Costco joins Australian retail fold

Posted by Daniel Palmer on 17th August 2009

The world’s ninth largest retailer has today opened its long-awaited first store in Australia within the Docklands precinct of Melbourne.

The warehouse retailer, which sells everything from branded food products to bakery goods, diamonds and TVs, was flooded with customers upon opening this morning – all hoping to find out what the fuss is about.

“There were people queuing halfway down Docklands this morning,” a Costco spokesperson told ninemsn. “There are thousands of people in the store at the moment.”

Costco is unique in the Australian retail space as they charge individuals, families and businesses an annual membership fee to shop at their outlets. Charging the fee allows margins to be slashed and the sizes of products they have allow for savings by purchasing in bulk.

However, as the membership fee is not seen at retail outlets in Australia, some have questioned their potential for success down under. Strong membership sales, positive press reports and the rush to enter this morning ensure that they have at least got off on the right foot.

They are restricted from speedy expansion, though, due to the size of their outlets – which are substantially larger than the average Coles or Woolworths store.

Victorian Premier John Brumby and Industry and Trade Minister Martin Pakula welcomed Australia’s first Costco Wholesale warehouse to Melbourne.

Taking a behind the scenes tour of the warehouse on the eve of its grand opening, Mr Brumby said Costco would provide a boost to the local economy.

“Costco’s arrival in Victoria will … deliver great opportunities for local manufacturers and suppliers to supply the store and potentially tap into Costco’s worldwide distribution network,” he suggested.

Mr Pakula said Victoria’s economy, workforce and choice of suppliers had attracted Costco to Melbourne and added that they would provide strong competition to retailers.

“Costco will increase competition in the retail sector and provide choice for Victorian consumers. The new warehouse will give Victorian families additional shopping choice with heavily discounted, bulk packaged goods,” he noted.

“(We have) been a strong advocate for Costco’s move to Melbourne and attracting this investment forms part of our joint Melbourne Retail Strategy 2006:2012 with the City of Melbourne which aims to ensure a diverse Victorian retail sector and attract international flagship stores to Melbourne.”

Costco’s Australian Manager, Patrick Noone, was thrilled the opening day had finally arrived.

“We look forward to contributing to the community in many ways, and to making a positive impact on the local job market,” he said.

Costco’s second store is likely to be opened in the western Sydney suburb of Auburn next year.