COLOMBIA NEWS — Those who don’t live or have visited Central and South America, PriceSmart is a company most have probably never heard of. PricesSmart is the company that owns and operates membership shopping warehouse clubs in Latin America and the Caribbean, selling perishable foods and consumer products to individuals and businesses, as well as offers ancillary services.
The company faces little competition but has the ability to become the next Costco, a path that is already travelling with more 30 stores, three in Colombia, with a fourth opening soon.
Many are confused about PriceSmart and Costco, are they the same company? Although they share the same business model and PriceSmart’s roots are from Costco, they are not.
Price Club was founded in 1976 by Sol and Robert Price. In 1993, the Price Co. and Costco Wholesale Club merged, forming Price/Costco Inc (later renamed Costco Wholesale Corporation). In 1994, Price Enterprises Inc. spun off from Price/Costco, naming Robert Price as Chairman, President and CEO of Price Enterprises, PriceSmart becoming a wholly owned subsidiary of Price Enterprises.
A brief history
It’s first club store was opened in 1996 in Panama. In 1997, PriceSmart opens its second store in Panama and separates from Price Enterprises Inc. separates itself from PriceSmart by spinning off all non-real estate assets to PriceSmart. PriceSmart completes 
IPO and begins trading as PSMT on NASDAQ stock exchange.
It wasn’t until 1999 that PriceSmart made its big push into the Latin American market, opening seven stores that year: one each in Costa Rica, Guatemala, El Salvador, Honduras, Panama, two in the Dominican Republic. A year later, eight more stores are added: Dominican Republic, El Salvador, Honduras, two in Costa Rica, Panama, Guatemala and Trinidad & Tobago.
In 2001 and 2002 the company continued expanding, with stores in Guam, the Philipines and licenses in China, with the creation of PSMT Mexico, a joint venture with Grupo Gigante, with PriceSmart holding 50% ownership. PSMT Mexico opens 2 club stores in Mexico.
In 2003, Nicaragua gets its first PriceSmart. So does Jamaica. The company opens four more stores in, one each in the Dominican Republic, Guatemala, Guam and the Philipines.
In 2005 PSMT Mexico closes its 3 stores in Mexico, relocating the San Pedro Sula, Honduras store a year later. In 2007, PriceSmart opened 2 club stores (Guatemala and Trinidad) and selling its interest in PSMT Mexico to Grupo Gigante.
After a few years of organizational changes, in 2009, PriceSmart began expanding again, opening club stores again and Ranked #55 on Fortune Magazine’s list of 100 fastest growing companies.
In 2011, PriceSmart began its expansion into Colombia in particular, opening its first club store in Barranquilla, then two more in Cali and soon one Bogotá, Colombia’s capital city. The company says it has plans to open two more, one in Medellin and Pereira for next year.
In Colombia PriceSmart faces little competition. Though from Today’s visits to the north Cali store, it faces an uphill battle to convince customers to hand over a membership fee.
While competition in warehouse style shopping is low in Colombia, PriceSmart does face stiff competition from Exito, Jumbo (formerly Carrefour) and La 14, for example.
Those rotisserie chickens are a big deal. At COP 15.000 they are a moneymaker for PriceSmart. Why? Despite the very little margin, the chickens are big draw for customers, where they can get the convenience of a quick-lunch or dinner, while loading up on toilet paper. “Economical as hell,” is the opinion of many consumers.
Obsession with toilet paper. Toilet paper displays are larger than for other products, and customers have a bigger selection as well. The Q! couldn’t get figures on toilet paper, but since PriceSmart is modeled after Costco, we can deduce that toilet paper is the No. 1 product at the company.
In the U.S. Costco hires technicians to test toilet paper for thickness, strength and softness, CNBC reports. It sends merchandise managers to tour toilet paper mills, checking everything from paper quality to humidity levels to the water used in production. “How can you not fall in love with a product that is the number one thing that you sell?” former CEO Jim Sinegal told CNBC.
PriceSmart tricks you into buying more
Did you ever stop at PriceSmart for one item, only to come out with a full cart? There’s a reason for that. PriceSmart has some clever tricks up its sleeve to get people to buy more than they planned.
One trick is not putting any signs on the aisles. So if you’re hunting for printer paper, for example, and can’t remember where exactly it is, you may end up wandering through aisles full of potential purchases.
