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9:00am CST: Costco opens its first China store in Shanghai.
1:00pm CST: Costco closes its first China store in Shanghai.
What happened? Consumers were too excited about bulk Craisins coming to China. The ~150,000 sq. ft. warehouse closed eight hours early after it was flooded with shoppers yesterday.
Local police were deployed to block customers from entering the store by mid-afternoon. Bumper-to-bumper traffic reportedly kept customers from entering or exiting the parking lot as well. On Wednesday, Costco said it would only allow 2,000 customers in the store at a time.
The hype bodes well. Costco conducted five years of online-only sales in China before opening a store to target the country’s ever-growing middle class. It expects at least 100,000 new members to pay 299 yuan (about $41.75) per year for Gold Star membership.
Similar wallet-friendly bulk retailers have tried to woo China’s vast consumer market with free samples and fro-yo—but predecessors haven’t had much luck against domestic retailers.
- French supermarket chain Carrefour decided to sell 80% of its China business to a domestic brand, Suning, in June.
- German wholesale retailer Metro is selling its China operations.
- Tesco, a British grocer, exited China in 2014.
Currently, two powerhouses remain: Hema, Alibaba’s offline retail chain, and Walmart-owned Sam’s Club, which plans to have 40 stores by the end of 2020. But Costco hopes its take on affordable membership and bulk deals will lure shoppers away from its competitors.
Zoom out: Costco’s looking to sail around the $75 billion in retaliatory tariffs on U.S. imports Beijing announced last week. The retailer plans to substitute some Australian produce for similar products from the U.S. About 50% of its merchandise for the China store will need to be sourced from outside of the country.