Costco poised to enter Regina liquor market
'Big player' would potentially make others reduce prices to stay competitive, says CEO
Costco is looking to make an entry into Regina's liquor store market and that could help push down pricing all-around, says the president and CEO of the Saskatchewan Hotel and Hospitality Association.
"For Costco to come into a market like that, they are definitely a big player and that will create pressure on the existing owners that are there, for sure," said Jim Bence.
"Their ability to be able to offer pricing based on volume may have a real significant impact on the pricing that others have to offer just to remain competitive.
On Wednesday, the province established new rules for liquor permits, with population size determining how many liquor stores are in towns or cities.
Regina and Saskatoon, as cities with less than 275,000 people, will be capped at 40 stores, which means both cities are not eligible for more permits.
Costco's looking to buy an existing retail store permit, and is waiting on Saskatchewan Liquor and Gaming Authority (SLGA) approval for the sale of the permit, according to Bence.
Anyone who has an issue with the granting of the permit has two weeks, from the time it was advertised on April 27, to file a written objection with SLGA.
The retailer wants to sell alcohol at its current location at 2110 Anaquod Rd. on the east edge of the city.
"Once that's completed, and the time limit has passed, then they'll own that permit, and they'll be able to set up their own store. Whether that's an existing store or they build a . .. massive building to be able to bring in the product they need."
The province says limiting stores is a harm reduction measure and is done in all other provinces other than Alberta.
If an entrepreneur is interested in getting a liquor store permit, an auction will be conducted online with real-time bidding.
The rules were changed in 2015, when the province announced it was privatizing 40 SLGA stores across the province.
Gene Makowsky, the minister responsible for SLGA, declined to say whether the auction process and guidelines for limited permits would be used as a framework to move toward privatization.
However, he said the province's current model has led to increased competitiveness in the liquor market, and the private retail model seems to be working for cannabis sales as well.
"It's something we've certainly wanted to see, competitive pricing choice and convenience," he said.
"We will see how that unfolds into the future."
with files from Alex Soloducha