Costco inches closer to its first French store

Costco inches closer to its first French store

It took more than four years, but American department store chain Costco seems ready to take the plunge into the French market. The "membership only" chain could open its first French store in the spring of next year.

Price war

Its plans are to open up to 15 department stores in France, over a 10-year period. Costco's competitors have protested its arrival for many years, and the French government has previously halted its plans on several occasions, but the chain finally made a breakthrough as the construction of a department store on the outskirts of Paris was finally approved in May 2014.

 

With its move to France, Costco will enter a price war which may lead to minimal advantages for its customers. In other countries, like Australia and Canada, Costco was successful because it handed out huge discounts on a limited product range. While an average Carrefour Hypermarket carries 80,000 items, a Costco only has about 4,000 items.

 

That price war has already put tremendous pressure on French margins, which is why several large French retailers have started joining forces late last year in order get better prices from their suppliers. This begs the question whether Costco can take its place in that changing retail landscape.

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