The U.S. distribution's giant - COSTCO - wants to open 15 of its hypermarkets in France. Stores are planned in Marseille, Lyon, Toulouse, Nice, Bordeaux and Paris.
It has been quite a while ago the French supermarkets had experienced such an event. For the first time in last two decades, a giant Anglo-Saxon prepares to challenge the ultra-powerful "locals" (Auchan, Carrefour, Leclerc) on their own land. The COSTCO - number 3 in the USA, with its &97 billion in revenue and &1.7 billion of net income - has such an ambitious development plan, which, however, is still waiting for the green light from local authorities.
"Over the next 5 or 10 years, we hope to be present in a dozen cities", says Gary Swindells, CEO of COSTCO France.
However, this is not going to be easy to reproduce this COSTCO low-cost model in France. Based on the principle of club membership, COSTCO offers its customers the possibility to purchase wholesale at unbeatable prices. Its gross margin never exceeded 15%, while that of the French retailers varies between 23% and 30%. At COSTCO store, to attract richer clients, luxury goods are sold off - the phenomenon never seen in France.
The company will, thus, have to overcome many obstacles before becoming powerful across the Atlantic. The Raffarin's Law (former French Prime Minister) makes it very difficult to open new hypermarkets in France, especially in the food sector.
"In Canada, we decided to open a store in February and it opened in November. In France, the standard lapse of time is situated between 24 and 30 months", says Gary Swindells.
Also, COSTCO will not be able to sell that many items as in the U.S. Luxury brands have signed a fairly strict "selective distribution" contracts, and it seems impossible that COSTCO can sell Chanel or Guerlain perfumes in its stores in France, as it does in America. It will also be impossible to sell at a loss, what happens on rare occasions in New York.
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