Costco grabs grocery market share, Australia to add two warehouses

With Woolworths set to ramp up the supermarket price war with rivals Coles and Aldi to win back sales, Costco Australia managing director Patrick Noone said that the warehouse retailer has been competitive since it opened but that nothing extraordinary has yet been seen on grocery prices.

Mr Noone’s comments came as chairman of competition regular the ACCC again warned of the dangers of an ongoing price war in the local grocery sector and said that the ACCC doesn’t mind robust negotiations with suppliers. “Our problem is when there’s arbitrary demands made mid-contract and threats made,” he said.

A Citigroup analysis found that both Coles and Woolworths have lost grocery market share recently, while Macquarie Bank said that market share gains by Aldi (now operating 366 stores) and Costco were accelerating.

In December 2014, Costco Wholesale Corporation said its current plan is to open up to 34 new warehouses (including three relocations), including two each in Australia and Korea in 2015.
Costco Wholesale’s net sales for the first half have increased by 6% to $53.16 billion with like for like (comparable) stores sales up 7%, including international stores for the 24 weeks ended February 15, 2015.

While no figures were available for Australia, total revenue increased to $878.5 million for the 12 months to August 2014.

Costco Australia has posted around $44 million in losses since the first of its seven stores opened in 2009 and last year opened stores at Ringwood (Victoria), Crossroads (NSW) and North Lakes (Queensland). It now operates 663 warehouse stores worldwide.

Its gasoline business continues to expand, with four locations added in Australia, the last being in Canberra at Christmas next to its Majura Park store. Gasoline sales internationally were in excess of $11 billion in 2014, with an increase in profits despite a very volatile market.

“We believe our gasoline operations not only provide our members with an exceptional value proposition, but also represent another factor driving ‘in-store’ shopping frequency,” Costco Wholesale said.

“Membership revenue increased over 6% in 2014 with strong signups at our new openings, particularly in Asia and Australia.”

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