Where Costco is looking to open a warehouse next – the retail giant’s Aussie expansion plans revealed
Australians fell in love with Costco and its unique shopping model the moment its first outlet opened here back in 2009.
The American giant – the third-biggest retailer in the world – boasts a presence in 13 countries, a customer base of some 120 million-plus members, and profits exceeding US$222 billion (AU$331 billion) last year alone.
Since the launch of its first big-box store in Melbourne’s Docklands precinct, Costco has expanded to 14 warehouses across Australia.
And work is nearing completion on its 15th, which opens on the Gold Coast next month.
Costco opened its first store in Australia in 2009 and is now preparing to launch its 18th warehouse. Picture: Getty
“Costco presented a whole new way of shopping for Australian consumers,” the company’s Australian managing director, Patrick Noone, said of its rapid expansion.
“There really was nothing like Costco in Australia.
“By simply offering a no-frills warehouse experience with the highest quality products at the best possible prices, we have quickly and firmly been able to establish ourselves in the market.
“We add a layer of competition to the market and extend the choice of the consumer.”
Those Aussies hoping a warehouse will open near them soon might not need to wait long.
Rising cost of living paves the way for expansion
It’s no coincidence that the cost-of-living crisis has seen consumer interest in Costco’s bulk-buying offering grow.
Indeed, as buying in bulk gains appeal among shoppers struggling with the rising cost of living, the membership-only retailer’s continued expansion into Australia is expected to follow suit.
“The cost of living increased by 7.8% in 2022, which was the highest rate in more than 30 years,” PropTrack economist Anne Flaherty said.
“Unfortunately, it’s the items households need that have seen among the biggest price rises over this time, including housing, grocery items, and transport.
“The cost of food and non-alcoholic beverages increased by 9.2% over 2022 — the second-highest growth rate for any category in the inflation basket.
“This rapid rise in food costs could drive more Aussies to rethink where they purchase groceries, which would benefit low-cost retailers such as Costco.”
Aussies have embraced the unique shopping model – especially the cost-saving benefits. Picture: Getty
Costco is famed for selling products in large quantities, which helps keep prices low by using less packaging and by shipping more efficiently.
“We are committed to delivering high-quality products at sharp price points, which we hope makes a difference for every member each time they shop” Mr Noone said.
“Certainly, our strong membership sign-up and foot traffic tells us that our merchandise and pricing resonate with our Australian members.”
Costco’s location-scouting formula
Costco’s latest store will open its doors at Coomera on the Gold Coast in May.
Set on a site adjacent to a Westfield shopping centre, the 14,000sqm warehouse will include a food court, plus specialty departments including a bakery and deli, a fuel station, and parking for about 800 cars.
As with all of its sites, the biggest factor when it comes to scouting for potential new locations is population density, Ms Flaherty said.
“For any supermarket chain considering expanding, the choice of location will be driven by cost and availability of a site, the demographic profile of an area, as well as forecast population growth.”
Costco is eyeing a number of potential sites across Australia. Picture: Getty
Costco typically looks in growth corridors or in areas with a high population density, with good access to major roads.
“We like a trade area of 300,000 to 500,000 people with a 30 to 45-minute access,” Mr Noone said.
“Our warehouses are quite sizeable in order to be able to house our comprehensive range of products and services. A typical warehouse is about 14,000sqm.
“We also look for lots that can house our fuel stations and sizeable car parks as well. For these reasons, it takes a bit of time for Costco to secure each site.”
Costco’s future expansion plans in Australia
Construction costs may have increased exponentially but this has not dampened Costco’s expansion plans.
The membership-only retailer is set to open more outlets across Australia over the next five years, with eyes set on Sydney, Wollongong, Hobart, Perth’s northern suburbs, Adelaide’s south, and Geelong.
“We are always on the lookout for new warehouse locations,” Mr Noone said.
“While there are a number of locations on our wish list, we continually review all areas of Australia for suitable sites, and there are a number on our radar throughout the country at the moment.
“Our focus is always to find the right location to meet our specifications so that we can ensure every warehouse is as comprehensively stocked, offering a wide range of merchandise of the best quality at the best possible price.”
