Costco Australia and New Zealand boss Patrick Noone offered the media an early glimpse of the massive business development. Video / Michael Craig
American members-only retailer Costco Wholesale is making its debut in Auckland this winter, but has plans for a second $100 million+ store elsewhere in New Zealand.
Now a secret government briefing paper has revealed the potential location of
the second deal and what impact Costco’s expansion could have on our grocery market.
Patrick Noone, Country Manager of Costco Wholesale Australia and New Zealand, has been certain for the last few years that business in New Zealand would not end in one store.
When he flew in from Sydney for the opening of Costco Fuel in Westgate in April, he said much more about how far along the plans were for the second and third stores.
Christchurch may be next on the list for a Costco, “but it depends on how things go here,” he said April 27.
After that, Wellington could get a Costco, Noone said when the media was invited to the inaugural camp visit to see the fuel flow.
Now more details about the next phase have become known.
But those details didn’t come from Costco.
Instead, the new information came from a somewhat unlikely source when business decisions are announced: the government.
Briefing papers, marked “confidential” to be forwarded to Prime Minister Jacinda Ardern, tell us so much more about what’s going on behind the scenes.
The vast, flat plains and acreage of Canterbury set aside for business development is earmarked as the second home of Costco: a 150,000-square-foot, $100 million+ deal with 847 parking spaces that has already been approved.
A local authority has signed an application on plans for Costco to open in Canterbury – but not, Costco’s David Clark has been told, but by the landowner.
This may seem a bit like splitting hairs or too nuanced.
But approval hasn’t really won the American retailer, whose arrival in that country is being piloted from a suburb of Sydney.
Instead, Christchurch developer/investor Carter Group’s Rolleston Industrial Holdings got county council approval for the scheme, which could mean Canterbrians gain access to Kirkland-labeled food, life-size teddy bears, cheap coffins, discounted hearing aids and more.
Clark’s office released Official Information Act documents about the deal to Herald journalist Kate McNamara after a meeting held April 8 via Zoom.
Her article was about how the government, as part of its supermarket restructuring, had consulted two international food giants and sought their views on what regulatory changes would facilitate their expansion into New Zealand.
In April, Clark spoke to Aldi and Costco.
That government briefing listed Costco with 804 warehouses worldwide as of last March, including 558 in the United States, 103 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in South Korea, and 14 in Taiwan, 13 in Australia, two in France, one in Iceland and one in China.
That briefing cited Costco’s Christchurch move: “Costco has also received the resource commitment for a large-scale, members-only warehouse outlet in Selwyn, Christchurch.”
It may seem like splitting hairs, but it wasn’t the retailer, it was the landowner who got that approval.
Resource consent documents are the next key to the puzzle.
It is planned to develop the next warehouse in the Selwyn District Council area of Rolleston, south of Christchurch, adjacent to the IPORT, a $500 million commercial development on 300 acres of prime industrial land.
The site is 17 miles from Christchurch CBD, parallel to but off State Highway One, approximately 10-15 minutes from Christchurch Airport between Maddisons Rd and Jones Rd.
This area near Rolleston is becoming a growing hub on the main road for travelers to and from Christchurch. Part of the commercial area has already been developed. Shipping containers are piled high at the IPORT site near the main railway line. Longer-term plans also include a major fly-over interchange to improve connections and increase security at the southern entrance to New Zealand’s second city.
Passengers traveling in this part of Canterbury are likely to be seriously injured or die if involved in a collision due to long straight roads, many intersections, most of which connect four roads and the potential speed on flat land .
But it’s also an area that’s perfectly positioned for growth because it’s so close to so many, to so many – almost 400,000 people – and yet it’s now perfectly green, pastoral land.
Selwyn Borough Council has granted an employee of Philip and Tim Carter’s business a resource commitment for 14 acres for a Costco on the Rolleston property.
Tim Harris, group leader for environmental services for the council, said approval had been given to Rolleston Industrial Holdings to allow a Costco to be built and operated.
“To be clear, consent was requested and granted by the landowner and not by Costco. This consent is valid for five years and allows the landowner to engage in this activity, but whether that happens or when is up to the landowner,” Harris said.
The consent document reads: “To build and operate a large-scale warehouse outlet for members, Costco. Consent is being sought in relation to the earthworks required for the physical development of the site and buildings and for the generation of waste associated with the activity.”
The construction of the large department store on an industrial site was also skilfully solved.
The proposed activity is best described as a large-scale Costco member camp operating on a membership basis and open only to members over the age of 18 and not to the general public, the motion reads.
The activity conducted by Costco does not fall within the definition of retail in the Selwyn District Plan as it does not meet the requirement that it includes the display or offering of goods for sale to the public.
“In short, since Costco, according to its own website, restricts purchases to members and those over the age of 18 only, it is assumed that it does not fall under this definition [of retail]. The proposed development includes a new one-story building with a total gross floor area of 13,900 square meters,” the application reads.
The building is intended to house a large-scale warehouse for members. The remainder of the site will be provided with parking, vehicle traffic and landscaping.
A total of 872 vehicles are to be parked on the site: 847 parking spaces, 25 mobility parking spaces and a truck parking area with three separate access roads. Six double racks are proposed for bicycles.
When asked about Costco, negotiations, plans and the Clark briefing paper, Landowner’s Tim Carter said, “Our company policy is that we do not publicly comment on commercial negotiations.”
The Resource Permit Application noted that Rolleston Industrial Holdings owns 95 hectares, the IPORT, which is gradually developing into an industrial and logistics hub with large scale retail stores to be concentrated around the Hoskyns Rd/Jones Rd intersection.
The plans were processed two years ago: Rolleston Industrial Holdings applied for approval on September 1, 2020 and received it 11 days later.
The confidential government paper said that Costco’s plans are of interest to the government, Clark and MBIE because “Costco has the potential to compete with major grocery retailers.”
But even two Costco stores pose no threat to Foodstuffs or Woolworths.
“Costco will likely compete with the major grocery retailers to some degree, but its limited network and product range mean it is likely to have less competitive impact,” the briefing said.
But the paper notes the size: “Costco’s Auckland store appears to be about 14,000 square meters, while the average Pak’nSave store is about 3,500 square meters,” the briefing said.
Costco’s sales to business customers also account for around 30 percent of total sales, making it somewhat unusual in the New Zealand retail landscape, the newspaper noted.