Membership shopping only

[Happy]

Costco seems to have this member purchases only and probably there is no other way with this shop.

I was just wandering, how and will other shops try to sneak up the customer paid loyalty on their customers?

 

[stocksontheblock]

This sort of thing already exists in Australia, yet very few of them have a paid membership, yet they do have a membership which entitles members to better deals and direct deals only with that shop.

Yet, my is that this will not last in this country and I give them 12 to 18 months before they close shop. The model works well in the US because of the buying power, attitudes of people, and the excessive bigger than life way Americans lead their lives.

 

[donteventryit]

This sort of thing already exists in Australia, yet very few of them have a paid membership, yet they do have a membership which entitles members to better deals and direct deals only with that shop.

Yet, my is that this will not last in this country and I give them 12 to 18 months before they close shop. The model works well in the US because of the buying power, attitudes of people, and the excessive bigger than life way Americans lead their lives.

If the bigger store model wouldn't work, why did Woolworths try to buy The Warehouse?

Why does the Bunnings model work? Or OfficeWorks?

We (Australia) too have led an excessive way of life over the last few years, driven by a simultaneous property/share boom.

 

[stocksontheblock]

If the bigger store model wouldn't work, why did Woolworths try to buy The Warehouse?

Why does the Bunnings model work? Or OfficeWorks?

We (Australia) too have led an excessive way of life over the last few years, driven by a simultaneous property/share boom.

I never said the big store idea doesn’t work; it’s the bulk product model I question.

As far as I know Officeworks hasn’t worked - well it has lost its appeal since its heyday. As for Bunnings, they don’t offer, generally, a bulk deal. They are just simply cheap.

Costco - as in the US, which I understand is the same model to be adopted here, is that instead of a pack of 12 loo rolls for $7, you can get 100 for $15. A broad example, as it is how it works in the US. Australia has never, to-date got into the massive bulk buying idea. Maybe because it hasn’t been here, yet some have tried a smaller yet similar idea and I don’t recall it taking off.

I would further suggest that we don’t have the cultural mentality to buy in such large amounts, hence the model wont work here.

Australia has also for a long time been a brand supporter. We buy the brands we know and 'trust'. Don’t know why, yet price has been found not to be a massive contributor when buying products (general house hold groceries) - unless of course you have no money, and need to be very very wise with every cent.

Most people I have spoken to about this say they wouldn’t use it (maybe not the biggest sample in the world), yet they would have a look around, so maybe the theory of Costco is to sell a million memberships and bank on creating revenue this way, and don’t worry about those who don’t buy?

Bigger stores are not what I am questioning; it’s the concept of bulk purchase I question.

 

[ajjack]

So you think 12 to 18 months before they are out?
Have you seen how big and popular Costco is in mainland US?
They are even in Hawaii, and always packed with buyers.

No, they will make it but it will take them a few years.

 

[stocksontheblock]

So you think 12 to 18 months before they are out?
Have you seen how big and popular Costco is in mainland US?
They are even in Hawaii, and always packed with buyers.

No, they will make it but it will take them a few years.

Yes I have seen them in the US, and shopped in them. With some 380m people, I think at last count, and massive concentrations of people to support it then it works. As well as the cultural values on big/massive/bulk purchases and shopping makes it fit well for them.

However, with 3 - sorry to the rest, yet with 3 capital cities with any real size to potentially support it I don’t think it can work. For it to work they would have to put one on either side of Melbourne, as people tend not to travel great distances for shopping unless for a specific reason, and that would end up being counter-productive as economies of scale would suggest only one is supportable (if a word) and thus a second might capture more market share from that side of town, however the cost might not outweigh the cost of setting up.

Brisbane and Sydney are even more spread out in terms of capital city population and this could never be sustained. With equal distribution of people on north, south and western suburbs of Brisbane, where do you put it? How many do you have? How do you overcome the apathy of shoppers who want to get in and get out?

I just can’t see how it works. Unless the model is different to that of the US, which as I have said I understand from what I have heard it will be the same.

Hey, yet this is not to say something like this is not need to bring Coles and Wollies back to earth, as Aldi doesnt seem to have made a dent - let me know if I am wrong though.

 

[ajjack]

The point I make is that 12 to 18 months is insufficient time.

A big player like Costco is not entering this market cold.
They would have done some homework.

Be a bit more generous ... give them about 3 or 4 years, then check back.


Tra

 

[son of baglimit]

might i suggest you all pay them a visit - when possible naturally.

i live in inner melbourne - 10 mins drive during the day to get there.

i have a safeway 2 mins drive away - and have used them constantly - til now.

the mrs went yesterday, and did a normal grocery shop - products she would normally buy - food, cleaners, bathroom, kitchen, you name it - a typical shop. ok not everything she wanted was there - yet - but she was able to buy name brands, the things she knows the quality of, at around 10-30% off normal special price - not normal price - THE SALE PRICE.
yes you had to buy 40 loo rolls (so what) 20kg bag of dog food (we have 2 large dogs) 1kg of strawberries (all perfect size, shape & quality), 3 pack of toothpaste, 30 pack of eggs etc etc etc - the things we buy multiple of when they are on special anyway.

if you a single person or a couple, and dont have room to store 2 weeks or more worth of everyday items, then it wont suit you. if you have 4 growing kids and time to shop there first, THEN go to safeway for what costco didnt have, then this is ideal.

in regards to their financials, they have stated many times they rely mainly on membership income anyway, and the margin they make on food would only cover the everyday costs.

this is clearly their trial run, as will the sydney store be - and when they slowly win folk over, and word keeps spreading, and they open stores out in the burbs, then watch it take off.

they wont take over supermarket shopping, but theyll certainly get their share of the weekly spend.

