Costco, Westgate in April this year - nearly finished. Photo / Michael Craig
Membership-only destination American retailer Costco Wholesale debuts this winter in Auckland but it plans a second $100 million-plus store elsewhere in New Zealand.
Now, a secret Government briefing paper has disclosed the potential location of the second store and what affect Costco's expansion could have on our grocery market.
Patrick Noone, Costco Wholesale Australia and New Zealand country manager, has been definite in the last few years that the business wouldn't stop in New Zealand at one store.
When he flew from Sydney in April for Costco Fuel's opening at Westgate, he said much more about how advanced plans were for the second and third stores.
Christchurch was possibly next on the list for a Costco "but it depends on how it works out here", he said on April 27.
After that, Wellington could get a Costco, Noone said when the media were invited on the inaugural warehouse visit and to see the fuel flowing.
Now, further details have subsequently emerged about the next phase.
But those details didn't come from Costco.
Instead, the new information came from a somewhat unlikely source when business decisions are being revealed: the Government.
Briefing papers marked 'in confidence' and to be forwarded to Prime Minister Jacinda Ardern tell us so much more about what is going on behind the scenes.
The vast, flat Canterbury plains and land zoned for business development is ear-marked as Costco's second home: a $100m-plus 13,900sq m store with 847 car parks, already consented.
A territorial authority has signed off an application for plans for Costco to open in Canterbury - but not as Commerce and Consumer Affairs David Clark was told by Costco but by the landowner.
This might seem a little like splitting hairs or too nuanced.
But consent hasn't actually been won by the American retailer whose arrival into this country is being managed from a suburb in Sydney.
Instead, Christchurch developer/investor Carter Group's Rolleston Industrial Holdings won approval from the district council for the scheme that could mean Cantabrians get access to Kirkland-labelled food, life-sized teddy bears, cheap coffins, discounted hearing aids and much more.
Clark's office released Official Information Act documents about the deal to Herald journalist Kate MacNamara following a meeting held over Zoom on April 8.
Her article was about how the Government had canvassed two international grocery giants as part of its supermarket shake-up, and sought their views on what regulatory change would ease their expansion into New Zealand.
In April, Clark spoke to Aldi and Costco.
Costco was listed in that Government briefing paper as having 804 warehouses worldwide by last March, of which 558 are in the United States, 103 in Canada, 39 in Mexico, 29 in the United Kingdom 27 in Japan, 16 in South Korea, 14 in Taiwan, 13 in Australia, two in France, one in Iceland and one in China.
It was in that briefing paper that cited Costco's Christchurch move: "Costco has also been granted resource consent for a large format membership-only warehouse outlet in Selwyn, Christchurch."
Not quite.
It might seem like splitting hairs but it wasn't the retailer but the landowner who won that consent.
Resource consent documents are the next key to the puzzle.
Plans are for the next warehouse to be developed in Selwyn District Council's area at Rolleston south of Christchurch beside the IPORT, a $500 million business park on 122ha of prime industrial-zoned land.
The site is 28km from Christchurch's CBD, parallel with State Highway One but off that, around 10 to 15 minutes from Christchurch Airport, between Maddisons Rd and Jones Rd.
That area at Rolleston is becoming a growing hub on the main highway for travellers in and out of Christchurch. Part of the business park is already developed. Shipping containers are stacked high on the IPORT land near the main trunk railway line. Longer-term plans are also for a major fly-over interchange to improve connections and improve safety at the southern entranceway to New Zealand's second-largest city.
Passengers travelling on that part of Canterbury face being severely injured or dying if they are involved in a collision, due to long straight roads, many intersections most of which have four roads connecting them, and the potential for speed on the flat lands.
But it's also an area perfectly positioned for growth because it's so close to so much, to so many - nearly 400,000 people - yet is now perfectly green, pastoral land.
Selwyn District Council has granted resource consent to an associate of Philip and Tim Carter's business on 6.3ha for a Costco on the Rolleston land.
Tim Harris, the council's environmental services group manager, said the consent was granted to Rolleston Industrial Holdings to allow the construction and operation of a Costco.
"For clarity, the consent was sought by and granted to the landowner and not Costco. This consent is in effect for five years and allows the landowner to carry out this activity, but whether or not this occurs or when is up to the landowner," Harris said.
The consent document said: "To establish and operate a large format membership warehouse outlet, Costco. Consent is sought in relation to the earthworks required for the physical development of the site and buildings and for waste generation volumes associated with the activity."
Building the big store on industrial land was also cleverly dealt with.
The proposed activity is best described as a large-format membership Costco warehouse which operates on a membership basis and is only open to members over the age of 18 and not general members of the public, the application said.
The activity undertaken by Costco does not fall within the definition of retail in the Selwyn District Plan because it does not satisfy the requirement that it include the displaying or offering goods for sale to the public.
"In brief, as Costco limits purchasing to members only and to those over 18 according to its own website, it is considered to fall outside this definition [of retail]. The built development proposed comprises a new single-storey building with a total gross floor area of 13,900sq m," the application said.
The building is proposed to accommodate a large format membership warehouse outlet The balance of the site will be provided with car parking, vehicle circulation and landscaping.
Parking is to be provided on-site for a total of 872 vehicles: 847 car parks, 25 mobility parks and one HGV bay, with three separate vehicle accesses. Six double cycle stands are proposed for bikes.
Tim Carter of the landowner said when asked about Costco, negotiations, plans and the Clark briefing paper: "Our company policy is that we do not comment publicly on any commercial negotiations."
The resource consent application noted Rolleston Industrial Holdings owns 95ha which is the IPORT, being progressively development into an industrial and logistics centre with large format retail to be focused around the Hoskyns Rd/Jones Rd intersection.
The plans were processed two years ago: Rolleston Industrial Holdings applied for the consent on September 1, 2020, and won that 11 days later.
The 'in confidence' Government paper said Costco's plans were of interest to the Government, Clark and MBIE due to "the potential for Costco to act as a competitor to the major grocery retailers".
But even two Costco stores do not pose a threat to Foodstuffs or Woolworths.
"Costco is likely to compete with the major grocery retailers to some extent but its limited network and product range means it is likely to have less competitive effect," the briefing paper says.
But the paper notes the size: "Costco's Auckland store appears to be around 14,000sq m whereas the average Pak'nSave store is around 3500sq m," the briefing paper said.
Costco's sales to business customers also make up around 30 per cent of its total sales, making it somewhat unusual in New Zealand's retail landscape, the paper noted.
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