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Costco set to arrive in France

Global retail giant Costco Wholesale Corporation is poised to expand its international operations next year, with a move to Paris, France.

After several years of negotiations with government officials, the company has been given the green light to open its first warehouse on French soil, in the Parisian suburb of Villebon-sur-Yvette.

Number two in the world for retail distribution with revenues of over $100 bn p.a., Costco has been looking to grow its business portfolio in Europe for several years, with France seen as a key target. This will be their third market entry in the region, following successful ventures into the UK (26 warehouses) and Spain (2 warehouses).

Costco’s tried and tested warehouse-club formula, offering large discounts on a limited product range, will certainly be something of a novelty in France. As retail analyst Angel González illustrates, “there’s nothing exactly like Costco in France to date: it sits between richly stocked markets like Carrefour and ‘Cash and Carry’ wholesalers that sell only to other businesses.”

With a typical Costco warehouse offering just 4,000 SKU’s (versus the 80,000 that can be found in a Carrefour or Auchan hypermarket), price competitiveness and quality come at the expense of product diversity. While some questions remain about French consumers’ readiness to adapt to Costco’s membership fee system and bulk-buying format, there can be no denying the retailer’s ability to compete with key players on cost, despite the market’s ongoing price war.

This first store could be just the beginning for Costco’s French connection however. Speaking to the press last month, Gary Swindells, head of operations in France, said that “Costco hoped to open up about 15 warehouse-stores over the next decade, of which 4 – 6 would be in the Paris area”. With memberships rising as high as 100,000 per warehouse, this is certainly an ambitious plan.