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The Costco service station under construction at Westgate in North West Auckland, directly opposite the retailer’s 14,000 sqm store. Photo/Cole Slawson
A petrol price war could be looming – at least for northwest Auckland.
Costco says its administrative office is taking memberships starting today — and its gas station, now nearing completion, will open before
its main retail store.
The AA expects Costco to increase gas price competition.
But to get access to any of its 27 pumps, you need a Costco annual membership, which costs $60 for individuals and $55 for businesses.
There is no online option, but people can join by visiting Costco’s temporary administrative office at Kakano Rd which is open for membership registrations from today, or by calling 9am 870 4700. (If you know the general area, it’s near Miter 10, sandwiched between Resene and Dulux outlets).
Costco pumps come into play. It will be interesting to see if they start a gas price war in the northwest pic.twitter.com/P5ALJE2bX2
— Chris Keall (@ChrisKeall) March 20, 2022
In Sydney, where there are three Costcos, the retailer typically sells 10 to 20 cents a liter cheaper than other gas stations (before loyalty programs), according to Pricepy data.
A 2020 Houston Chronicle report said the giant retailer sometimes uses fuel as a “loss leader”, selling 20 to 30 cents per gallon (3.7 liters) cheaper than traditional gas stations to attract customers. customers to the rest of its business. And in a March 11 article on the Ukraine crisis highlighting “cheap gas” at Costco and other major retailers, the Wall Street Journal said, “Big box retailers plan to entice consumers with cheaper gas and have them walk away with a load of groceries too.”
The Costco gas station in Westgate – which sits between the retailer’s store and a nearby Miter 10 – will have 27 pumps, a spokesperson said.
It will be no-frills, with self-service, pay-at-the-pump only, and no car washes or stores. It will be open to Costco members only.
It is being built by Haydn & Rollett, which also has the main contract on the Costco giant store being built across the road at a cost of over $100 million.
The gas station seemed almost finished when the Herald came by. The Costco spokesperson said it would open ahead of the main store – which was due to open mid-year but is now scheduled for August. But he declined to give a date.
AA auto policy adviser Terry Collins told the Herald he expects Costco to exert downward pressure on gas prices in the area, similar to supermarket-owned stations – but that exact impact would depend on the retailer’s distribution arrangements (in Australia, Costco is supplied by Mobil.
Here, Pak’nSave and owner of New World Foodstuffs ditched Mobil in 2018 to sign a seven-year deal with Z, covering both its specials and supplying its own stations.
“When people ask me, ‘Why is gasoline more expensive in my area?’, it’s usually related to the number of outlets,” Collins said. “The more competing outlets, the lower the price. That’s a good rule of thumb.”
He expected Costco to hold opening promotions. The American giant will be looking to make a statement with its initial price, and nothing will grab attention like discounts at the pump.
In its recent report on competition in supermarkets, the Commerce Commission said: “Woolworths NZ [owner of Countdown] also told us that Costco is considered a ‘destination store’ and that they have seen Australian analysis suggesting that Costco stores have in-person catchment areas of around 25km.”
This is for general shopping. Across the Tasman, a report for the New South Wales State Government found Costco influenced gas prices within a 5 km radius of its stores.
The new Costco in Westgate is much smaller than I thought, tbh pic.twitter.com/g0youFeRBy
— Chris Keall (@ChrisKeall) December 10, 2021
ComCom noted that while Costco was actively seeking locations in Christchurch and Wellington, the opening of new locations would depend on the success of its first store in Auckland – and would not impact competition beyond its catchment area. immediate catchment.
Costco’s 2021 annual report says its 636 gas stations account for 9% of its $163 billion in worldwide revenue (as of December 2021, Costco had 828 stores or “warehouses” as it calls them, including 677 in North America. North, 29 in the UK and 13 in Australia).