Costco: Bulk buying saves cash but may have hidden costs - expert

Source: 1News

An expert is telling Kiwis to be wary about the potential pitfalls of bulk buying in the wake of mega-store Costco opening its first New Zealand store.

One flat who visited Costco with TVNZ's Breakfast found they spent more at the retail giant compared to their usual shop, but many of the items they bought would last them a lot longer.

Although shoppers can enjoy lower prices for more items overall, budgeting expert David Verry says along with the upfront membership cost, the higher cost of the initial shop may cause headaches.

"We might see a problem with this - people taking the very, very first big shop and saying 'gosh how am I actually gonna pay for this?'"

Verry said some shoppers may only be able to afford the initial shop on a credit card, and face more costs in the form of interest if they fail to pay off the debt.

Hummus at Costco.

Buying perishable items such as fruit, vegetables, meat and dairy in bulk may also lead to food waste.

For instance, brown onions only come in 5kg bags, and other goods can only be bought in pairs.

Verry said many Kiwi homes aren't designed for bulk shopping, with insufficient space available to store the goods.

"That storage is a major issue. Typically, most of our houses aren't made up for having, you know, 25 kilograms of sugar, even the 48 rolls of toilet paper."

He said Kiwis can limit the unexpected non-essential expenses by taking a shopping list whenever they go.

A new competitor?

There are hopes that the new Costco will provide competition to the current duopoly and bring the cost of groceries down.

"Let's give credit, competition is good," Verry said.

The opening of Costco has even prompted The Warehouse Group to try expand its grocery range.

"That's all gonna be good for competition and hopefully bringing the prices down," Verry said.

However, monopoly-buster and 2Degrees founder Tex Edwards said the new player is unlikely to impact Aotearoa's overall retail landscape.

Rather than threatening the major grocery retailers, Edwards said Costco's lone store is a "dream come true", amid the Commerce Commission-prompted crackdown on the duopoly giants.

Pizza being made at Costco

"Because they can pretend competition is coming."

"Costco is interesting, it's noteworthy - but it is just one development, a pocket of competition," Edwards said.

"Eventually if you want to drive competition policymakers will have to split up the incumbent supermarkets."

Edwards said the megastore is great for West Auckland shoppers but will have no impact on other areas where the duopoly still dominates.

But Costco's Australasian managing director Patrick Noone said more stores might be on the way to help with that.

"The two larger population centres Wellington and Christchurch are interesting, we are searching them right now."