Costco may very well be a household name in the United States, but the corporation is still fairly new in terms of its operations in France. Recognizing the potential market in Paris Region, the company decided to open their first local store. Since their arrival 2 years ago, Costco has seen ample success and is currently in the process of opening their second store in the Region.
We spoke with Gary Swindells (Country Manager for Costco France), to discover the company’s approach to constructing a successful business strategy, their take on Paris Region, and how they successfully executed their plan in their French expansion.
Can you tell us a bit about Costco, their operations in France, and your role within the firm?
Costco is a membership club open to businesses as well as the general public. Our membership fee is 36 euros, and the membership card needs to be renewed each year. It is important to note that just like our products, our membership cards are under our policy of 100% satisfaction or your money back. Costco's mandate is not to sell products at the lowest price but to sell the best quality products at the best price. We carry many different types of products but a limited selection of items per category. For example, a hypermarket or a department store the size of Costco would carry 80,000 items while we carry only 3,800. We do not carry entry level products – only products from high-end brands or our home brand, Kirkland Signature. Our selection contains the following categories: food, fresh produce, electronics, houseware, appliances, jewelry, clothing, and much more. We are proud to say that our membership card renews at a rate of 91 % in the US and Canada and 88% internationally.
In June 2017, we opened our first store in Paris Region (Villebon-sur-Yvette). We are very satisfied with the support we received from our suppliers as well as our members. As of today, we have more than 160,000 card holders in France. We hired a great group of employees, and we are proud of the role of ambassadors they show to our members. We will be opening our second location in November of this year in Pontault-Combault located east of Paris.
My role as Costco's Country Manager for France is to develop our business model in the country by hiring a great team that will implement our culture and core values, open new locations in major cities in order to gain market shares, and source amazing suppliers that will work with us not only in France but around the world.
What led Costco to set up business in Paris?
When we decide to invest in a country, we try to pick a major city in order to better evaluate our concept and the acceptance of a membership club. In terms of demographics, we require a minimum of 1 million people in 30 minutes so having such a dense population in the Paris Region gives us a clear picture. Furthermore, France's reputation is known for the quality of their products, so it is a perfect partner for Costco.
What are Paris Region’s most attractive assets in terms of business?
Paris Region offers a high market potential from the density of the population. With its many airports and train stations, it is easy to travel from other countries in the EU and abroad. The Region is well connected to all other regions thanks to a very good highway network, and the efficient public transportation system makes it simplifies for employees’ commutes. A lot of companies' head offices are located here including our counsels. And with so many businesses in the Region we will be able to effectively evaluate our B2B product selection.
How is Costco contributing to sustainability in Paris Region?
Our building was built following the High Environmental Standards certification guidelines (HQE). It has 106 skylights in order to reduce electricity consumption. We also offer free charging stations for electric vehicle as well as 28% more "green areas" than what was requested including two green walls.
How would you describe the workforce in Paris Region?
Costco hires employees on a wide range of jobs and the Paris area offers quality employees adapted to our needs. Most of our employees come from the local area and we, on average, hire 300 employees per location with 90% being CDIs (permanent contracts).
What can you tell us about the 2nd Costco store that’s currently in development?
As I mentioned earlier, it is located east of Paris in Pontault-Combault and set to open in November 2021. The concept is exactly the same for all of our stores except for the fact that we will be adapting an existing building as opposed to constructing a new building as we did in Villebon-sur-Yvette.
What are some of Costco’s future plans for business in Paris Region?
We would like to open at least 2 to 4 new stores in order to properly cover the market but also to try and avoid cannibalization.
In your opinion, what are the keys towards a company’s successful international expansion in Paris Region?
You need to take the time to review, understand, and adapt to the local market. It is also necessary to work in partnership with the local authorities and understand the local laws (commercial, social, etc.). Our performance thus far suggests that we have been successful in the right mix between local products with high savings and the international aspect brought from our global purchases. Having said that, regardless of our actual success, we need to remain very close to our members and properly align ourselves with their changing needs.
In 3 words, how would you describe Paris Region?
- A Must
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