On 27 August, 2019, American membership-only warehouse chain store Costco Wholesale Corporation (Costco) opened its first store for China in Shanghai’s Minhang District. In this article, we cover the key strategies of Costco in China, we also review some of the opportunities and challenges of the company in the China market.

Crowded with thousands of shoppers, the new store was forced to suspend operation in the afternoon on the opening day due to heavy traffic and customer flows. Some customers reflected that they waited for three hours to get into the car park; and many said they waited for two hours in the checkout line before their turn to pay. From the second day after opening, Costco decided to introduce traffic control in the store and restrict the number of visitors in the store to 2,000 in order to provide a better shopping environment for its customers.

Most of the products are sold in bulk in Costco store, and the prices for the same products are often cheaper in Costco than in other supermarkets and even on Costco’s own Tmall store. It is noteworthy that Costco even offers luxury products in-store, including bags, apparel and fragrance from Prada, Hermès, Chanel and Burberry, and at a cheaper price than in other retail channels. According to media reports, Kweichow Moutai liquor was priced at 1,498 yuan on the first day, about 400 yuan cheaper than elsewhere.

Founded in 1983, Costco is the second largest retailer in the world behind Walmart, with a net sales of US$138 billion in the year ending September 2018 according to its annual report. Costco currently operates 778 warehouses as of August 2019, including 540 in the U.S. and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the U.K., 26 in Japan, 16 in South Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland and France. Costco also operates e-commerce websites in the U.S., Canada, the U.K., Mexico, South Korea, and Taiwan.