Every so often, America wins foreign hearts and minds with a slick consumer proposition. One thinks of Russia’s first McDonald’s and Selfridges, the UK’s first US-style big store. Should Costco Shanghai join the roll of honour? The first Chinese outlet of the discount retailer is no glitzier than stores back home. Huge crowds still forced the shop to shut early.
Mass retailing models generally travel no better than fresh vegetables. Walmart and Best Buy failed to revolutionise UK shopping. Tesco’s Fresh & Easy flopped in the US. Why should Costco Wholesale do any better in China?
Price is the reason Costco could thrive. Consumerism is unchained in China. But average wages remain modest. Costco has low group gross margins — the difference between the cost of goods and selling prices — of 13 per cent. That compares with US supermarket chain Kroger at 22 per cent and general retailer Target at 29 per cent, according to S&P CIQ.