Bruce Guthrie
June 3, 2012
The Age
SO, BUSINESS is booming at Costco, the members-only shopping warehouse that sits in the shadow of that other cheap thrill, the Southern Star Observation Wheel, on the edge of Docklands. And why wouldn’t it be: I mean, who could resist paying $60 for the right to shop in a space the size of an aircraft hangar with ambience to match?
And if that’s not a sufficiently singular experience for you, once you’re in the place you can play clothing lotto. It goes like this:
”Excuse me,” you might say to a floor staffer (as I did last week). ”I’d like to try on this pair of jeans. Where are the change rooms?”
To which they might reply (as one did): ”We don’t have change rooms.”
”So what should I do?”
”Try them on in the toilet … But you’ll have to buy them first, because the toilets are past the checkout.” Costco might be a lot of things, but Saks Fifth Avenue it is not.
It’s been almost three years since the ”big box” chain opened in Melbourne, the first of the US giant’s Australian outlets. (It now has three.) I tried to visit in its first giddy month in 2009 but couldn’t get near the place.
The Sunday morning queue of shoppers and their trolleys – actually, that’s a misnomer, the trolleys are the size of small Holdens – stretched 100 metres.
It would be two years before I tried again and that didn’t go smoothly either. While I knew I needed a membership to buy goods, I thought I’d be allowed in if all I wanted to do was wander about. But, no, I’d need a special two-hour pass to do that. This week, I actually joined. It cost $60 and is good for 12 months. My wife gets a membership too.
Costco’s chief financial officer, Richard Galanti, recently told financial analysts that memberships were increasing, principally because of new stores here and in Asia.
The Age reported that more than 100,000 Australians are now believed to be members of Costco. I’ll accept the claims, even though I’m bemused that people have to pay for the right to shop. What next – admission charges at dental surgeries?
Certainly, business appears to be booming. Just 20 minutes after the Docklands store opened on Wednesday there was a queue to get into the car park and another to sign up for membership. On entering the warehouse I was immediately reminded of a scene from Mike Judge’s 2006 cult comedy, Idiocracy.
Set 500 years into a dumbed-down future, a couple of time travellers visit the local Costco, which is so big it can be seen from space. After an hour they fear they are lost. ”Are you sure you know where you’re going?” asks one of them. Replies their escort: ”I know this place pretty good. I went to law school here.”
Costco at Docklands does not have a law school, but pretty much everything else: huge teddy bears, washing machines, refrigerators, TVs, gazebos and, of course, loads of grocery items – butter comes in 1.5 kilogram slabs, yoghurt in five-litre tubs and toilet paper in packs of 60. There’s even a toilet to go with it, if you like – a steal at $131 over in aisle 139 (yep, the place is that big).
Costco’s American founder, Jim Sinegal, once explained to Fortune magazine the company’s formula for success: small profit margins and precise product selection.
In contrast to a supermarket, which might carry 40,000 different items, Costco stores only carry about one-tenth of that. ”Of that 4000, about 3000 can be found on the floor all the time,” explained Sinegal.
”The other 1000 are the treasure-hunt stuff that’s always changing. It’s the type of item a customer knows they’d better buy because it will not be there next time, like Waterford crystal.”
Melbourne psychologist Yvonne Willich says the treasure hunt is all important. ”You feel like you’ve had a bit of a win when you go in there and find an item that’s $65 at DJs selling for $25,” says Willich. ”Let’s face it, Australians love a bargain.”
The bargain strategy and, I suspect, the upfront, non-refundable membership fees, have a curious effect on the demographics of the place: certainly, there were plenty of fancy cars in the car park and the shoppers looked decidedly middle-class. And, boy, can they consume. Most of the Holdens, sorry, trolleys, were full to overflowing.
For me, shopping is always a struggle between want and need, and after an hour I was having difficulty justifying the purchase of anything.
So much so, that my trolley had just three items in it. The checkout man took pity on me. ”Would you like a small box for those things, sir?” As I strolled out, box under my arm, I swear I got strange looks. Worse, when I got home, the jeans didn’t fit. Looks like I’ll have to go back.
Bruce Guthrie is a former editor of The Sunday Age, The Age and the Herald Sun. Twitter: @brucerguthrie
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