Exclusive Investigation by Patrick Avenell
MELBOURNE, VIC & SYDNEY, NSW: Costco is currently selling three leading TV brands for up to $1,000 off the recommended retail price. The slashing of prices at the store may be a win for the consumer, but it has resulted in two leading TV manufacturers choosing not to supply panels to the new retail venture.
In a special investigation, Current.com.au travelled to Melbourne this week to visit the new Costco warehouse and speak with manager Robert Boskovski. Whilst there, we analysed the pricing and range of flat panel TVs — one of the biggest selling CE products on the market — to determine just how much value a consumer gets for their $60 membership fee. The results are astounding.
The latest high-end Sony Bravia LCD, the KDL52Z5500, which has an RRP of $4,999, is on sale for $3,999. A Sharp 52-inch LCD, product code LC52D77X, was also on sale for $1,000 less than the RRP of $4,299. The Samsung 46-inch LED UA46B800, which is RRP $5,299, was reduced by $900 to $4,399.
Considering these amazing discounts, it was unsurprising that Boskovski declared that consumers who pay their $60 to become members would soon make that money back.
“I’m confident in saying yes, they do [get their money back], depending on what they purchase. I mean, you could purchase a television and you could almost [know] that you were getting your $60 back based on that visit. It might take a couple of visits, depending on the member and their purchases, but I’m confident they will get their money back within the first two visits,” he said.
As for the severe discounts on price, Boskovski was more proud than apologetic.
“Clearly, members are now recognising the value — what the mark up actually is in [other retail stores]. That’s what people need to look at, [these are] our every day prices.”
And it is these everyday low prices — not firesale or promotion prices — that has caused two leading TV suppliers to decline Costco the chance to retail their panels. Both Panasonic and LG, two of the Big 4 panel producers, are not ranged by Costco in this category. We asked both why they made this decision — LG has not responded — but Panasonic issued this statement:
“Costco currently sells a number of Panasonic products including microwaves, DVD recorders and cordless phones. They do not currently sell Panasonic TVs. It is not Panasonic’s policy to comment further on commercial arrangements with its retail partners.”
One retailer has since expressed its happiness that there is supplier resentment to this pricing policy: JB Hi-Fi. We asked CEO Richard Uechtritz his thoughts on the Costco model.
“I’ve been in their stores before,” he said. “They’re to be respected competition, however, I think they’re going to have to get a lot more scale then they have at the moment to make any impact on this market, or to get the type of buying power with local suppliers.
“We applaud Panasonic and LG for not supplying them with panels.”