Sunday, March 19, 2017

The Costco Change Coming to Iceland

We are almost within sixty days of a significant change in Icelandic commerce.....a Costco (the first on the isle) will open.  For those who've never shopped at the US's a warehouse retailer that sells in bulk for a discounted price.

To be honest, Iceland has never had anything like Costco....ever.

Oh, there's plenty of grocery stores (at least in Reykjavik and the far west side of the island), and there'a fair number of clothing shops (at least in the capital).  But no one has ever come in and done a lot of hefty prices are a dismal part of the Icelandic landscape.

As a kid, I grew up in a rural area which had two or three major store-fronts, and at least a dozen grocery stores in the local area of the US where I lived.  One day....Wal-Mart came.  Within a decade....the two major store-fronts were mostly gone, and the grocery store operations had taken a fair hit.  In some parts of town.....they survived.  But they were all forced into a more competitive direction.

I see this with stores that exist in Iceland, but in a totally different fashion.

There aren't a lot of studies to talk about shopping in Iceland.  There are 332,000 residents to Iceland....a vast number of those reside on the far west side of the island.  For Reykjavik and the surrounding area..,there's roughly 220,000.  If you figure residents outside of that 'civilized area' but within a four-hour drive of Reykjavik....there's probably another 40,000.

The real question to ask then, out of this combined group of 260, many will go and sign up for membership with Costco, especially in the first hundred days?  I'll bet on 50,000 memberships in that hundred-day period.

If Costco can undercut the normal sales price for items by 15-percent (my guess), then I think it'll be a large group of people shopping there.  In fact, driving five or six hours to get there, and then buy in bulk (easily spending a thousand Euro in value) might be a habit that you see developing.

All of this would unsettle the regular grocery operations....undercut their profits, and likely send 50-percent of them within the next couple of years to shut down.

Somewhere out there, there out to be some underused PhD character, who'd like a one-year period in Iceland to study this one approaching change in an entire nation's spending habits and shopping routine.  It would be the study of a lifetime.  In less than one year....changing a third of an entire culture into bulk-buyers.

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