Costco China plans more store openings
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Within days of opening its first warehouse store, Costco China is already talking about its plans to expand the new network.
As happens in many new market Costco enters, the new Shanghai store grew thousands of people, some of who queued for hours to shop, and then check out, while others spent a similar time in their cars circling the suburb seeking somewhere to park. In the afternoon, the store was closed due to crowding.
Costco CFO Richard Galanti confirmed with analysts a second store is already in advanced planning and he hopes construction will start as soon as possible.
The first store opened on August 27 in Shanghai’s Minghang district. It followed a four-year program by Costco to build brand awareness among local consumers through a presence on Alibaba’s Tmall Global. The company has a target of signing up at least 100,000 members to make the venture viable.
While Costco expected to draw large crowds to the opening, the sheer numbers exceeded even the company’s most optimistic projections. A record number of customer membership registrations were taken for an opening day, however Galanti did not release the actual number.
Costco China is looking to establish a beachhead in Shanghai before expanding into other tier-one cities.
Trade tensions between China and the US appear not to be affecting the store’s early success, with Costco switching sourcing of some products from the US to Australian suppliers.
Questions & Answers
Q.What led to Costco's first China store being temporarily closed on its opening day?
What led to Costco's first China store being temporarily closed on its opening day?
The store was closed due to extreme crowding. Thousands of people queued for hours to shop, and similar numbers spent time trying to park, exceeding even Costco's most optimistic projections for the opening day.
Q.Which city will Costco primarily focus on for its initial expansion in China?
Which city will Costco primarily focus on for its initial expansion in China?
Costco China is looking to establish a strong presence in Shanghai before considering expansion into other tier-one cities across the country. The first store and the planned second store are both in Shanghai.
Q.How did Costco build brand awareness among Chinese consumers before opening its first physical store?
How did Costco build brand awareness among Chinese consumers before opening its first physical store?
Costco spent four years building brand awareness by maintaining a presence on Alibaba’s Tmall Global. This strategy aimed to familiarise local consumers with the brand ahead of the store launch.
Q.Has the ongoing trade tension between China and the US impacted Costco's early success in China?
Has the ongoing trade tension between China and the US impacted Costco's early success in China?
The article suggests that trade tensions do not appear to be affecting the store's early success. Costco adapted by switching the sourcing of some products from US to Australian suppliers.
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