The U.S. retailer Costco has announced that it will enter the Chinese market through Alibaba. The company will offer access to consumer goods and its Kirkland generic brand through the platform known as “T Mall.” Not only will access to the Chinese market provide a new and different type of consumer base, but could help boost revenue for Costco, which has seen depressed revenues for the past five quarters.
Costco’s entry shows more than the company’s desire for new markets and revenue though. Costco offers household, consumer goods for consumers that have enough house space and up-front paycheck to stock goods in order to save money. China’s expanding middle class, which includes greater amounts of household wealth and physical house space means a changing dynamic for retailers in China. Companies can now appeal to a class of consumers that is constantly growing and is roughly the size of the entire U.S. population. Costco will not be last large-scale consumer retailer to open Chinese operations in the coming year, but its move is indicative of an expanding middle class that is dominated by online retail.