Costco, the US-based warehouse retailer, has become one of Australia’s largest retailers, with $4.4 billion in sales in 2023, a 20 per cent increase from the previous year.
The retailer, which operates 15 stores in Australia and New Zealand, has outperformed the local supermarket giants Coles and Woolworths, which only achieved sales growth of around five per cent in the last financial year.
Costco sells a wide range of products, from pools and DJ decks to fresh food, at low prices. To shop at Costco, customers have to sign up as members, which costs a minimum of $65 a year. This generates revenue for the chain and encourages customer loyalty.
Chris Tingman, the CEO of Costco Australia and New Zealand, told The Australian that the retailer lowered its prices in 2023 due to strong price competition from the supermarkets, in an effort to appeal to 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”.
Mr Tingman said that Costco was not only successful in selling food, fresh produce, bakery items and petrol, but also in attracting 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 also said that the retailer was looking for opportunities to open more stores in Australia, but finding suitable sites was the “biggest challenge”.
Costco’s original store in Melbourne’s Docklands is currently moving to a bigger site.
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