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This is how Costco will operate on the Costa: the American hypermarket where you have to pay an annual fee to shop at low prices
Retail

This is how Costco will operate on the Costa: the American hypermarket where you have to pay an annual fee to shop at low prices

The retail giant, which has already set a date for its arrival in Malaga, operates as a members club where you have to register to access its competitive rates

Almudena Nogués

Malaga

Monday, 29 April 2024, 14:35

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The American retail giant, Costco Wholesale, is closer to landing in Malaga province. After a long journey, with more than two years of planning application paperwork, the owners of the Málaga Nostrum shopping centre hope to start work in September to move the cinemas to the building formerly occupied by Conforama and thus vacate the space that the US supermarket chain plans to occupy. The owners of this retail complex - the Seville-based Bogaris group - hope that the necessary planning permissions will soon be obtained to launch the first phase of this operation.

Javier Martín, general manager of Bogaris, has assured SUR that everything is ready for the works to start this year. His aim is for the adaptation to begin in September. If there are no problems, the new cinemas could open during the course of next year and the demolition of the current cinemas would then be carried out, on whose plot Costco will begin the construction of its shopping centre, designed by the architect Antxon Taberna.

When could the shop be finished? According to the planned schedule, the expected opening of Costco in Malaga would be a reality in 2026. With an ambitious challenge ahead: to conquer a local market that is not used to its unique sales philosophy. At Costco, customers are not mere buyers. They are partners. The hypermarket works like a club where you have to register and pay an annual fee to be able to go to the checkout.

Its origins, in 1976 in an aircraft hangar

Costco Wholesale Corporation was born in the United States in 1976 under the name Price Club. Its first store was aimed at professionals and was located in an aircraft hangar in San Diego. This first business, started by retailer Sol Price and his son Robert, soon attracted private customers interested in its prices and variety. In 1983, a former Price employee who had specialised in distribution and mass merchandising opened the first Costco store in a Seattle warehouse, and a decade later, in 1993, the two companies merged under the name Price Costco.

The leap to Europe, from Seville

Since then, the American giant has been expanding by opening shops all over the world, including the Asian market and Australia. Although it has a notable presence in the United Kingdom, with some thirty stores, its arrival on the old continent was a long time coming. The first Costco on the European continent opened in Seville in May 2014. The following year it debuted in Getafe (Madrid), in 2020 it opened in Las Rozas (also in Madrid) and later in Sestao (Vizcaya). The Valencian municipality of Paterna will be its next opening, although as is happening in Malaga, the project is suffering delays in its initial schedule.

Interior of one of its establishments.
Interior of one of its establishments.

This is how it works: a philosophy somewhere between Makro and Lidl

Costco's sales system could be said to be halfway between the philosophies of Makro and Lidl, two chains that have established themselves in Spain thanks to their competitive prices. Makro is the big retail giant and the German chain has always offered very low prices while saving on other services. Costco has a bit of both business models, with its own personal stamp.

Membership system: How much does it cost to join the club?

To be able to shop at Costco, you have to become a member by paying an annual membership fee. To do this, you have to fill in a form in the shop itself or do it online. To join the club costs around 36 euros a year for individuals and 30 euros for companies and the self-employed. Once you have paid, you receive a card with which you can go to the cash desk. If you are not satisfied, even on the same day you sign up, the company refunds the amount and cancels your membership. At the close of the 2022 financial year -the latest data made public- this distribution giant had around 400,000 members in Spain, many of them from the hotel and catering industry.

An extensive catalogue: from food to clothing, electronics to jewellery

Much of the catalogue is dominated by dry groceries. However, the company also includes an attractive «bazaar» section where you can find everything from toys to clothing, appliances, kitchenware to jewellery, home décor and electronics. «At Costco you can find a large selection of exclusive products, including catering products, confectionery, electrical appliances, television, car parts, tyres, toys, electronic devices, sporting goods, jewellery, watches, cameras, audiovisual, books, household products, health, beauty, furniture, office equipment and products... all with the best quality», the corporate website highlights.

Extra large formats or family packs

At Costco, the vast majority of products are sold in extra-large formats or family packs with more units than we are used to in other hypermarkets. The aim is to sell a lot of volume in order to adjust profits and thus achieve lower prices.

Its own private label

The company prides itself on always offering the best brands, including some well-known American brands that have yet to gain the trust of the Spanish public. They also have their own private label, Kirkland Signature, which is highly valued by consumers. As the chain points out on its own website, this brand offers everything «from shirts to pet food, laundry detergent, toilet paper, canned food, even car and beauty products», it emphasised.

Why is it so cheap?

There is no single answer to this question. Many factors come into play to enable the chain to achieve such price competitiveness. First of all, Costco's stores are as economical as possible in terms of facilities and ancillary services. Their shops look more like industrial warehouses where products are spread out in large aisles stacked on pallets and high shelves. Another hallmark of their philosophy is the large format, not only in the space of their stores. The vast majority of products are sold in extra-large sizes or family packs with the aim of selling a lot of volume in order to adjust profits and thus achieve lower prices. In addition, Costco invests very little in marketing or advertising campaigns.

What is known about this shop in Malaga

The chain's intention is to build it within nine or ten months. In this case, it would not have to wait for the planning permission from Urbanismo because it has already been granted since April last year, so the construction could start immediately once the existing cinemas have disappeared. For the moment, it is known that its hypermarket in Málaga Nostrum will have a car park with 640 parking spaces distributed between the basement and the ground floor, where there will also be a workshop for the sale and fitting of tyres, a restaurant area, toilets, optician and audiometric areas, as well as offices.

Its arrival in the city includes a fuel filling station

Likewise, Bogaris is confident that before this summer the urban planning approval for another project that goes hand in hand with Costo's arrival in this area can be issued This is for the construction of a fuel filling station, also managed by the American chain.

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