so the Costco shopping experience was genuinely fresh, different, and above all, exciting.

4.    Chinese consumers love western luxury brands, and Costco not only has them but has them at great Costco prices.

Here is what I believe we can all learn from Costco.

That it is essential to be bold, to be different, and to move into the future no matter what is currently happening in the present. Costco is betting that the current tariff anxiety is a passing disruption, and I think we all should as well.

We can also learn that China is a potentially voracious consumer market for western toy brands. Western toy companies should be looking for opportunities to enter…now!

If you want to learn more about China's consumer market, join us in Dallas for a series of talks by experts on the Chinese marketplace. Details to come.

 

One thought

  1. Just one thing about factor number 3…
    Sam’s Club (Walmart) has been in China since 1996-23years-and have over 20 stores there.
    So China is VERY familiar with the “club” big box store experience. Also, as MANY items are made in China, I don’t think the whole tariff situation is a concern. Actually, it gives new meaning to “buying local”.

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