Bargain hunting Aussies have embraced the value brand since its local launch in 2009 and with $4.4 billion in sales, Costco is now one of Australia’s largest retailers.
In Australia and New Zealand, where Costco operates 15 warehouse-style stores, the retailer’s $4.4 billion in 2023 sales represented a 20 per cent increase on 2022, which itself was up 30 per cent on 2021.
By comparison, local supermarket giants Coles and Woolworths were only able to achieve sales growth of around five per cent in the last financial year.
But while total sales at the warehouse retailer, which sells everything from pools and DJ decks to fresh food, are still dwarfed by the supermarket giants, it has overtaken Myer, David Jones and Officeworks in terms of sales and is nipping at the heels of Big W.
In an interview with The Australian, Costco Australia and New Zealand CEO Chris Tingman said that the retailer lowered its prices in 2023 due to strong price competition from the supermarkets, in an effort to attract Aussie customers in good times and bad.
“We want to be the ‘go-to place’ – when you have money you shop at Costco, when you don’t have money you shop at Costco,” he said.
He added that in the current economic environment “everybody is going after everybody” as “dollars are harder to come by”.
To shop at Costco, customers have to sign up as members, which costs a minimum of $65 a year.
This adds to the chain’s revenue and provides a financial incentive to keep its customers returning.
It’s believed each of its local stores have around 100,000 members, giving it a total local customer base of 1.5 million people.
Mr Tingman said that as well as a strong performance from food, fresh produce, bakery items and petrol, it was still managing to attract discretionary spending from consumers in areas such as consumer electronics, clothing and toys.
“We had some good results in that area, and the discretionary spend is the hardest and it doesn’t matter what (income) level, everyone is pinching their pennies and making sure that purchase makes sense for them.”
He flagged the potential for the retailer to open more stores in Australia but said finding suitable sites was the “biggest challenge”.
“I’m learning that it is not easy, and we are constantly out there looking for opportunities.”
It’s original store in Melbourne’s Docklands is currently in the process of moving to a bigger site.
