Will more buyers mean more competition for meat stock? One must assume CostCo didn’t get to its leading supermarket position by paying a premium for its product. If that is the case, then presumably they must believe that,
1. There is a market in Australia with enough volume for them to make a good profit.
2. They are going to be able to source ‘product’ to sell at a good enough buy price to make a good profit.
This begs the obvious questions that farmers should/will be asking. Will there be additional competition to drive-up prices?
Will the standard of meat be below that currently provided? If the answer to these questions is, “No”, then how will the CostCo margins be gained in order to compete with such a strong existing duopsony? (2 dominating buyers)
What do you think?
Please leave your comments below.
Andrew Dunlop said
I am a resident of Japan and COSTCO is my favourite shop.
Quite frankly, I hate shopping, and COSTCO offer me the perfect solution.
They have done the shopping for me and all I need to do is pick up what I want and pay for it.
I am no longer baffled by the standard supermarket choice of 30 varieties of toothpaste, 45 different combinations and pack sizes of toilet paper etc.
In COSTCO you have a choice of 1 or 2 in a range.
Pretty quickly you learn to trust COSTCO to do the shopping for you and give you the best product at the best price.
And from personal experience they have done it, they present the best product at the best price.
The only decision you have to make is whether you want whats on offer or not.
Average basket size in Costco is around 10 times what it is in the standard supermarkets, as the time poor customer does the shopping much less frequently for most items and then tops up from a local supermarket or convenience store.
COSTCO presents value for money to consumers by being efficient, with lean margins.
Frankly speaking, they have changed the face of retailing in Japan and I hope will do the same in Australia.
I wish them all the success in Australia and look forward to being able to shop at COSTCO in Australia instead of being held to ransom by the big 2
ruralaustralia said
Hi Andrew,
Costco has entered Australia with a lot of Press and it seems on the face of it it follows the ALDI type model already here from OS. It would be good to get some competition for both producers and consumers alike. however, I guess it is all to do with them achieving critical enough volumes.