Does Iceland have Costco? Can I use my membership card?

costco iceland kauptún

Many travellers to Iceland may be surprised to learn that Iceland does, indeed, have a warehouse from the bulk retailer Costco.

Opened in 2017 and located in a shopping centre in Garðabær, a 10- to 15-minute drive from Reykjavík, the membership-based retailer carries – for the most part – the same selection as its American warehouses, with a little local flavour. In addition to tubs of hummus, sacks of coffee, and jars of speciality pickles, Costco in Iceland also offers a selection of skyr, Icelandic hotdogs, local sodas, harðfiskur, and more.

And yes, travellers can use their membership cards from abroad at Costco in Iceland, and vice-versa: Icelanders with Costco memberships can also use their cards when travelling.

So, while travellers may have no need for the quantity of goods purchased at Costco, it may be a good option for a last-minute pair of rain pants, a sweater, or stocking up on snacks for a trip around the Ring Road.

It’s also worth noting that membership cards from abroad also work at the gas pump.

Central Bank Working on Domestic Payment System

currency iceland

The Central Bank of Iceland is working to develop a domestic payment system for Iceland.

As more and more transactions become electronic, interest has grown in an independent payment system for Icelandic commerce. Cyberattacks or other disruptions to service in the several foreign payment systems on which so many Icelandic businesses currently rely could cause serious disruption to economic life in Iceland. By working towards a secure and independent solution, the Central Bank of Iceland hopes to make the Icelandic economy more resilient to risk in the future.

The Central Bank of Iceland has begun taking initial steps at the request of Iceland’s National Security Council, in line with steps taken recently by other European nations. The Central Bank plans to publish a report on the matter in the coming months, in which possible ways forward will be considered.

The Central Bank’s recent report on financial cybersecurity indicated the real possibility of long-term disruption to the payment system following a cyberattack on a foreign payment system. According to the Central Bank, other means of payment need to be provided to ensure that necessities can still be purchased in the event of such an attack. In addition to a domestic payment system, the Central Bank has also called for the creation of preparedness plans in the event of such a disruption.

The need for a secure, domestic payment system is especially pressing in Iceland, where fewer and fewer transactions take place with cash. In the past two years, the use of cash in purchases has declined by some 25%, although it is still used by some 40% of the population, especially for gifts and personal payments. In the event of an electronic payment disruption, the Central Bank has stated, there are still enough cash reserves to address such an event.




New Designer Shopping and Dining Centre Hafnartorg Gallery to Open Downtown

Downtown is about to get another designer facelift. Vísir reports that 11 new shops and restaurants, all of which will be housed in the newly anointed Hafnartorg Gallery, are expected to open in the next five weeks. The gallery is located between Arnarhóll and the Kolapórtið flea market and its opening signals the long-awaited conclusion to more than decade’s worth of development between the Harpa Concert Hall and Lækjartorg.

See Also: Sizeable Hotel Rises Beside Harpa

Downtown Reykjavík has been under near-constant construction since ground was first broken on Harpa in 2007. (After the Icelandic economy collapsed in 2008, construction halted on Harpa—and in Iceland in general—until the government decided to step in and fund the building’s completion, making it the only active construction project in Iceland for several years following the crash.) In recent years, this harbourside district has added high-end apartment buildings, a luxury hotel, a pedestrian mall, and a variety of shops. And the end is finally in sight: after Hafnartorg Gallery opens, Landsbankinn’s new building is the area’s last major construction project. It’s set to be completed by the end of the year. 

See Also: Iceland University of the Arts to Receive Permanent Home

Finnur Bogi Hannesson, who works for the real estate firm Reginn and acts as Hafnartorg’s development manager, says the all-indoor gallery will be easily accessible in inclement weather from the 1,100-car underground garage, and will also have entrances on several surrounding streets. He says that most of the restaurants are on pace to open slightly ahead of the stores, but the goal is for everything to open by early July.

