Costco’s first store in China swarmed by crowds

An unexpectedly large number of clients forced Costco to close its first store in China earlier on its opening day and set a customer limit.

Reuters’ John Ruwitch had the news:

Costco Wholesale Corp (COST.O) said it will limit the number of shoppers at its new China store after overcrowding forced the U.S. big box retailer to shut it early on the opening day.

No more than 2,000 shoppers at any given time will be allowed into the store in a Shanghai suburb, Costco’s first in China, and local police will help to improve the flow of traffic near the store, it said on Wednesday.

Large crowds had flocked to the store when it opened on Tuesday, causing traffic jams in the neighborhood.

Viral images online showed shoppers clambering to get in, jostling with others to snag roasted chickens and meat, and waiting in huge lines to check out.

“We’d like to apologize for the inconvenience caused to our members on our warehouse opening day in Shanghai,” Costco said in a statement posted on WeChat, the Chinese social media platform.

The BBC noted the incident comes at a time of heightened trade tensions between Beijing and Washington:

Costco’s push into China comes as other foreign retailers have struggled to compete with local rivals.

It also comes at a time of rising tensions between the US and China over trade.

Costco is a discount warehouse store that sells a range of goods, from fresh foods to household electronics.

Some customers spent two hours lining up to pay for their purchases, while some had to wait three hours for parking, state news agency Xinhua reported.

One video showed people pushing through heavy crowds to get their hands on roast chickens.

“Due to overcrowding in the market, and in order to provide you with a better shopping experience, Costco will temporarily close on the afternoon of August 27. Please avoid coming,” the retailer in a notice on its official app, according to AFP.

CNN’s Laura He and Serenitie Wang questioned Costco’s ability to keep the interest alive:

Costco has built a cult following in the United States — now it’s China’s turn. The country’s first Costco store is so popular that it had to shut down early on its first day because of too many shoppers.

The retailer opened its first physical outlet in Shanghai on Tuesday morning, and it quickly got too crowded to stay open.

“The store has been clogged up with crowds,” Costco said in a text message alert to its members in China. “To provide you with better shopping experience, Costco will suspend business in the afternoon. Please don’t come.”

While Costco has had an online presence in China for five years through a partnership with Chinese e-commerce firm Alibaba (BABA), the new brick-and-mortar store in Shanghai marks a significant investment.

Costco’s annual membership program, which accounts for the bulk of its profit, is also cheaper in China — it costs 299 yuan ($42) compared to $60 in the United States.

But despite the early buzz around its Shanghai store, the US retailer will have to prove it can stick around for the long haul. It has to contend not only with global rivals like Walmart (WMT) and big Chinese players like Alibaba and JD.com, but also with China’s rapid economic changes and its growing online retail industry.

“There is big market potential for Costco in China, as its value for money strategy is attractive to many middle-class consumers,” said Michelle Huang, an analyst at Rabobank in Shanghai.

“Whether Costco can succeed in the long term depends how well it can adapt to China’s dynamic retail landscape,” she added.