The Costco effect in Iceland
American warehouse brand Costco will open a store in Iceland in the coming months in Garðabær, the greater capital area. Though the store is not yet open, this has already started to rattle the Icelandic market.
Costco runs 725 warehouses all over the world, there of 508 in USA, 94 in Canada, 28 in the UK and two in Spain. There are plans to open a warehouse in France, a short distance from Paris on the same time as the one in Iceland.
There is only one branch of international supermarkets in Iceland, British chain which confusingly bears the same name as the country, Iceland. It opened a few years ago, with three stores in urban districts of the capital area.
The market is primarily ruled by Icelandic brands.
Drastic affect on prices predicted
Already importers of food and drink have been renegotiating with their foreign suppliers, hoping for lower prices to be better prepared for the competition. Specialist state that Costco’s opening will drastically affect Icelandic wholesales of food and drink.
And not only that, Costco will also sell fuel, books, pharmaceuticals, and if the Icelandic Government will lift the state’s monopoly on alcohol, wine, beer and other spirits. Many Icelanders are curious and hopeful that the Costco’s opening will through competition lower prices on many different things. Fuel comes first to mind as the Icelandic fuel companies have been accused of collaborating on prices, and some have been fined for just that.
Many Icelandic supermarkets have the same suppliers, which means that most of their products are the same. That will not be the case in Costco as the stores imports their own products.
Opening in Iceland an experiment
According to Steve Pappas, CEO of Costco in the UK, the idea to open Costco in Iceland came up in Canada when certain Icelandic companies started importing products from Costco. It was later decided that the store in Iceland will be a branch from Costco in the UK.
“We noticed that prices here were very high in Iceland, and we believe we can have prices substantially lower for Icelandic consumers.” With regard to customs and shipping, the prices will never be as low as in Los Angeles but Costco is doing well both in Britain and in Spain, according to Pappas.
Opening Costco is in Iceland as a branch from the Costco UK, is an experiment. Costco normally doesn’t open in such small countries. “We’re trying the waters, opening a branch from a bigger office. If it will work in Iceland we’re positive regarding other markets, like Norway, Sweden and Denmark.”