Costco reports 20 per cent sales increase amid cost-of-living crisis
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In the face of a rising cost of living crisis, Australians are increasingly turning to value brands to stretch their dollars further.
One such brand, Costco, has seen a significant surge in sales, with a 20 per cent increase in 2023.
This impressive growth has propelled the American multinational corporation into the ranks of Australia's retail heavyweights, even outpacing the growth of local supermarket giants Coles and Woolworths.
Since its local launch in 2009, Costco has been warmly embraced by bargain-hunting Aussies.
The value brand's sales in Australia and New Zealand reached a staggering $4.4 billion in 2023, marking a 20 per cent increase from the previous year, which itself was up 30 per cent from 2021.
This growth trajectory is particularly noteworthy when compared to the modest 5 per cent sales growth achieved by Coles and Woolworths in the last financial year.
While Costco's total sales still trail behind the supermarket giants, the warehouse retailer has surpassed Myer, David Jones, and Officeworks.
It's even nipping at the heels of BIG W, signalling a potential shift in the retail landscape.
Costco's diverse product range, including everything from pools and DJ decks to fresh food, offers a unique shopping experience that observers say resonates with Australian consumers.
In an interview with The Australian, Costco Australia and New Zealand CEO Chris Tingman attributed the retailer's success to its competitive pricing strategy.
Amid strong price competition from supermarkets, Costco lowered its prices in 2023 to attract Aussie customers, regardless of their financial situation.
'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,' Mr Tingman said.
Costco's membership model also reportedly contributes to its revenue growth.
To shop at Costco, customers must sign up as members, which costs a minimum of $65 a year.
This model adds to the chain's revenue and also incentivises customers to return.
It's estimated that each of Costco's local stores has around 100,000 members, amounting to a total local customer base of 1.5 million Australians.
Despite the challenging economic environment, Costco continues to attract discretionary spending from consumers in areas such as consumer electronics, clothing, and toys.
Tingman noted that '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'.
Looking ahead, Costco sees potential for further expansion in Australia. However, finding suitable sites for new stores remains a significant challenge.
'I’m learning that it is not easy, and we are constantly out there looking for opportunities,' Mr Tingman added.
Costco’s original store in Melbourne’s Docklands is reportedly moving to a bigger space.
What are your thoughts on Costco's growth in Australia? Have you shopped at Costco before? Share your experiences with us in the comments below.
One such brand, Costco, has seen a significant surge in sales, with a 20 per cent increase in 2023.
This impressive growth has propelled the American multinational corporation into the ranks of Australia's retail heavyweights, even outpacing the growth of local supermarket giants Coles and Woolworths.
Since its local launch in 2009, Costco has been warmly embraced by bargain-hunting Aussies.
The value brand's sales in Australia and New Zealand reached a staggering $4.4 billion in 2023, marking a 20 per cent increase from the previous year, which itself was up 30 per cent from 2021.
This growth trajectory is particularly noteworthy when compared to the modest 5 per cent sales growth achieved by Coles and Woolworths in the last financial year.
In 2023, Costco saw a staggering 20 per cent increase in sales from the previous year. Image source: Shutterstock.
While Costco's total sales still trail behind the supermarket giants, the warehouse retailer has surpassed Myer, David Jones, and Officeworks.
It's even nipping at the heels of BIG W, signalling a potential shift in the retail landscape.
Costco's diverse product range, including everything from pools and DJ decks to fresh food, offers a unique shopping experience that observers say resonates with Australian consumers.
In an interview with The Australian, Costco Australia and New Zealand CEO Chris Tingman attributed the retailer's success to its competitive pricing strategy.
Amid strong price competition from supermarkets, Costco lowered its prices in 2023 to attract Aussie customers, regardless of their financial situation.
'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,' Mr Tingman said.
Costco's membership model also reportedly contributes to its revenue growth.
To shop at Costco, customers must sign up as members, which costs a minimum of $65 a year.
This model adds to the chain's revenue and also incentivises customers to return.
It's estimated that each of Costco's local stores has around 100,000 members, amounting to a total local customer base of 1.5 million Australians.
Despite the challenging economic environment, Costco continues to attract discretionary spending from consumers in areas such as consumer electronics, clothing, and toys.
Tingman noted that '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'.
Looking ahead, Costco sees potential for further expansion in Australia. However, finding suitable sites for new stores remains a significant challenge.
'I’m learning that it is not easy, and we are constantly out there looking for opportunities,' Mr Tingman added.
Costco’s original store in Melbourne’s Docklands is reportedly moving to a bigger space.
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