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Will Costco work in Australia?

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Tyler Durden

Tyler Durden

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US discount retailer Costco's beachhead in Australia, its warehouse-style store in Melbourne's Docklands, is generating more sales than the average North American Costco. The Australian arm has been handed a further $40 million by its parent to fund aggressive growth. And the new kid on Australia's supermarket block hasn't been put off by the fresh price war being fought between Coles and Woolworths, claiming shoppers viewed differently its discount and bulk model, compared with the cheap offers of main rivals.

Costco Wholesale Australia has reported total revenue of $165.9 million for the 2009-10 financial year, eclipsing the average turnover of one of its American stablemates which typically produce annual sales of $145 million. The results for the year to August 30 represented the first full-year of operations for Costco in Australia.

Costco's Australian managing director, Patrick Noone, told Business Day the supermarket, which relies on a membership model, had already signed more than 100,000 members in Australia and was performing strongly. ''It's probably a little bit higher than the average North American [store] I would expect,'' Mr Noone said.
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However, the business still recorded a loss for the year, with its net loss falling to $11.43 million from $14.13 million as its US parent invested more capital in securing a new site for its second store, planned for Parramatta Road in Sydney's west. It recently secured a site in the Majura Park Retail Precinct at Canberra Airport for its third warehouse.
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http://www.smh.com.au/business/costco-wheels-out-aggressive-expansion-plans-20110220-1b105.html

Seems like they want to compete with Coles and Woolies but in a different style, relying more on bulk sales. The poll currently shows 71% of people are willing to switch to Costco if it is cheaper, but just wondering if this style of shopping could actually work, or perhaps take off, in Australia?

Also, I tried looking for the asx code for this, but can't find it. Anyone know how to find it?
 
Absolutely 100%.

If they were listed on the market, I would definitely buy shares for the grandkids.

Superb model and above the duopoly phucknose about how much the rest of the world pays/works model.

Fantastic products and much more accessible to so many more people.

Look out WOW and WES holders, have a fight over Bunnings. Because in the the end, these guys will take your frequent flying points without marketing for them. 5 years from now, you might dread not dealing in bulk when it comes to groceries. Finally, this country is coming out of the Cold War and all the pollies feathering their own nests from either side eg. CIA/MI5 vs. KGB/Polit Buro

Woolies and Coles need to adapt or die. Or the American business model of Costco will dismantle and/or smash both of them.

DYOR
 
Tyler Durden said:
http://www.smh.com.au/business/costco-wheels-out-aggressive-expansion-plans-20110220-1b105.html

Seems like they want to compete with Coles and Woolies but in a different style, relying more on bulk sales. The poll currently shows 71% of people are willing to switch to Costco if it is cheaper, but just wondering if this style of shopping could actually work, or perhaps take off, in Australia?


Also, I tried looking for the asx code for this, but can't find it. Anyone know how to find it?
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Costco is Charlie Munger stock :) it has been given the biggest support from the top to push into Asia

7 out of 10 of Costco most profitable stores located in Asia Pacific..

Next store location is Canberra, population 330K or so and under the 400K-500K population per store for Costco but I guess they found Canberra has high disposal income and that maybe can generate some extra sale to cover the short fall in people number :)

http://www.costco.com.au/Canberra/release.shtml

you bet it works and work better than in their home land
 
Coles and Woolies were doing really well at Warringah Mall, prices high and no competition. Then along came ALDI, now they are all dropping their prices to meet ALDI's. You can go into ALDI anytime of the day and it is still chock a block after being there many years.

Will Costco work? You betcha... Aussies love a bargain and for sure they will join up. It's a bit like our RSL clubs, the beer and food is cheaper but it costs you to be member. On the other hand pubs are free but everything you buy costs you heaps more. I just hope they build one up here on the Central Coast, go Costco.:xyxthumbs
 
Bill M said:
Coles and Woolies were doing really well at Warringah Mall, prices high and no competition. Then along came ALDI, now they are all dropping their prices to meet ALDI's. You can go into ALDI anytime of the day and it is still chock a block after being there many years.
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I hate Aldi. They have no express checkout and if you have only a few items you have to stand for ages in the one queue. No service. I would much rather pay a bit more and shop in a pleasant environment which offers some service.
 
I'm happy for any competition which should see more small private businesses than corporations. Only a dumb society would permit an oligarchical situation.
 
GumbyLearner said:
And only a dumb consumer would pay top dollar to a few players for the privilege.

GET USED TO IT!
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More competition is required. Bring on the thousands of small businesses providing farmers with various places to sell to and consumers with cheaper prices and small people with employment and wealth, not just wages.
 
I don't like the idea of paid membership and hope Duopolists can give them fight for their money.

