Costco opened a new store in Shanghai, but the Suzhou store queued up to return the card

By orchioo Mar22,2023

Four years later, Costco, the largest chain of member stores in the United States, opened a second store in Shanghai.
On March 10th, Costco Shanghai Pudong store began trial operation, with current limiting facilities arranged in advance on site. In order to control the flow of people, customers had to climb stairs to reach the mall, but there was still a long queue at the scene.
“Li Yang arrived at Costco’s parking lot around 9:00 in the morning, but was told that the parking lot was full.” He made a big circle to park the car, and then came to the queue, which went round and round. The scene is similar to that of the World Expo that year. It is difficult to get in and have a good look at the goods. It is recommended that friends who want to come over on the weekend wait a moment.
Costco Pudong Store is adjacent to Kangxin Road Station on Metro Line 11, and is only one stop away from Shanghai International Tourism Resort (Disney). This is Costco’s third store in Chinese Mainland and the 849th store in the world. After two previous openings in which too many consumers flocked to Costco, Costco limited the daily passenger flow of 20000 people and launched an advance booking service.
“Before the trial operation, the membership fee will be reduced by 100 yuan, and customers can enjoy a preferential price of 199 yuan per year for membership. As of March 6th, more than 80000 people have applied for membership.” Currently, Costco has two types of membership systems in the mainland: Golden Star membership and corporate membership, with an annual membership fee of 299 yuan.
Times Finance learned that during the trial operation of Costco’s Pudong store, BMW i3 and iX3 new energy vehicles were also sold to members in limited quantities, with an i3 offering of 268000 yuan. A staff member said that the prices of BMW cars sold in the store were significantly discounted.
In 2019, Costco opened its first store in Shanghai – Minhang Store. In 2021, the second store opened in Suzhou. According to media reports, Zhang Sihan, President of Costco Asia, said that during the Spring Festival of 2023, Minhang Store maintained the first place in global store sales for two consecutive weeks, and the company is very confident in the Chinese market.
However, the practice of charging “entrance fees” by supermarkets has not prevented discussion among consumer groups. Recently, Red and White Ice, the website of Tiktok’s tens of millions of fans, released a video of exploring stores, which pushed the paid member supermarket to the forefront of the storm. He visited Sam, Costco, and Pangdonglai respectively. The total number of comments on the three videos exceeded 10 million, but nearly 800000 comments in the review area were arguing about whether the service of the paid member supermarket could match its membership price.
1、 Costco Shanghai Second Store still does not provide delivery services after opening
In August 2019, Costco Shanghai Minhang Store opened. As the first store in China, it was forced to close due to a full website. In February of the next year, it won the eastern plot of Kangqiao Industrial Zone in Pudong New Area of Shanghai with 898 million yuan, but it opened in March 2023. As Costco slowly advanced the process of opening stores in the mainland, Sam
“And members of Hema X, who are also warehouse members and supermarket members, have begun to attack cities and seize territory.”.
In September 2022, Carrefour will open two member stores in Shanghai, one of which will open in the urban area; On November 19, 2022, Metro AG Shanghai’s first membership store will be located in Baoshan, the 23rd after Beijing, Nanjing, Chengdu and other cities; On November 25th, Hema X Club opened its fifth store in Shanghai – Donghongqiao Store, which is also its eighth member store; Sam also opened his fourth store in Shanghai in Baoshan, which is also the first downtown store. In 2023, Sam will leave two sons in Shanghai.
Bao Yuezhong, a new retail expert, told Times Finance: “Paid membership is one of the enterprise marketing models, which is very mature in the current Chinese market. For some medium to high consumer groups, paying is used to more accurately identify and lock in members, and better tap the value contribution of these medium to high consumer groups.”
Membership supermarkets are gathering, and competition between them is beginning to heat up. In 2021, when the Carrefour Club Store opened, the member supermarket started a storm of “choose one from the other”. In the letter of apology issued by Carrefour, it said that competitors had pressured suppliers to buy back and sell short related goods, which made consumers unable to buy. Soon after, Hema X Club encountered a similar situation. By the end of 2022, Shanghai has nearly 20 membership supermarkets. In 2023, Hema Xiansheng, Sam, Costco, Metro AG and others all plan to open stores in Shanghai, and the battle will be further launched.
However, Costco seems to be better at customer price. According to research by perfect price, Costco’s unit price per customer is $136 (approximately 937 yuan), 1.68 times that of Sam, 2.47 times that of Wall Mart, and 2.52 times that of Whole Foods.
