Costco TV discounts make mockery of RRPs, rival retailer hits out

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.”

One Response to Costco TV discounts make mockery of RRPs, rival retailer hits out

  1. Grant Jury Wed 17 Dec 2014 at 11:06 am #

    I hope JB HiFi will applaud me for now refusing to buy anything from their stores, its this “cartel fixing” mentality the major retail chains and consumer product importers adopt to manipulate and price fix consumer products that has Australians paying way more. Seeing this article shows its no coincidence Australia pays excessively for its same products that are sold in other mature and developed consumer markets, just a simple look online will confirm this. OH!! and don’t be duped by the economies of scale BS they will throw back…oh we are a small market..blah blah
    Manufacturers work on tight margins and the difference between major buyers, Walmart etc and smaller wholesalers is small only a few percent not 50 -100% like they will have you believe
    so next time you say its just the multinationals like apple, Microsoft and Adobe are ripping us off,,,take a look locally,,, JB HiFi Harvey Norman Coles, Woolworths ect have their hands in you pocket too

    SO how to fix this issue, firstly stop being complacent, you are rewarding the cartel mentality with your hard earned cash,, trust me most of it isn’t running the economy by paying taxes and employing staff, its little more than greed and fueling their share price!!
    Shift your buying patterns, buy from companies willing to be inline with a global market prices, were are always told we’re global,, so buy global..

    Buy online or from bricks and mortar who dare to discount. and yes the Gerry Harvey’s of the world will bleat about, online and the GS T and cant compete blah blah , firstly the stores we buy off, they pay tax, they pay staff,… its a relatively level field… and remember hes UBER rich from the excessive margins you have paid all these years… time he and others got a wake up call , ALSO the online world is is for everyone,,, why is it Australia trails the world in our major retailers and their online store presence

    Its a shame we have to buy off international companies to get an AUSSIE fair go, but thanks Costco, Aldi and bring on Tesco, Walmart etc,,,, obviously our loyalty to Aussie companies doesn’t pay!! (well does pay,, we pay through the nose,,lol)

    there’s my soapbox stand, hope it can make may you think and make a difference

    Grant

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