Bloomberg has a terrific story about Costco’s first store in France, about a half-hour south of Paris, which brings the American membership club store right into the heart of some extremely tough competition.
“The stakes are high for Costco,” the story says, because global expansion is seen as a way of continuing to drive growth. “Its U.S. customers are shopping less frequently as they get older, new locations are cannibalizing existing ones, and the younger set is spending more online.”
While in some ways France is a natural for Costco - it is the home of the hypermarket, and the French are among the biggest retail spenders in Europe - it also has required some adjustments by Costco, which has had to focus more there on higher quality items. At the same time, “the 500 billion-euro French retail market is crowded and cutthroat. A half-dozen companies control most of it, and they’ve spent the past decade engaged in a brutal price war. German discounters Aldi and Lidl have elbowed in, too, luring penny pinchers.”
But so far, some local shoppers seem to like what they’ve found at Costco - its commitment to low margins and prices remains, and a recent survey showed its prices to be 21 percent cheaper than a nearby Carrefour.
Costco management has said it plans to have a dozen or so Costco locations scattered around France eventually.
“The stakes are high for Costco,” the story says, because global expansion is seen as a way of continuing to drive growth. “Its U.S. customers are shopping less frequently as they get older, new locations are cannibalizing existing ones, and the younger set is spending more online.”
While in some ways France is a natural for Costco - it is the home of the hypermarket, and the French are among the biggest retail spenders in Europe - it also has required some adjustments by Costco, which has had to focus more there on higher quality items. At the same time, “the 500 billion-euro French retail market is crowded and cutthroat. A half-dozen companies control most of it, and they’ve spent the past decade engaged in a brutal price war. German discounters Aldi and Lidl have elbowed in, too, luring penny pinchers.”
But so far, some local shoppers seem to like what they’ve found at Costco - its commitment to low margins and prices remains, and a recent survey showed its prices to be 21 percent cheaper than a nearby Carrefour.
Costco management has said it plans to have a dozen or so Costco locations scattered around France eventually.
- KC's View:
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French retailers like Carrefour and Auchan failed when they came to the US because they were determined to teach American consumers how to shop like the French. (This isn’t hyperbole. This is what one member of their management team told me…right before he kicked me out of their store.)
It sounds like Costco isn’t making this mistake in reverse … the experience may have its roots in America, but it is making enough adjustments to avoid seeming like an ugly American company. And that huge price advantage probably helps, too.
