China’s First Costco Closes Early Due to Buyer Frenzy
China’s first Costco store was overrun by masses of consumers on its first day of operation, Tuesday, August 27. Customers at the Shanghai store fought over discounted products and waited hours to pay for their purchases.
Shoppers didn’t seem to care about economic tensions between the US and China. The crowds were so big that Costco addressed the public via Weibo (a Chinese version of Twitter) with it was closing the store early due to "heavy traffic and customer flows."
Twitter posts illustrate the siege during Costco's Chinese debut. Videos and photos show shoppers elbowing each other in their eagerness to get their hands on roasted chicken and other items. According to local news reports, Costco offered discounts as deep as 60% to opening-day shoppers. Annual membership was priced at just 199 yuan - about $28.
Now that the dust has settled, it is clear that Wall Street investors shouldn’t be worried about whether Costco's business model will work in this very distinctive market.
In fact, experts say Costco could become the largest retailer in China. The growing Chinese middle class, which is sparking demand for larger living spaces and luxury goods, is likely to drive this shopping model. Wholesale shopping has not yet become mainstream in the country.
Costco didn’t make an immediate statement following the opening of its first Chinese store. CFO Richard Galanti confirmed earlier this year that the company plans to open a second outlet in China despite the ongoing trade war. “China's a little unique in many ways aside from any issues right now with tariffs,” Galenti said. “That's hopefully not a long-term issue.”
Costco is not China’s first big-box wholesale store. Walmart’s Sam’s Club has opened 24 stores across the country over the past two decades, and it plans to open 16 more outlets in mainland China by 2020.
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