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 (00:00):
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

(00:20):
us now, how Patrick, Oh hell, how are you? I'm well,
thank you? Does this blow your mind hearing this? Or
is this exactly what you would expect?

Speaker 2 (00:27):
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 of the fly items come up where the
market's gone a pie and price and Costco can maintain
the price that with their buying power, and all of
a sudden you've got great value in that business.

Speaker 1 (00:47):
Yeah, so it looks to me like butter. There is
what is it ten dollars a cagey, 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 2 (01:00):
I'm not in New Zealand, so probably what are you paying?

Speaker 1 (01:03):
Where are you?

Speaker 2 (01:04):
I'm in Sydney, Sorry, Sydney, Australia.

Speaker 1 (01:06):
What do you pay for butter?

Speaker 2 (01:08):
Oh that's a good question. I can't tell you right now.

Speaker 1 (01:10):
How do you not do the shopping in your household?

Speaker 2 (01:12):
No, Alas, I'm more of a strategic thinker. Heather.

Speaker 1 (01:17):
You think you're the strategic thinker, but you try carrying
the mental hello to a home and then you tell
yourself you're in need. 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 cage. How do they do that?

Speaker 2 (01:33):
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 but
a well for worldwide distribution. So they're getting a big
volume break on the coast.

Speaker 1 (01:51):
And is it legit like you're allowed to go in
and buy boxes at a time. They're not going to
stop you.

Speaker 2 (01:56):
Not at all. No they should. There's very limited occasions
what that would happen. And 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
the US as well. But most other items that they
can supply that commodity, they'll supply as much as you
want to buy.

Speaker 1 (02:11):
Brilliant Patrick, thank you very much, really appreciate time. Patrick Noon,
retired Managing director of Costco. For more from Hither Duplessy
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