It’s 23rd May, 9h in the morning. Something is going on in Garðabær, a suburb in Reykjavik Region. Hundreds of people are gathering there and even rescue workers have been called out to help in crowd control and organising the traffic. You might think there is a concert or an important football match but the reason why almost thousand people have come to this place and are queuing is because of the official opening of US wholesaler Costco Iceland. But are they selling at low prices or at fair prices? I will try to explain it from my point of view in this post.
Since this store opened, just some days ago, around 40.000 people from Iceland have bought their membership card. The card costs 4.500 ISK for individuals and 3.800ISK for companies and guarantees the access to the Costco stores all over the world.
This company is mainly known worldwide for selling product in large quantities, but the big noise they are making in Iceland is mostly because of pricing. They offer a wide range of articles – I would even say you can find anything you need there: reading glasses, car tires, all types of food, baked goods, underwear… It will be the first Costco in Europe to prepare sushi on the store and they will even sell medication. Alcohol will be available for company card holders for the first time, as the sale of alcohol was monopolized by the Government until now.
Besides this incredible wide range of products at convenient prices, is the fuel price which has caused a great fuss among the population. They sell outside the store the cheapest fuel in Iceland. They sell at 169.9 ISK per liter, 15.8 kronas lower than the former cheapest branch. There is a shocking difference if we compare for N1 or Olís where the liter is sold at 199.9 ISK. This is probably the most scandalous topic regarding Costco opening, as the Icelandic fuel companies have been accused of negotiating prices and some of them have even been fined because of this fact.
Immediately people have started comparing prices with other companies and sharing their thoughts. Many consumers, as the managing director of FÍB, the association of Icelandic vehicle owners, are asking for explanations about those price differences from the fuel companies. There is a Facebook group where people share experiences and items bought at Costco Iceland and compare prices.
In addition, the Neytandinn app (‘the Consumer’) has registered the biggest rise in users since it was created two years ago, now is the most popular in Iceland. On this app people share pictures of their receipts in order to build a database for consumer price comparisons. If we visit those online places and read the users comments, many of the people feel deceived: how come we have been paying so much for fuel, for example?
Maybe this new store with “new prices and products” will affect to consumption patterns in the country, will bring attention to price comparison and Icelandic society will begin to be a more consumerist society. But the question is: are those facts that bad? In my opinion, competition is good; it leads to cost savings, prices and customer service improvement and definitely it makes companies offer products or services at fair and reasonable prices.
Costco Iceland general manager, Brett Vigelskas, affirms that “There is bound to be an effect when such a large store is opened. But exactly what the effect will be or how impactful is hard to say.” Well, in the case of Iceland it has even lead to a new world: “Costcoáhrifin” (the Costco-effect)
I understand that local stores and shops might feel threatened but they will have to realize that consumers are looking for good value and good prices, and they feel a bit fooled now. Those little shops will have to gain the customers’ trust again, starting by studying their prices and trying to reduce them. To highlight some other positive points of those massive wholesale stores, they will employ 200 people, all from Iceland and many products are obtained from Icelandic manufacturers and companies.