Costco outlines plans for stores in New Zealand

Costco, the world’s second-biggest retailer after Walmart, has revealed two new giant stores for New Zealand.

Patrick Noone, Australia and New Zealand managing director of Costco with 101 million members, has outlined the chain’s expansion plans for this country and named those two cities on a list for five new Australasia stores.

Wellington and Christchurch are on a hit list which features plans for Tasmania, the Northern Territory and Queensland.

Speaking via video linkup to about 300 Property Council conference-goers from Australia, he revealed Costco’s areas for planned new stores under the heading “other opportunities – Townsville, Darwin, Hobart, Christchurch, Wellington and infilling Melbourne and Sydney markets”.

No one made special mention of Christchurch as “good from our point of view, being the second-largest city in New Zealand”.

Costco is the world’s second-largest retailer after Walmart, both being US-headquartered. It has 254,000 employees, 785 stores it calls warehouses and made US$149b net annual sales last year, according to its 2019 annual report. That was up from US$138b in 2018.

Costco Westgate, New Zealand’s first store, is a $100m warehouse. Earthworks started in early September when the earth dried out.

Haydn & Rollett won the contract to build that store of nearly 1.5ha and Noone said on Wednesday that would open in the first half of 2022, not next year as originally planned pre-Covid, although he didn’t go into any detail about why the project was delayed.

He did, however, stress that border openings were being awaited.

Under a slide headed ‘future plans’, Noone said a new store at Lake Macquarie was planned to open next year, along with the chain’s first Gold Coast store, also next year. Currently, Gold Coasters go north of Brisbane to shop at Costco.

Then, Noone revealed Costco site requirements. Ideally, the land must be 6ha to allow for a 14,000sq m warehouse, a fuel station and 800 carparks, he said. The sites must also be in a place where 500,000 to 1m people can drive there in 30 minutes.

Being in a place with a higher than average household income, easily accessible from motorways or major arterials and with multiple access/egress points were other requirements.

But Costco’s car-centric vision met with fire this week from public transport advocate Ben Ross who tweeted “what is not told is that Costco will have 800 car parks and a gas station. So much for Auckland Council complying with any aspect of the Zero Carbon Act, calling itself a C40 low carbon city and any ounce of sustainability because Costco represents none of it”.

Chris Wilkinson of First Retail Group said consumers would be pleased about Costco’s plans.

“It’s a brand many people will be familiar with and there’s been strong interest since they announced their New Zealand entry last year,” he said.

Costco would have an impact on current wholesale businesses such as Foodstuff’s owned Gilmours with one warehouse in Wellington, he thinks.

“However the company has likely already anticipated the likelihood of these megastores and have been going through a transition themselves in recent years. They have rationalised warehouse numbers, located strategically alongside other bulk retailers – to achieve location synergies – and developed a stronger proposition to attract a more diverse range of consumers and business customers,” Wilkinson said.

Regional wholesaler Moore Wilson’s, with four warehouse stores in the Wellington region, had a very strong, much-loved and inter-generational connection with trade customers and consumers – with the brand diversifying further into fresh, gourmet and liquor – creating a very defendable niche.

“While the opening of Costco will have some effect on their commodity products, the family company continues to evolve strategically, both in range and the theatrical nature of its shopping experience, with quite a different audience,” he said of Moore Wilson’s.

Planning to develop in Wellington and Christchurch couldn’t come at a better time, he thinks.

New roading connections via Transmission Gully in Wellington and the new urban motorway in Christchurch) would transform connectivity between the cities, suburban centres and regions, enabling more consumers to be within easier reach of the stores, he said.

“These will likely influence where best they will be sited. In Wellington, the Porirua area is a leading contender as it is central to the region’s growth corridor and provides the land necessary to achieve the scale of this development,” Wilkinson says.

Earlier this year, Costco won Overseas Investment Office approval to buy the Westgate land in Auckland.

Costco needed state consent here because the land it is buying is classified as sensitive. It applied to buy a freehold interest in 2.7ha of land at the corner of Maki St and Gunton Dr near the Harvey Norman store.

It also needed OIO consent because it plans to establish a business in this country where the expenditure involved exceeded $100m – the land purchase and the development of the giant new store with its fuel station, food court, pharmacy and hearing aid sales centre.

The store will be the size of two rugby fields, at 14,740sq m.

The 2.7ha irregular-shaped site is bound by Sakaria Stream to the west, Totara Creek and the Northwestern Motorway and is presently a grassed paddock.

The building will be 160m long, 114m wide, 11.9m high to the upper parking deck and 18.5m high to the top of the entrance/lift lobby, fronting Gunton Dr, with a triple-height entrance lobby in the southwestern corner for pedestrian access.

Vehicle access will be off Gunton Dr, with ramps on the southern face. The building will cover most of the site but the standard rectangular format is compromised to account for the irregular shape of the western boundary against the stream. Parking is on top, compared to most other Costcos around the world where it’s beside the store.

Costco will have 795 car parks, including 18 accessible spaces, six customer parking spaces for the tyre centre, 43 staff parks and 10 stands for 20 bikes.

Costco Wholesale Fuel will be at 6 Kakano Rd where a Palmers Garden Centre and a Mitre 10 are to the northwest and a Resene Colour shop is west.

The self-service fuel station will be only for Costco members with one staff member and no retail, air, or carwash.

Buildings will be only a canopy above the bowsers, small data hut and staff amenities. Five rows of bowsers are proposed, with each row consisting of three bowsers, making a total of 30 refuelling spaces.

Four underground fuel storage tanks will be laid for 440,000 litres: three for petroleum, one for diesel.

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