Latest / Best of Business / Patrick Noone: former Costco managing director responds to videos of people bulk-buying products at stores

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Patrick Noone: former Costco managing director responds to videos of people bulk-buying products at stores · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks. There'd be
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  Speaker 2: It turns out people are stocking up on boxes of
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  Speaker 2: butter at Costco because of the high prices. There's a
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  Speaker 2: man from New Plymouth who apparently is traveling over seven
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  Speaker 2: hundred and fifty kilometers to Costco and Auckland to buy
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  Speaker 2: the butter and bulk and then sell it back to
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  Speaker 2: his community. And there's a video of people buying like boxes,
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  Speaker 2: boxes and boxes of butter at a time. Patrick Noon
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  Speaker 2: is the retired managing director of Costco and he's with us.
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  Speaker 3: Now, Hi Patrick, Hi, Hell, how are you?
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  Speaker 2: I'm well? Thank you. Does this blow your mind hearing
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  Speaker 2: this or is this exactly what you would expect?
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  Speaker 3: It was pretty much what I would expect. Costco has
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  Speaker 3: a great model where they have the low margins and
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  Speaker 3: they're honest to that, and from time to time, you say,
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  Speaker 3: there's one the fly items come up with a market's
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  Speaker 3: gone a pigeon price, and Costco can maintain their price
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  Speaker 3: that with their buying power, and all of a sudden
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  Speaker 3: you've got great value in that business.
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  Speaker 2: Yeah, So it looks to me like butter. There is
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  Speaker 2: what is it ten dollars a cage, which seems to
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  Speaker 2: be to be about half the price of butter everywhere
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  Speaker 2: else Because you're paying ten dollars for five hundred grams elsewhere,
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  Speaker 2: aren't you.
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  Speaker 3: I'm not in New Zealand, so probably what are you paying?
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  Speaker 1: Where are you?
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  Speaker 3: I'm in Sydney, sorry, Cyvia Australia.
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  Speaker 2: What do you pay for butter?
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  Speaker 3: Oh, that's a good question. I couldn't tell you right now.
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  Speaker 2: How do you not do the shopping in your household?
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  Speaker 3: No? Alas I'm small a strategic thinker.
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  Speaker 2: Heather, you think you're the strategic thinker, but you try
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  Speaker 2: carrying the mental helload of a home and then you
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  Speaker 2: tell yourself you're in here. We don't need to go
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  Speaker 2: down that rabbit hole anyway. How is it that they
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  Speaker 2: managed to when everybody else is paying I think it
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  Speaker 2: is about ten bucks for five hundred grams, and then
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  Speaker 2: Costco's got a ten bucks for kg. How do they
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  Speaker 2: do that?
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  Speaker 3: Well? The two things. One is that they had the
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  Speaker 3: low margin, so they'll be able to offer butt with
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  Speaker 3: low margins. The second thing is that Costco's buying power,
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  Speaker 3: they're likely and I haven't been at Costco for a
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  Speaker 3: year and a half now, but they're likely buying butter
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  Speaker 3: well for worldwide distribution, so they're getting a big volume
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  Speaker 3: break on the cost.
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  Speaker 2: Like you're allowed to go in and buy boxes at
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  Speaker 2: a time. They're not going to stop.
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  Speaker 3: You, not at all, No they should. There's very limited
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  Speaker 3: locations that would happen. For example, eggs, we did it
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  Speaker 3: once with eggs, I remember, because of the egg shortage
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  Speaker 3: in Australia, but I think they've done that in US
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  Speaker 3: as well. But most other items that they can supply,
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  Speaker 3: that commodity, they'll supply as much as you want to buy.
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  Speaker 2: Brilliant, Patrick, thank you very much, really appreciate time. Patrick Noon,
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  Speaker 2: retired Managing director of Costco.
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