The gallery will house the largest 66° North in Iceland, as well as the country’s first North Face location, the lifestyle store Casa, an 80-seat fine dining restaurant focused on contemporary Franco-Italian cooking, and seven smaller restaurants catering to a range of tastes. In the end, Hafartorg will be home to a total of 30 shops and restaurants.

COVID-19 Restrictions in Reykjavík: Less Traffic and More Online Shopping

There was 21% less traffic in Reykjavík last week compared to the same week in 2019, according to figures from the Road and Coastal Administration. Tightened COVID-19 restrictions are likely the reason. The statistics reflect a similar drop that occurred in March 2020, when restrictions during the first local wave of the pandemic were tightest. Online grocery retailers have seen a surge in customers in the past two weeks, also comparable to the increase seen last March.

COVID-19 Restrictions were tightened across Iceland on Monday last week following a rise in domestic case numbers. Further restrictions were imposed on the Reykjavík capital area two days later, where the vast majority of Iceland’s active cases are concentrated. The measures are similar to those imposed in March, including a 20-person cap on gatherings and the closure of gyms, bars, and swimming pools. The decrease in traffic last March also measured 21% as compared to March of 2019. A week-to-week comparison of traffic between 2020 and 2019 shows a decrease in most weeks throughout this year.

RÚV also reports an increase in online grocery shopping, reflecting similar trends in March of this year. “We are experiencing a huge rise in demand [in online shopping and delivery] in light of this new epidemic,” Ásta Sigríður Fjeldsted, CEO of grocery chain Krónan, stated. “It has just been increasing in the past few months and there’s been a real explosion in the last two weeks.” Online grocery retailer Heimkaup’s CEO says the company has experienced a 400% increase in demand and has had to hire new staff.

“We don’t want Laugavegur to become a restaurant street”

Reykjavík walking district laugavegur

City officials and restaurateurs are at odds about whether the ongoing expansion of the downtown shopping and dining district is actually good for businesses long-term, Vísir reports. On one hand, officials say that more shops and restaurants have opened in the last 18 months than closed. On the other, local restaurateurs point to the recent closure of several long-running downtown restaurants of note, saying that the influx of restaurants is overwhelming the market. But city officials say they will not be setting a cap on the number of restaurants that open in the area.

Among the Reykjavík restaurants that have closed recently are Dill—previously the only restaurant in Iceland with a Michelin star—as well as its sister restaurant (the aptly named Systir) and Óstabúðin, a cheese and charcuterie shop that also operated a popular café. The latter shuttered only this week, and in an interview about the closure, owner Jóhann Jónsson remarked that the business environment in downtown Reykjavík has become particularly difficult because so many restaurants are entering the market. Restaurant owners have to contend with competition not just from other sit-down venues, he said, but also food trucks.

Jóhann also noted that there are 35,000 seats for diners in downtown Reykjavík alone. For perspective, per Statistics Iceland, the population of Iceland was 360,390 at the end of the second quarter of 2019. So currently, just under 10% of the population could sit down for dinner in downtown Reykjavík at the same time.


“This is about protecting shopping downtown”

Many restaurant owners have spoken out in recent months to say that the city is issuing too many permits for restaurants in downtown Reykjavík. According to Sigurborg Ósk Haraldsdóttir, the chair of the city’s Planning and Transportation Board, there is only a quota in place to control the number of shops that are allowed to be on specific downtown streets.

“In reality, this is about protecting shopping downtown because we think that’s important,” she said. “Restaurants are allowed to come in when the quota of shops has been filled on those streets. That’s where the oversight comes in. We don’t want Laugavegur to become a restaurant street—that would be monotonous and it would lose its draw. That’s why we want to keep the stores there.”

As the number of tourists have increased on Laugavegur, more opportunities have been made for stores to open on the main street and, as a result, more restaurants were given permission to open as well. However, this increase in restaurants has mostly occurred on side streets that cross Laugavegur, or in nearby neighborhoods such as in the area around Hlemmur, the former bus station turned food hall, and Grandi, a former warehouse district near the waterfront on the west side of town.

