Costco Australia sets out strategic plans

Date : 11 May 2018

Patrick Noone, Managing Director of Costco Australia, has provided an insight into what the retailer has planned for its private label strategy, future expansion and online operations.

Growing focus on Australian made private label

Costco this week launched a new Kirkland Signature toilet paper, which is made in South Australia and in the future plans to look at how it sources and sells all key commodities in Australia, including milk, flour and rice. If it can source these at a cheaper rate to what it currently gets and can ensure the same or better quality, it plans to further develop its private label range. Costco's private label penetration in Australia remains in 'single digits', some way below that of Coles and Woolworths and with growing competition in the market the retailer will be keen to embed a stronger value offer for customers.

Potential for over 60 Costco stores in Australia

Costco currently has nine stores trading in Australia, with two new stores opening in Melbourne and Brisbane by the end of the year and its first Western Australia store due to open in Perth in 2019. The current opening rate of 1-2 stores per year is expected to continue for some years to come. However, Noone did says that with 25m people between Toronto and Vancouver in Canada and 65 Costco stores, there remains significant growth potential for network expansion down under, over the next 30-40 years.

New DC to help underpin online growth

Costco will also be opening a new AU$108m distribution centre in Sydney next year, paving the way for new store expansion and also the opening of an online store. Costco has already been testing a B2B online service in Melbourne, but has yet to roll out the service more widely. With online operations in the US, UK, Taiwan and South Korea, the retailer clearly sees Australia as a future market for the service. This is likely to involve further B2B reach, home delivery services, as well as click and collect in stores. Noone commented that before any role out, it was important the business had the right infrastructure in place.