Costco to launch in Melbourne, Sydney to follow

By Martin Vedris

MELBOURNE: Discount retail giant, Costco, is well on its way to begin trading in Australia by mid-next year after the Victorian government granted the company approval on Friday for a 13,800 sqm store in Melbourne’s Docklands area.

“We don’t know when it’s going to trade yet but we think it’s sometime next year — I hesitate to say exactly but mid next year is our goal,” said Costco Australia managing director, Patrick Noone today.

Sydney is to be the next location for Costco, which is a discount retail outlet for branded products that started in the USA in 1976 and utilises an annual membership model for shoppers, which it calls a ‘membership warehouse club’.

“In the United States it’s $50 US — we haven’t determined what it is here yet but it probably won’t be dramatically different and you can come and shop all year long and then every year you re-new that membership,” said Noone.

In the USA the model has three types of membership — Business, Gold Star and Executive. The Executive membership offers a two per cent cash back on all purchases for the higher annual membership of US $100. There is also a co-branded Amex card in the US model.

“We haven’t determined any of that yet,” Noone said. “I think that’s for a fully developed market and we’ll probably start off with a Business and a Gold Star membership system and we’ll develop it from there.”

Noone is in discussions with major brand suppliers to find ways to offer savings on branded products to its members.

“We’re looking for their [supplier’s] assistance in terms of packaging but we haven’t got into specifics yet,” Noone said.

“It will be the same brands you see everywhere else but we work with providing the best value with each of the manufacturers. That value may include upsizing to a larger pack size or a different type of packaging that’s out there in the retail market right now.

“Certainly the shopping experience of Costco is to buy brand-name merchandise at dramatic savings, so we work with the vendors to enable us to get the savings for our members.”

When asked about whether the Australian Costco experience would include online purchasing, Noone did not rule this out.

“Everything’s possible in the long run but currently we’re looking at a warehouse at this point.”

Noone originally hails from Melbourne but moved to Canada in 1986 to work for the retail organisation Loblaws, in its Real Canadian Superstore business. Noone then joined Costco, where he has worked for the past 18 years.

“I have enjoyed coming back,” Noone said. “It’s a big challenge getting new concept up and running and I’m looking forward to running a Costco again.”

Costco also operates outside of the USA in Canada, the UK, Japan, Korea, Taiwan, Mexico and Puerto Rico.

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