 

[Happy]

With example of ALDI it wasn't the revolution they promised, just few cents saved here and few there.

Very little variety and with other 2 keeping close look at the price difference especially in generics, it almost fizzled out for me.

There might be something in it, but who cannot afford higher prices could have problem with transport and if not lucky enough to live close by might not be able to benefit.

As others say: time will tell.

 

[gfresh]

Starbucks was "huge" and what did Australia do to them :321: we had better equivelents, so Australians in the long run simply weren't that interested. Just because it has worked over there does not mean it will work over here.

I don't have a big family, so maybe I'm not the proper demographic, but I never see the point of bulking up on massive items simply to save a couple of dollars. Neither do I like the idea of skungy stores with items stacked to the ceiling with a messy layout, which turns me off both Bunnings, and Aldi. In many ways I think Australians (call us precious or not) also appreciate clean stores, with modern fittings and neatly laid out.. I mean look at how much Coles is spending on "revitalising" all their stores, if this wasn't important to the consumer as they see it, they wouldn't bother. This is where I think there is a bit of a big difference between what we will accept, compared to say the US.

I am not sure what the "average" family size is in the US, but I have a feeling it may be slightly larger than here, where it is not much more than 2, and shrinking. This could also play a part in larger bulk stores, where supporting a large family on a small income is difficult. Again following this, there are striking differences between the demographics of the US and Australia. The gap between "rich" and "poor" over there seems much more pronounced than here in Australia. We may be heading that way also, but for the moment, the average Australian family (in general terms!) is so much better off than the US family, and the need for families to save every single dollar, through items such as discount stores, is less.

 

[trading_rookie]

I was under the impression the reason Aldi is a huge hit in Europe is because Europeans consider price more important that quality. Whereas, the culture in Oz is strong brand over price thus the reason why Aldi will never be able to topple the big two, let alone Franklins and IAG when it comes to food and drink.

Never heard of Costco, but they remind me of Campbells Cash and Carry, membership only, except Cash and Carry are wholesalers not retailers...yet.

 

[stocksontheblock]

I was under the impression the reason Aldi is a huge hit in Europe is because Europeans consider price more important that quality. Whereas, the culture in Oz is strong brand over price thus the reason why Aldi will never be able to topple the big two, let alone Franklins and IAG when it comes to food and drink.

Never heard of Costco, but they remind me of Campbells Cash and Carry, membership only, except Cash and Carry are wholesalers not retailers...yet.

The reason why Aldi is big in Europe is that it offers a variety of products like Coles and Wollies here. Aldi in this country offers one sort of butter, one sort of milk, one sore of biscuit, you get the point... one sort of everything. They have none that I am aware of, of the product/brand names we all know.

Further, Aldi tends to only have imported products from Asia, and in my view are very inferior to what we are used to. There is no choice in Aldi here, unlike Europe where they are a true supermarket, with local, international, and a WIDE variety of products and brands.

Ohhh, and on the face of it, Aldi is no cheaper than the big 2 here. The only scam that has been pulled on people with the customer shopping watch list is that it assumes milk is milk and therefore comparable.

It’s not! Buying full fat milk from Malaysia and comparing it to reduced fat milk from Australia or somewhere else is not like for like. Just as is comparing the Aldi chocolate biscuit with a Tim Tam. Sure, if you want to have some very narrow glasses on and say both are a chocolate biscuits then Aldi is cheaper, yet when you compare like for like then lets see who wins. It wont be Aldi because they don’t have anything that is a true like for like.

If I cant by a 30% reduced fat, cholesterol free, salt reduced butter, and all Aldi has is some generic 100% fat, full of oil import tub of butter then it is not a like for like.

However, I digress. Gfresh has a good point. There is a certain demographic for Costco customers, and I can’t for the life of me see that be an Australian demographic. The US, and thank god it is, is unique amongst the worlds countries and their habits are ones that few replicate outside of a place like the US.

I guess the one thing that many Australians will also ask themselves, as I know I would, why would I pay a membership fee, I think to be about $66 a year, to shop in a place? And we do expect a certain level of up-keep on where we shop. I have seen Costco, and Aldi (in this country the stores are an insult and a mess, whereas in Europe they are like the big 2 here) and they are like walking into the $2 Shop. A mess, staff who couldn’t care less, and it’s a random pile of bits and pieces. Christ, I would be very disappointed if this was to become the norm in my shopping experience.

