Seattle-based wholesale retailer Costco is reportedly getting closer to launching its first store in France after spending four years battling bureaucracy.
Costco has a reputation for succeeding in every market it enters internationally, despite huge variations in consumer behaviour in countries as diverse as the Australia, Japan, Taiwan and Spain.
But analysts are holding their enthusiasm in check over the brand’s French foray – because some of the world’s largest retailers are already engaged in a cut-throat battle for market share.
France is home to Carrefour, Casino and Auchan – all of whom operate large scale hypermarkets and discount heavily. Costco’s business model is to charge its customers an annual membership fee then sell all of its products at the same margin. In effect, its profitability in any market is dependent on its ability to re-sign and expand its membership base.
Jacques Dupré, director of insights and communications at retail consultancy IRI, said in an interview with the Seattle Times that French retailers “especially Carrefour” are not going to give an inch in market share to the US newcomer.
France will be Costco’s third market in Europe – it has one store in Spain and 26 in the UK.