Costco opens in Australia

The US discount warehouse chain opened its first Australian shop today in Melbourne.
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  • Updated:17 Jul 2009

01.Costco opens in Australia

Thousands of shoppers were up early to throng the store, about three times the size of a large supermarket, to check out the hype of low prices and unusual product offerings such as grandfather clocks, diamond rings and king crab legs from Russia.

CHOICE was there to see if the eighth-largest retailer in the world, which has more than 550 stores, can grow its business in Australia and bring more competition to the crucial grocery sector via its food and packaged goods lines.

Like the country it comes from, everything at Costco is big – the trollies, the combined lofty warehouse and retail area, and the packages, including hummus in one-kilo packs and yoghurt in two-kilo containers.

It all adds up to value, albeit at a price. The first hurdle is the $60 annual membership fee, but if you have a growing family or are even staging a big party you could pay that off quite quickly. The second is the storage you’ll need at home to make the most of the bulk items, i.e. a big pantry and basement.

Inevitably, you may end up buying more than you intended. To get to the food department you must pass the tempting offers of TVs, computers and items such as the latest GPS. At first glance they don’t seem significantly cheaper than at the large electronic chains, the range is more limited and you’re not allowed to haggle the prices down any further.

But as Patrick Noone, the retailer’s local boss, told CHOICE: “People come here for bananas and leave with a flat screen TV. You can buy steak and Grange Hermitage under one roof.” Stock lines change, meaning each visit can be something of a treasure hunt.

There’s no way Costco, which is due to open a Sydney store in the next year, will compete directly or immediately with the convenience of the neighbourhood supermarket. But it should attract a dedicated following, and could grow significantly depending on how Australians take to paying up-front for access to lower prices.

If today’s experience is anything to go by, consumers will load up on more of the lower-valued items, including massive packs of toilet paper, trays of muffins and large packs of razors. It’s a slice of the US in Australia, complete with a no-frills café selling hot dogs and “soda” for $2.49 plus refills.


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