Costco reveals plan for 20 new Australian stores in just five years

Costco is rapidly expanding its footprint across Australia, aggressively targeting new locations as cost-conscious consumers increasingly turn to bulk buying for value.

The US retail giant is set to open two new warehouses next year in Victoria and Western Australia, with a focused search underway for additional sites in North and South Sydney, Perth, and Adelaide.

Significantly, Costco is also planning its inaugural stores in Tasmania and Geelong, marking a strategic push into new markets.

This accelerated expansion is driven by strong financial performance, with retail expert Gary Mortimer noting Costco’s “half a billion dollars in profit after tax” last financial year, surpassing Aldi’s $499.2 million.

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This profitability underpins a “long game” strategy to capture a larger share of the Australian grocery market, he told Seven News.

“They are playing the long game,” he said.

“Costco are a very large format business. It takes a lot of space. A lot of land.

“(But) you would imagine that with population growth, particularly in southeast Queensland, that they would (also) be looking at sites on the Gold Coast and Sunshine Coast.”

Costco plans to open 20 new stores within the next five years, targeting locations in NSW, SA, VIC, WA, and Tasmania. Source: Seven News.

For many, the appeal of Costco is undeniable.

North Lakes resident Susan, a pensioner, also shared her experience with Seven News.

“Being on a pension, I come here every one to three months and I stock up. It’s cheaper really.”

Her sentiment is echoed by countless Australians who find the membership fee, ranging from $65 to $130 annually, quickly recouped, often through savings on fuel alone at Costco’s discounted service stations.

The move into Tasmania, in particular, comes as a surprise to many.

The island state has long yearned for the arrival of both Aldi and Costco, retail powerhouses known for their competitive pricing.

Retail expert Gary Mortimer told Seven News that Costco turned half a billion dollars in profit after tax last financial year. Source: Seven News.

Despite growing demand, both companies have remained conspicuously absent, leading locals to question why they have been overlooked.

Ray White Group head of research Vanessa Rader previously suggested that the absence was due to population and scale, indicating the market might not sustain a Costco store or the additional distribution requirements.

However, Costco’s current plans suggest a shift in strategy, potentially seeing the retailer overcome these perceived hurdles.

The Greens have even proposed a $30 million plan to entice more discount supermarkets to Tasmania, highlighting the political and economic desire for more affordable shopping options.

Costco’s expansion plans are concrete, with several major projects already underway.

In Melbourne’s southeast, a $74 million warehouse and mega fuel station is planned for Pakenham, set to open in 2027.

This investment is seen as a clear sign of Costco’s ambitious growth strategy and a “vote of confidence” in Victoria’s eastwards expansion.

Western Australia will see its third Costco open in Alkimos in 2027, anchoring the $33 million Alkimos Central’s Home X Trade Hub.

Shannon Hendry shopping with daughters Cleo, 3, and Charlie, 4, at Costco Warehouse in Bundamba. Picture: Tara Croser.

This development aims to support local jobs and economic growth in the rapidly expanding City of Wanneroo. While a proposed Costco in Officer, Melbourne, faced a temporary roadblock with the State Government rejecting a council request, the retailer’s commitment to expansion remains strong.

The recently opened Ardeer store in Melbourne, which replaced the Docklands location, features Australia’s largest Costco fuel station with 38 pumps, further cementing the retailer’s focus on providing value to its members.

Patrick Noone, Costco Warehouse Australia managing director, confirmed the retailer’s goal to expand business across multiple locations.

He identified several “hotspot” locations where the company is actively seeking suitable sites, including Hobart, North and South Sydney, North Perth, South Adelaide, and Geelong.

“Those are kind of the hotspots that we’re trawling through all the time looking for good sites,” Mr Noone told realcommercial.com.au.

Mr Noone emphasised the significant opportunity in Sydney, where only three Costcos currently serve a population of approximately six million.

The retail giant currently has just 15 stores in Australia, compared to Aldi’s 600+ stores.

When scouting for new development sites, Costco has specific criteria.

They typically seek locations with excellent access to major roads, situated in growth areas or regions with a population density of around 400,000 to 500,000 people.

Each warehouse requires approximately 14,000 square metres of building space and about 800 car parks.

The trade area for each site generally extends to a 45-minute drive time.

Each new store also creates significant employment, hiring between 250 and 300 staff upon opening, in addition to jobs generated during the construction and planning phases.

As Costco continues its aggressive push across Australia, its expansion is set to offer more Australians access to bulk buying and discounted goods, intensifying competition in the retail sector and providing a welcome relief for households navigating challenging economic times.