In pursuit of the world's third-largest market in household spending, Costco is said to be planning a second store after foreign competitors like France-based Carrefour and German wholesaler Metro left control to local Chinese operators.
Even if Costco has 783 warehouses globally, including its store in China, analysts are saying that for the Seattle-based supermarket to keep up with local hypermarkets and even online rivals and not end up like its two peers, it will have to depend on big data.
Carrefour, which entered the Chinese market in 1995 and was hailed as a game-changer in China, announced in June that they are selling 80 percent of its business to China's Suning.
German wholesaler Metro likewise agreed to hand over a majority of its stake to Wumart Stores.
When Costco opened in China in late August this year, it was forced to close early due to safety concerns because of the mad rush it generated.
Much of this success came from customer profiles and spending behavior that Costco got from its online store on TMall.com and from those who signed up as members for a fee of 299 yuan (US$42).
Based on the big data Costco customers had been providing Alibaba's TMall.com since 2014, the store used information based on product details and purchase price to also personalize customer's online experience based on its privacy policy and of course, to prepare for its store opening.
Big data is the large volume of information from mobile and social media including online sales that make it possible for businesses to make better and faster decisions on the products and services to offer customers matching their behavior, spending patterns and trends.
Remi Blanchard, project leader at Daxue Consulting confirmed that it is with this data that local operators gain an edge over foreign competitors.
According to a source from a company that provides logistics to Costco, the US retailer is planning its second store in Kanqiao, in Shanghai's Pudong district next year because of the "exceptionally positive response from consumers."
One week after Costco's store opening, scores of shoppers were seen queuing up to terminate their membership and ask for a refund as prices on some products are not cheaper than those sold on Tabao and JD.com.
Jennifer Ye, a partner at PwC (PricewaterhouseCoopers) that gives advisory services, said growth will be more challenging ahead with the need not only to pinpoint customers with technology but with Costco needing "to grow sustainably" by maintaining "pricing advantages through efficient cost controls."
