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

A bustle of butter-buying at Auckland's Costco - where it costs $10 a kilo.

Stats NZ figures show the price of a block of butter has soared 65 percent in the past year.

Videos on social media show shoppers piling boxes of the spread into carts at the bulk-buy supermarket.

Former Costco managing director, Patrick Noone, says the store's very unlikely to try to stop bulk buying. 

He explained they did it once when eggs were short - but if they can supply it, they'll let people buy as much as they can.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
It turns out people are stocking up on boxes of
butter at Costco because of the high prices. There's a
man from New Plymouth who apparently is traveling over seven
hundred and fifty kilometers to Costco and Auckland to buy
the butter and bulk and then sell it back to
his community. And there's a video of people buying like boxes,
boxes and boxes of butter at a time. Patrick Noon
is the retired managing director of Costco and he's with us.

Speaker 3 (00:37):
Now, Hi Patrick, Hi, Hell, how are you?

Speaker 2 (00:40):
I'm well? Thank you. Does this blow your mind hearing
this or is this exactly what you would expect?

Speaker 3 (00:44):
It was pretty much what I would expect. Costco has
a great model where they have the low margins and
they're honest to that, and from time to time, you say,
there's one the fly items come up with a market's
gone a pigeon price, and Costco can maintain their price
that with their buying power, and all of a sudden
you've got great value in that business.

Speaker 2 (01:04):
Yeah, So it looks to me like butter. There is
what is it ten dollars a cage, which seems to
be to be about half the price of butter everywhere
else Because you're paying ten dollars for five hundred grams elsewhere,
aren't you.

Speaker 3 (01:16):
I'm not in New Zealand, so probably what are you paying?

Speaker 1 (01:19):
Where are you?

Speaker 3 (01:21):
I'm in Sydney, sorry, Cyvia Australia.

Speaker 2 (01:22):
What do you pay for butter?

Speaker 3 (01:24):
Oh, that's a good question. I couldn't tell you right now.

Speaker 2 (01:26):
How do you not do the shopping in your household?

Speaker 3 (01:29):
No? Alas I'm small a strategic thinker.

Speaker 2 (01:32):
Heather, you think you're the strategic thinker, but you try
carrying the mental helload of a home and then you
tell yourself you're in here. We don't need to go
down that rabbit hole anyway. How is it that they
managed to when everybody else is paying I think it
is about ten bucks for five hundred grams, and then
Costco's got a ten bucks for kg. How do they
do that?

Speaker 3 (01:49):
Well? The two things. One is that they had the
low margin, so they'll be able to offer butt with
low margins. The second thing is that Costco's buying power,
they're likely and I haven't been at Costco for a
year and a half now, but they're likely buying butter
well for worldwide distribution, so they're getting a big volume
break on the cost.

Speaker 2 (02:08):
Like you're allowed to go in and buy boxes at
a time. They're not going to stop.

Speaker 3 (02:11):
You, not at all, No they should. There's very limited
locations that would happen. For example, eggs, we did it
once with eggs, I remember, because of the egg shortage
in Australia, but I think they've done that in US
as well. But most other items that they can supply,
that commodity, they'll supply as much as you want to buy.

Speaker 2 (02:28):
Brilliant, Patrick, thank you very much, really appreciate time. Patrick Noon,
retired Managing director of Costco.

Speaker 1 (02:33):
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