Costco Wholesale Corp.’s first outlet in China opened on Tuesday and was soon overrun with customers willing to fight over discounted products and wait hours to pay for their purchases.
The American retail giant had to suspend operations in its Shanghai store in the afternoon citing “heavy traffic and customer flows”, according to a text message sent by the company to consumers holding its membership card. The message was shared on Weibo, China’s micro-blogging website.
The frenzy at Costco’s store comes at a time when the U.S. and China are locked in a tit-for-tat tariff war that shows no signs of abating and is making American firms wary of investing in the largest Asian economy. Costco is also entering a market where many of its global rivals have struggled and given up. Carrefour SA sold 80% stake in its China unit at a discount in June while German wholesaler Metro AG is looking to sell its operations.
“There’s no other word to describe Shanghai’s Costco but crazy,” a Weibo user said, who gave up on the shopping plan after seeing two-hour queues at the checkout counters. Other Weibo users shared that they had to wait three hours to enter the parking lot while some decided to walk to the store to avoid the traffic jam.
It was an open-and-quickly-shut deal.
Clips circulating on Weibo and other Chinese social media show customers crammed in aisles, playing tug of war with raw poultry and elbowing other shoppers out of the way.
“There’s no other word to describe it but crazy,” marvelled one Weibo poster.
Source: News Corp.
Costco has built a cult following in the United States — now it’s China’s turn. The country’s first Costco store is so popular that it had to shut down early on its first day because of too many shoppers.
The retailer opened its first physical outlet in Shanghai on Tuesday morning, and it quickly got too crowded to stay open.
“The store has been clogged up with crowds,” Costco said in a text message alert to its members in China. “To provide you with better shopping experience, Costco will suspend business in the afternoon. Please don’t come.”
Police were deployed to restore order and manage traffic jams around the store, with law enforcement urging people to remain calm.
Costco’s annual membership program, which accounts for the bulk of its profit, is also cheaper in China — it costs 299 yuan ($42) compared to $60 in the United States.
Whether Costco can succeed in the long term depends how well it can adapt to China’s dynamic retail landscape.
Giants like Amazon and Tesco have withdrawn from the country after struggling to gain market share. Analysts believe Costco was welcomed with such enthusiasm because it was able to satiate China’s appetite for new concepts, at a time when its market maturity is ideal.
Gordon Haskett analyst Chuck Grom added that Costco store openings are always met with frenzy.
“Most times Costco moves into a new country, whether it’s been in Australia or Japan, or even France and Spain more recently, the first store openings tend to be wild and successful for Costco,” he said.
Portell said that Costco’s first-day success shouldn’t be discounted. “It’s a lot easier to start with a lot of demand and maintain momentum than to open your doors and have no one show up. It’s the best possible way for them to start off.”
Edited by staff