In Telligence

VIDEO: Costco SVP still believes in bricks-and-mortar

Coming in behind Wal-mart, Costco is the world’s second largest retailer with 715 warehouses — 49 of them being in Japan, Korea and Taiwan.

Speaking at Retail Congress Asia Pacific 2016, Richard Chang, senior vice president of Costco Asia, made the case for why bricks-and-mortar will always have its place, and how e-commerce is just ‘incremental’.

SEE ALSO: Richard Chang’s ‘How to survive in an online world’ at Retail Congress Asia Pacific 2016

Retail in Asia (RiA): How important is e-commerce to Costco?

Richard Chang (RC): E-commerce is very important. As I said before, we are in North America, Europe as well as Asia. We can develop that business [online], but at the same time, that business has had the same operating philosophy as bricks-and-mortar. That is, buying unique products with the upmost value, limiting our SKUs and promoting our signature partners online as well as offline.

RiA: What difference do you see in Asian Costco members versus North America?

RC: Really, no difference. Costco members want value – they’re looking for unique products. They want to be surprised — that’s what we call the treasure hunt. So to answer your question, Costco members globally are similar and dynamic, with similar buying habits.

SEE ALSO: What is the #FutureofRetail according to StyleRunner, Zalora and Love, Bonito?

RiA: ‘Wholesale’ is still a part of Costco’s name, even though it is now more of a retailer.

RC: We have probably 30 percent that is still wholesale business. Small and medium sized stores still buy for their business, whether it’s cheese or meat for their restaurants. Some areas have more, others are less. But we cannot deny that we are a hybrid between wholesale and retail.

Regardless, we still have what we call the price authority. We have to be the cheapest in the market because we require a paid membership to shop, so we have to be cheaper than our competitors.

RiA: You’ve said that Costco is quite conservative on technology. Do you think this is a disadvantage?

RC: I don’t think so. If we can provide value, if we can provide trust, if we can provide that pricing authority, I think being at the back of technology is not detrimental to us.

If you are on the front side of the technology and your product is more expensive than others, and people have no trust, consumers will figure that out very soon. So, our DNA and corporate culture are very conservative.

RiA: Do you think bricks-and-mortar is better than digital stores?

RC: It’s not better, it’s complementary. We see e-commerce as incremental to bricks-and-mortar. For instance, some of the SKUs that you might not be able to find inside a store, you will find it online. So, that’s our operating philosophy between online and offline, where online is complementary and incremental to offline.

RiA: What is the future of retail?

RC: I think retail is going through a transformation relative to online and digital. But I think bricks-and-mortar will always have its place because of the ability to touch, taste and take the product. That will never change.

MORE: See our video on the #FutureofRetail featuring Stylerunner, Althea, Love, Bonito, Costco Asia, Zalora and more at Retail Congress Asia Pacific. 

Retail in Asia is an official media partner of Retail Congress Asia Pacific 2016. See our full coverage from the Congress here.

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