Warehouse club offers bargains but no 'frills': David Nicholson-Lord looks at a shopping concept posing a threat to supermarkets

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FORGET about paw-paws, tayberries and Italian ciabatta bread. The new look in British shopping is an aircraft hangar, in a reclaimed Essex chalk pit, stacked to the roof with salad cream and baked beans.

Europe's first warehousing club, run by the American company Costco, opened its doors at the Lakeside shopping centre, Thurrock, yesterday, offering half-price blueberry muffins and fillet steak, which it claimed were 30 per cent cheaper than Tesco's.

For pounds 20 membership a year each, plus VAT, the public can turn up and stroll along concrete aisles lined with crates of tins and bottles, compact disc players, televisions and mountain bikes, all at savings of 25 per cent or more on supermarket prices. Yesterday thousands did so - some to stare, many more to buy.

The Thurrock warehouse, a rectangular brick building guaranteed to win no architectural prizes, was opened in the teeth of opposition from Sainsbury, Tesco and Safeway, which objected in the High Court to the decision by Thurrock planners to treat Costco as a wholesaler instead of a retailer. The superstores lost that case, and look set to lose a lot more besides.

Costco's profit margins in the US are a third of those of the British superstores. It achieves its low prices by buying in bulk, operating a 'no-frills' sales policy and stocking fewer product lines - typically around 3,500 against 15,000 in a superstore. Predictions are rife that as Costco opens more warehouses, the superstores will be badly hit.

In the bare, pallet-lined goods receiving area where Costco was treating its new members to free coffee and pastries yesterday, many satisfied customers agreed with the retailing pundits.

Christine Jupp, from Rainham, Essex, said that she had grown suspicious about Tesco's profits when the store began selling own- brand orange juice at 39p a carton instead of the usual 80p for a brand name.

'I think the big supermarkets have had it,' she added. 'They have had a monopoly for too long. Somebody is finally shaking them up - just like they did to the small shopkeepers.'

Typical prices on offer at Costco included fillet and rump steak at pounds 5.29 and pounds 2.43 per pound - Costco says these could cost pounds 7.50 and pounds 3.80 to pounds 4.40 respectively in a supermarket - and muffins in packs of a dozen at 33p each, compared with 70p to 80p in a Lakeside pastry shop. A Costco spokesman estimated savings on a pounds 75 grocery bill at pounds 15 to pounds 20.

The superstores still have their backers, however. At the exit, two Sainsbury customers, Mike and Joy Chantry, who had driven 10 miles from Hartley in Kent, said they would still visit the supermarket for their regular shopping but would come to Costco for Christmas and special occasions.

The couple spent pounds 320 at the warehouse on games, presents and household goods. Mrs Chantry said she 'hadn't a clue' how much she had saved. Her husband put the figure at pounds 50 to pounds 60, adding: 'We came here to be nosey more than anything else. If we hadn't come, we wouldn't have bought half this stuff.'

(Photograph omitted)