 

[alwaysLearning]

Having been to costco/best buy/price club in the US, I'm 100% certain it will take off in Australia in a Big way IF people can save money.

There is cultural this and brand that....but at the end of the day, people will make effort to save money.

See how busy the gas stations get (after work) on the day that petrol is supposed to be cheaper and I think it will be a similar mentality with costco.

I think costco will become like Bunnings. (but on a smaller scale).

If people can save money, they'll be there. So far costco gives decent prices for electronics goods like plasmas etc...but with haggling you can get better deals elsewhere. Thing is though that Costco appears to have some good deals with grocery so I figure that that will be their main attraction that hooks Aussies.

As for branding, I think that isn't as important now anyway. Look at all the coles or woolworths branded chocolate and soft drinks that get sold every day. Also 'Homebrand' is popular now as well.

 

[Knobby22]

If I cant by a 30% reduced fat, cholesterol free, salt reduced butter, and all Aldi has is some generic 100% fat, full of oil import tub of butter then it is not a like for like.

.

Actually, I know a bit about Aldi, their stores in Europe are very similar.
They use only the best produce and if you go there and know your brands you can pick which one it is. Most of the range is Australian made, especially the fresh food. The cheese is Bega for instance. We love it as we save about $30 a shop and don't feel ripped off. It's also quicker.

Every week they also have specials and I have bought top quality ski gear, tools, and gym gear from them. They are becoming huge in Melbourne. Look how many stores they have! They are opening heaps more. And they always seem busy. This is the radio I bought. $10!!http://www.aldi.com.au/au/html/offers/2827_9582.htm

The guy who owns them is a billionaire, one of the richest men on the planet. He knows what he is doing. I wish I could buy shares in the business.

 

[stocksontheblock]

Actually, I know a bit about Aldi, their stores in Europe are very similar.
They use only the best produce and if you go there and know your brands you can pick which one it is.

Sorry, just to clarify, are you speaking about European Aldi, or Australian Aldi? As I completely agree about the European one.

 

[gfresh]

There is cultural this and brand that....but at the end of the day, people will make effort to save money.

Bilo, Tuckerbag, SSW, Franklins, Jewel, remember all of them? All of those offered a lower cost service, and lower cost goods, but they all failed in Australia over the last few decades. Maybe simply due to the aggressive approach taken by Woolworths and Coles, but history has already shown we don't necessarily choose the "no frills" cheaper options. That's why I'm not so convinced.

p.s. somebody mentioned Campbells Cash and Carry, which is still going, and from memory offered direct bulk products to the public starting from the early 90's, but that has never really taken off in a big way.

 

[stevenc]

I think Costco will do well here in the major cities, they will not be in every suburb like woolies and coles but I believe they will definitely give woolies and coles a touch up in those locations. Aldi in Aus are a joke, I have tried a couple stores and there is no benefit or desire to shop there unless I want to buy crap like cheap soft drink and biscuits and while I am at it pick up a $19 dvd player to last a couple months. Aldi would probably do better if they actually stocked more groceries here. I would pay the membership if a Costco was handy to us, as I have experienced costco when I lived in the states for a few years and we do buy in bulk to save costs when we can . Someone mentioned that Campbell cash and carry offer membership to the public since the 90s, that is the first I have heard about that and probably the reason why they dont make a dent on the food industry here. Costco is a different machine, they are not coming here to experiment. At the end of the day if it gives Coles and Woolies some competition and lowers the grocery bill I am all for it.

 

[gfresh]

Anybody remember the ads on TV with the black woman "Delilah" I think it was "save save save" .. "But you need this card".. It was so over the top it stuck in most people's minds I think The ads ran for a few years pretty regularly, but I think they've stopped advertising. Maybe you had to be in Melbourne at the time.

LOL.. Youtube to the rescue!



Well ads says something that you had to be in the Yellow pages or something, so I guess it wasn't really retail..

 

[dalek]

Have not had the opportunity to check out Costco Docklands as yet but there should be no doubt that they will have serious impact on traditional stores. It may take a little time to tune their ranging and Australian product offer but they will take sales from WOW & WES and start to create a new value perception in the market.
Customers will respond and their catchment will probably extend well beyond traditional retail boundaries with people travelling from regional areas to pick up savings.
The critics were wrong about the Bunnings model "not enough population to support big box hardware, etc. etc." and they will be proven wrong in this case.
Aldi on the other hand has a very different business model and with 200 stores in 8 years is already a major force. Not for everyone but their range strategy is impressive and targetted at a very specific demographic. With something like 8000 stores and $58 Billion US revenue world wide these guys are very good at what they do and along with Costco will change the way we shop in the future.

 

[GumbyLearner]

This sort of thing already exists in Australia, yet very few of them have a paid membership, yet they do have a membership which entitles members to better deals and direct deals only with that shop.

Yet, my is that this will not last in this country and I give them 12 to 18 months before they close shop. The model works well in the US because of the buying power, attitudes of people, and the excessive bigger than life way Americans lead their lives.

Big call stocks!

I believe they will give a good thrashing to the duopoly majors within the next five years. That's right thrashing!

I will re-visit this thread in good time!