I’ve been excited since the rumors circulated… Super nervous at Costco that landed in Gyeongnam

Consumers are paying attention as Costco, an American membership-based warehouse discount mart, landed in Gyeongnam for the first time. As Costco, which had mainly opened stores in the metropolitan area, accelerated its attack on the provinces, the domestic distribution industry such as E-Mart, Lotte Mart, and Homeplus seemed to be very nervous.

○ Crowded on the first day of opening

According to the retail industry on the 26th, Costco opened a Costco Gimhae branch in Juchon-myeon, Gimhae, Gyeongnam the day before. It is the 17th store in Korea, starting with the first store in Yangpyeong-dong, Seoul in 1994.

On the first day of opening, the vicinity of the Gimhae branch was crowded with consumers who visited the store. A vehicle trying to enter the mart parking lot occupied one lane of the surrounding road and continued for more than 500 meters. The city of Gimhae tried to control traffic with the cooperation of the police, but to no avail. The Gimhae City Transportation Policy Division also operates a task force (TF) separately.

As it is the first Costco to enter the Gyeongnam area, the retail industry believes that it was successful in the early stage of opening as consumers with curiosity flocked to it. More than half of Costco’s 17 stores in Korea are concentrated in Seoul, Incheon, and Gyeonggi-do.

Although there are Costco in Busan and Ulsan, local retail industry officials explain that it is a long way to go shopping in the Gimhae area. An official from the distribution industry said, “From the time the rumors of a Costco opening in Gimhae first started circulating three years ago, the local residents were so interested that the area shook.”

○ “It cannot be explained by mainstream business administration”

In the business world, Hyundai Card Vice Chairman Jeong Tae-young (pictured) met Craig Jelinek, CEO of Costco Whole Sales, who visited Korea ahead of the opening of the Gimhae branch, and toured the store together. Hyundai Card has been the sole card partner of Costco Korea since 2019. Costco issues cards to its members through a partnership agreement with only one credit card company in a country.

“After working with Costco for several years, there is still something strange about it,” said Vice Chairman Chung. Mainstream business management can’t explain it,” he posted on social media and drew attention. He introduced, “Every time Costco opens a store, the top management of the head office comes to check it, but it is not a formal inspection, but a really detailed inspection.” He added, “The management visits all stores in Korea and rechecks them.

“Costco is very practical and reasonable overall, and is extremely wary of loopholes that can occur if only reports or numbers are exchanged,” said Vice Chairman Chung. “Product sourcing seems to be conservative but trendy,” he said. “The execution is concise and fast, and it feels like watching high-end football without unnecessary passes,” he said.

○ Costco also suffered from ‘inflation typhoon’

As mentioned by Vice Chairman Chung, the biggest strength of Costco is its product and price competitiveness. It sells 4,000 products carefully selected through the global sourcing system at the lowest price and leaves little profit. Instead, it benefits from strict sales cost control and annual fee income.

Costco Whole Sale in the US is making outstanding performances not only in Korea but also in the global market during inflation. Costco Whole Sale posted sales of $19 billion (about 256 trillion won) in fiscal 2021. This is an increase of 17.6% from the previous year ($163.2 billion or about 217 trillion won). Gross profit rose 17% to $21.3 billion (about 28 trillion won). Costco Korea also posted sales of 5,352.3 billion won in fiscal 2021, an increase of 18.3% from the previous year (4.5229 trillion won). Costco’s fiscal year runs from September of the previous year to August of that year.

Park Jong-gwan / Gimhae = Reporter Kim Hae-yeon [email protected]