Costco Business Centre opens in Scarborough, targets small businesses
The popularity of wholesale retailer Costco is undeniable, especially if you’ve ever been fighting for parking outside one on a Saturday, or attended a Costco-themed birthday party.
But all that popularity also means that the original purpose, a wholesaler for small businesses, has been diluted by the addition of other items in stores, like clothing, Christmas decorations and a snack bar.
On Friday, Costco returned to its roots with the launch of Costco Business Centre in Scarborough, Ont. the first of what the retailer intends to be several cross-Canada locations catering to small business purchasing needs. The 127,000 square-foot facility has different operating hours than its other stores in order to better serve its targeted customers and offers delivery in a 24 km-radius of the store.
Approximately 80 per cent of the products found in the Business Centre won’t be available in the typical Costco stores.
“We’re essentially going back to our roots, how we started in Canada,” Marc-Andre Bally, vice-president of Costco Wholesale Business Centre at Costco Wholesale Canada, told BNN in an interview. “We hope to attract a lot of restaurants, convenience store owners who, over the years, we weren’t serving very well.”
The store is still open to all Costco members, but will tailor its offerings to the small-business crowd. Unique items include a $999 barrel of olive oil, a $375 wheel of parmesan cheese and a $5,500 hot dog cart.
10 unique finds at Costco Business Centre (#6: barrels of olive oil for $999 each) https://t.co/YjBBQVWZUU pic.twitter.com/qm0aiBPiQx
— BusinessNewsNetwork (@BNN) April 1, 2017
The Business Centre model launched in the U.S. about 20 years ago, and there are currently 14 of those stores south of the border.
Costco plans to roll out 10-15 more of the stores across Canada in the next three to five years, Canadian Grocer reports. The impact those stores will have on the wholesale industry could be significant, as Costco operates at significantly lower margins than typical wholesale suppliers, like Sysco Canada and Gordon Food Service.
“Costco operates on a 15 per cent margin at retail,” Bruce Winder of Retail Advisors Network told The Financial Post, “If they work on the same gross margin (for the business centre), which I believe they do, that will significantly disrupt the wholesale market, because wholesalers work on a margin of anywhere from 30 to 50 per cent.”
Costco operates 95 stores across Canada, and has 10 million card-carrying members — more members per capita than the United States.
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