Sigurborg Ósk says that downtown expansion is happening quickly, and that demand is driving the number of restaurants that want, and are being given, permits to open. “Downtown has really gotten a lot bigger in recent years and in the future, it will reach all the way up to Suðurlandsbraut.” (Laugavegur becomes Suðurlandsbraut east of Kringlumýrabraut and runs along Laugardalur on the east side of Reykjavík.)

“There is a certain market prevailing here and if there is demand for more restaurants, then more restaurants will open,” Sigurborg Ósk continued. “I think it would be very unusual for us, as the government, to directly intervene in that.”


“Downtown is booming like never before”

Sigurborg Ósk says that downtown is the most sought-out area in Reykjavík. It is responding to an international trend, she says, wherein people opt not to go to large shopping centers, but rather focus on downtown districts where they can experience the everyday life of a place and local food culture.

“It’s safe to say that there are more places opening than closing and downtown is booming like never before.”

Property Appraisal and Taxes Affect Downtown Reykjavík Businesses

Empty Storefront Skólavörðustígur Laugavegur

Twelve storefronts stand empty at the heart of downtown Reykjavík, at the intersection of Laugavegur and Skólavörðustígur streets. Rising rents are believed to be the main factor that has pushed local businesses out of downtown, some of which served customers in the centre for decades. Benóný Ægisson, chairperson of the Association of Downtown Reykjavík Residents, told RÚV there are few services left downtown for locals.

Property tax rose by 60%

Hardware store Brynja, at Laugavegur 29, has stood at its location for a century. Its CEO Brynjólfur Björnsson says rising property tax is pushing up rent in the area. “When [property taxes] are so high then of course the rent increases or the shop owners can’t manage this high rent. I know that here the property tax has risen 60% over the past three years but nothing has changed here, the building is exactly the same, and we haven’t changed anything. Why has it increased by 60%? We’re not getting any special services.”

A cycle that raises prices 

Sigurborg Ósk Haraldsdóttir, chairperson of the city’s Planning and Transport Committee, says the National Registry is partly responsible for rising housing costs in downtown Reykjavík. The registry adopted a new method of calculating real estate value in 2014. In 2018, rateable value rose by 17.2% in the Capital Area overall.

The National Registry’s new appraisal method could be causing a cycle of rising prices, where higher rents lead to higher real estate appraisal value and vice versa. “This is an algorithm that is somewhat opaque. I second that. This, in turn, has an impact on the rental price, which then has an impact on the real estate value, so this is maybe not a good development,” Sigurborg observed.

Fewer services for locals

Herrahúsið, Kúnígúnd, and Frank Michelsen’s watch workshop are just a few examples of long-standing shops that recently relocated away from downtown. These three businesses all graced Laugavegur street for between 37 and 76 years. “This has been happening for about the last two years,” says Benóný. “I’m not an expert, but I think it’s because rent has just become so expensive,” he stated.

Shops and businesses have, however, been springing up on side streets in the area, such as Hverfisgata. Benóný hopes new construction will bring down rent in the neighbourhood and prompt the return of essential services. “There is for example no fish shop here, there’s no butcher, there’s just one shoe repair store, the post office is gone, there’s just one bank left. The services which are essential to us residents have been disappearing.”

Shopping habits are changing

Sigurborg says the City of Reykjavík plans to address the situation by lowering its tax mark-up on commercial real estate from the current 1.65% to 1.6% by 2022. She says, however, that she is not worried the empty storefronts downtown are forebearers of the death of Laugavegur. “There are empty rooms in Kringlan [shopping centre] as well,” Sigurbjörg says. “Shopping and shopping habits are changing. We are investing more in experiences, we are investing more in quality of life and that’s what the city centre offers.”