It is worth noting that Costco, as a veteran member player, has rich experience in supply chain, operations, and other aspects, but the Shanghai market has not yet opened delivery services, which has also become one of the factors impeding its entry into the club. A clerk at the Minhang store told Times Finance that she had only been to the store twice after applying for a card. “It’s too far, I have to drive to the store every time, and I can only return my membership card. I still need to queue up on weekdays.”
“The Pudong store in Shanghai has not received any notification of the launch of the delivery service yet. Everything depends on the company’s arrangements, as sufficient personnel need to be arranged in advance to ensure the customer’s home experience. In addition, we have not yet found a suitable logistics company.”
According to the National Bureau of Statistics, in 2022, the online retail sales of physical goods accounted for 27.2% of the total retail sales of social consumer goods, with an increase of 16.1%, 3.5%, and 5.7% in clothing, food, housing, and transportation. Bao Yuezhong of Times Finance analyzed that the lack of delivery services would definitely have an impact on Costco, as the Chinese market has now become an omnichannel market, and retail must be done at home.
He emphasized that whether to achieve home based entrepreneurship at present is a strategic choice made by enterprises based on their own operating conditions, but in the long run, it is necessary to do so. “Customers have both the demand for shopping at the store and the demand for delivery to the home. Enterprises should consider how to comprehensively create this kind of retail from the perspective of customers.”
2. Suzhou Store Queues to Return Cards, Customer Service: Membership Validity Approaches
Costco’s Pudong store in Shanghai is in full swing recruiting new members, while its Suzhou store is facing a wave of card refunds.
Last month, when Lin Jing from Suzhou was shopping at Costco, she found a long queue of card refunds waiting at the door
Costco Suzhou store customer service told Times Finance: “If the membership card is not satisfied within the one-year validity period or for other reasons, it can be returned within the validity period. Many people queue up to return the card because it is nearing the validity period, usually the last day or two of the card, so there are many people returning the card without any other reason.”
Times Finance learned that the Suzhou store opened in December 2021, and members were delayed for two months due to the epidemic. Therefore, many consumers who applied for a membership card before opening their business will enjoy a full refund when their membership card expires in February this year.
Many consumers report that the reasons for returning their cards are low usage frequency and poor shopping experience.
In February this year, Wang Ying returned Costco’s membership card. “I have been there twice since I applied for my card, and it’s inconvenient to have no car.” She told Times Finance that her home is closer to Costco than Sam. So she applied for a membership card at the time, but Costco only opened its online delivery service in October 2022. Within 7 kilometers, it can only enjoy same-day delivery, and the price is generally higher than that of offline stores.
Times Finance has noticed that the Suzhou online delivery service is provided by the third-party platform “Pick and Buy” applet designated by Kaishike (China) Investment Co., Ltd., with a premium of about 6%.
In addition, purchasing on behalf of others is also an important reason to persuade members. Many members post posts on social platforms accusing Costco of purchasing goods on behalf of them. They often see boxes of goods being dragged away, but when they arrive at the store, there is not enough to buy.
Zheng Qi, a member of Times Finance, said that he was unwilling to go through the formalities after the expiration of the membership period. “I always buy some milk and Komatsu, with a maximum purchase amount of 5 to 10 yuan, which is better than not being able to buy in the store. It can also save fuel and membership fees.”
Member Yang Zhen complained to Costco about purchasing on a commission basis. She told Times Finance that she likes shopping in supermarkets very much. Although she was willing to fly away, every time she went to Costco, she was robbed of everything she wanted to buy. “This has greatly affected the shopping experience, and nothing can be bought for 299 yuan.” Later, she left a message on the official official account to purchase, “Leave a message in the afternoon, and call me back the next morning. The other person has been apologizing, and I think it will be useful.”
Bao Yuezhong believes that from the situation of member stores such as Sam, Costco, and Hema, how to operate members in paid member supermarkets is currently at the stage of exploration and practice, and has not yet formed its own unique model advantages. Basically, it is the threshold for paying members to become members, but there is no more action to operate members.
It is pointed out that there are two key aspects to a paid membership system. The first is commodities. Consumers are more willing to choose member supermarkets that can bring differentiated, competitive, and cost-effective products; The second is how to create more unexpected added value for customers.
“The core of future retail competition is customer competition. On the basis of doing a good job in commodity management, everyone needs to create greater customer contribution value. Therefore, establishing some better models around member management is the direction of member supermarkets.”

By orchioo

Related Post