Costco’s Chinese Adventures
Discount retailer, Costco, plus a debut store opening in China, equals pure carnage! Who knew? After police were called in to herd mobs of Shanghai shoppers scrambling for its meat counter, “please don’t come” was Costco’s stark message. Oh my!
China remains a contested battleground for retailers, with western companies more than willing to take up arms. Competing against native Chinese names like Sun Art and Yonghui, blood has already been spilled as Amazon retreated from its online store in April, and France’s Carrefour quit after heavy losses. However, when the provincial county has to shut down traffic because a brand is just too hot, investors know something’s up! Costco is slaying the red dragon, and by definition, its debut is only the start!
The prospect of bulk-buying cheap products on a membership card that offers exclusive privileges was enough for the warehouse retailer hit the ground running. The market will now look for evidence of Costco’s long-term survival skills in the country, which could unlock heaps of unexpected profit. Further, if Costco’s Sino-retail revolution coincides with a downturn at home, its fortunes could be compounded. Discount stores come into their own when consumers tighten their purse strings.
So, if your glass is half empty on the American economy, but you think Costco can maintain its Chinese momentum, add the stock to your shortlist. It’s been no slouch in 2019, rising 35% with little resistance. Investing is a field where luck and skill tease each other, but you only need one of the two to win. Game on!