Having said that I have some doubts as they seem to claim 3% profit only.
If true, there is hardly any room to do better.

But as usual workforce will be looked at, quality of products can be dropped a bit or two, or nothing will change and without Bogans who will shop in warehouses, Duopolists might become pleasurable place to shop for elite.
 
It's Snake Pliskin said:
More competition is required. Bring on the thousands of small businesses providing farmers with various places to sell to and consumers with cheaper prices and small people with employment and wealth, not just wages.
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I am all for competition as well,

But producers are already screaming that Woolworths and coles put to much pressure on them, Just wait till they feel the pain from the likes of costco and walmart putting pressure for them to sell at 5% above cost of production with 240 day payment terms, and prefering to sell cheaper imported goods.
 
Tysonboss1 said:
I am all for competition as well,

But producers are already screaming that Woolworths and coles put to much pressure on them, Just wait till they feel the pain from the likes of costco and walmart putting pressure for them to sell at 5% above cost of production with 240 day payment terms, and prefering to sell cheaper imported goods.
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Primary producers biggest problem is the fact that they dont stick together, hence why they constantly moan about the prices they receive for their fruit and veg. if they formed an active union they could get much better prices, but they never do (i know this from experience)
 
Happy said:
I don't like the idea of paid membership and hope Duopolists can give them fight for their money.

Having said that I have some doubts as they seem to claim 3% profit only.
If true, there is hardly any room to do better.
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The 3% profit is after all cost including overheads.

It's easy for the smart person to compete, create less overheads, make everything more efficient so you hire less people etc

Wall mart is a great example on efficiency. To speed up the wait in the line, the bags are in a carousel so you buy your products, the checkout chick puts them in the bag. The carousel has 8 bags on it so all she does it turn it and ready for the next customer and you take out the bag yourself.
It's a great system, don't know why they don't have something like that here.
 
I love ALDI. Cheap and good quality. A few years ago ALDI was pretty crap, but they have certainly come a long way.
 
DB008 said:
I love ALDI. Cheap and good quality. ...
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For some reason I just see ALDI store as little bit cheaper and not on all items.

Mushrooms, pasta, often bananas too can be bought cheaper elsewhere.
Sugar, flour, milk butter, cheese not much difference with little choice.

But people flock to ALDI as it was giving goods away, so why bother to give lower prices?
 
Julia said:
I hate Aldi. They have no express checkout and if you have only a few items you have to stand for ages in the one queue. No service. I would much rather pay a bit more and shop in a pleasant environment which offers some service.
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Aldi doesnt cater for the convenience shoppers that is their business model
(you pack your own goods, you pay for not return the trolley and credit cards)

They cater for the population who want to save a few bucks on their Grocery bill
and it works wonder in every single market they operate in, that pretty close

to half of the planet that has shopping mall :)
 
Went to Costco in Ipswich yesterday.

They had bags of avocados that worked out to $2.70 each. Bulk buy and I think it was a 1kg minimum per bag, roughly 5 or 7 avocados per bag.

Woolworths had avocados for $2.50, individually. Much better value.

If you don't know your pricing, Costco can be worse off.

Fuel was approx 10 cents/L cheaper (98)

On the plus side, the pizza is $3 per slice and hotdog with free refill is also great value but there is no option for soda water, you have to have a Pepsi beverage.
 
Soda Water in Costco compared to Woolworths. Both stores are using their own home brand.

Pay for wholesale membership and it's still more expensive than regular Woolies soda water....

Fuel was similar price, maybe 1c/L cheaper

Costco Soda Water
Costco Soda Water 01.jpg

Costco Soda Water $0.93/L

Costco Soda Water 02.jpg



Woolies Soda Water

Woolies Soda Water 01.jpg


Woolies Soda Water $0.68/L

Woolies Soda Water 02.jpg
 
Costco sometimes just doesn't cut it

Costco Salmon
$28.99 kg
​
Costco 01.jpg


Costco 02.jpg




Woolies Salmon
$26 kg
​
Woolies 01.jpg


Woolies 02.jpg


And thats just regular shopping at Woolies with no membership. Even if not on special, Woolies salmon is usually sitting at $28/kg, same price as Costco.
 
DB008 said:
Costco sometimes just doesn't cut it

Costco Salmon
$28.99 kg
​
View attachment 105241

View attachment 105242



Woolies Salmon
$26 kg
​
View attachment 105243

View attachment 105244

And thats just regular shopping at Woolies with no membership. Even if not on special, Woolies salmon is usually sitting at $28/kg, same price as Costco.
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And ALDI will be even cheaper. anecdotal but i did not renew my COSCO card this year..except for good quality branded clothes not really worth
 

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