CANBERRA: American discount retailer Costco looks set to post record sales in Australia, as it considers setting up shop in sites once occupied by Woolworths’ failed hardware chain, Masters. Costco Australia managing director Patrick Noone said this year’s results would be better than last year’s, suggesting revenue of more than $1.32 billion. “It will be higher than last year, for sure,” Mr Noone told Fairfax Media. For the 2015 year, Costco generated a 50 per cent rise in revenue to $1.32 billion, and swung to a pretax profit of $22.7 million.
Costco opened its first warehouse in Australia in 2009, and now has eight. It makes most of its money from selling memberships to an estimated hundreds of households and businesses for between $55 and $60 a year. Mr Noone declined to name Costco’s market share in Australia’s $90 billion-odd grocery market but said the company did not plan to rev up store openings in the near term.
“We’re going to grow the business organically,” Mr Noone said. “As opportunities come up we’ll grow.” “We’re hoping to open one [store] in Marsden Park in Sydney next year, in July. And [the northern Melbourne suburb] Epping is probably going to be [20]18, I think. That’s the horizon right now. There are a number of other opportunities around the country but those are the two that we have in the works.” Still, Mr Noone suggested Costco might pick up some of the land now up for grabs from the collapse of Masters. “I don’t think there’s any definites there yet,” he said. “We’re always interested in new sites but right now it’s pretty confusing so I don’t know how it’s going to work out.”
The comments come after Aldi veteran Paul Foley estimated Costco would end up with 5 per cent market share, while German discount supermarket Aldi would get 15 per cent share. This would leave big chains Woolworths and Coles and independents supermarkets such as IGA, FoodWorks and Foodland with a combined 80 per cent market share – albeit in a market that is much less lucrative for retailers, but cheaper for shoppers.
Mr Foley, who helped the German discount supermarket set up in Australia, said international retailers had been attracted to the country by its high profit margins, its high wages, its lack of discounters, and the dominant supermarkets being listed and therefore slow to react. “If you have someone earning pretty much double what the rest of the world is able to earn, it’s much easier for a discounter. So that is basically the Aldi story [in Australia], and pretty much the Costco story too,” Mr Foley said. Costco is expected to release its 2016 financial year accounts in December.
