Costco desires to create an experience of exclusivity that will challenge the status quo in the Nordic markets. The timing of their launch in Sweden couldn’t have been better, claims Saara Järvinen, Senior Insight Strategist at Kuudes Stockholm.
Retail strategist Arhi Kivilahti has been wondering why the Nordic media is not reacting to Costco’s October launch in Sweden, north of Stockholm to be precise. We are talking about the third biggest retailer in the US, so this is quite dramatic in the Scandinavian retail scene. One can only wonder what Costco’s plans are but opening of five warehouses in Sweden has been discussed.
Swedes truly are hungry for novelty in groceries! On my visit on a Friday morning, the store was lively, and the opening days it has been jam-packed. All this excitement about a supermarket seems a bit sad. Costco enthusiasts even created a private Facebook group, reaching now more than 32,000 members. The discussion is active, almost fanatic. The excitement is religious. The group administrators are not accepting criticism towards the brand, and mostly welcome positive experiences, finds, and tips.
People seek to shake up their daily routine
Tips are needed of course, to make the most of Costco you must learn what and how to buy. The Costco shopping experience differs a lot from your ordinary trip to ICA. Costco promises affordable prices, but in order to shop, you need a personal membership – 500 kr per year.
The whole journey in store is quite different from what we are used to. You start by showing your membership card at the entrance, the store layout and design resembles a wholesale store, groceries are packed for you, and you show the receipt to get out. Navigating the selection is not obvious. Facebook group members are arguing whether Costco is cheap or not, and it seems that at least 1 in 4 products cost more at Costco, but people do appreciate the big packaging sizes.
Regardless of prices, it seems that for most Swedish shoppers the number one reason to visit Costco is the chance to buy products they wouldn’t find elsewhere. American food culture, new brands, or interesting formats. It is painfully obvious how bored most consumers are of their shopping and cooking routines. Still, there is little choice is in the retail scene. And I mean real choice that goes beyond endless flavour options. People are ready to drive up to hundreds of kilometres, queue and pay for a membership they might not get to use that many times, just to shop for pancake mix and rotisserie chicken in a new environment.
What would happen if Costco opened in Finland? Finns might love the sensible, reduced spirit. Also, judging by Lidl’s market share of 9.5 percent, even in conservative Finland some are comfortable with not finding their favourite yogurt brand from the shelf and want to explore new options. And Costco does localise their selection: you can find Kalles Kaviar and even a few meters of Valio products. A big part of the meat is local. Some Facebook group members have even criticised Costco for having too many local products instead of exciting American flavours.
Feel like a pro
Costco excels at creating an experience of exclusivity. The membership fee and the private label with a vast and exciting selection are crucial of course. Lots of fresh products are packed and meals prepared in-store. Customers get to see the staff working behind the glass, creating a feeling that you can buy products only available at Costco. The store looks like a wholesaler for professionals – huge, efficient, and stern – which interestingly makes the customer feel a bit special. Almost like a pro, obviously smarter than an average supermarket shopper.
Smartness is the key. Costco’s timing is perfect. During this time of crisis people want to feel resourceful and in control, while gaining indulgent, comforting experiences in ways that are not too far from our safe routines. Even exoticism close to home. And Costco doesn’t just attract the most price-conscious consumers, the Costco way is to make you feel that you can find premium options and wellbeing products that give value for money.
How should Nordic companies prepare?
This could very well be a recipe for success in the Nordics. It will be interesting to see how established players will react. And how much (hopefully) the retail scene will evolve in order to compete? There are opportunities especially in terms of social and environmental sustainability, since it is not something that Costco can boast about.
And the challenge to evolve goes beyond food retail. Costco Arninge offers services ranging from in-store pharmacy to an optician. For retailers in other Nordic nations, now is the time to keep a close eye on the developments in Sweden, learn and get ready. At Kuudes, we love a good trend safari that can open our eyes to issues, new possibilities, and better concept design. Team Kuudes Stockholm welcomes you along!
P.s. And what did I buy from Costco? Premium coconuts, a couple of big bags of fruit and veg, butter cookies, two huge bottles of maple syrup, fish, and chili oil. Other than that, I spotted exciting frozen aisles and the lack of organic products. I did cancel my membership upon walking out of the door, since all this was not worth the 30 km journey. Although I’m a fan of buying in bulk and do love alternatives to my dreary shopping routine 😀