Costco plans Australia foray to challenge duopoly
Written on June 24, 2008
Costco Wholesale Corp (COST.O: Quote, Profile, Research, Stock Buzz) has gained its first foothold in the Australian market in a bid to shake up a dominant supermarket duopoly.
Costco, whose U.S. warehouses sell everything from groceries to big-screen TVs, has secured a site for a large-format store in the developing Docklands area in inner city Melbourne, Costco’s Australian country manager Patrick Noone said.
“We just got the planning approval, it will be a 13,800 square meter store, similar in size to a North American-style Costco store,” Noone told Reuters in a telephone interview.
He said the Melbourne store, opening next year, would sell a similarly wide range of goods, from food to diamond jewellery, and talks with suppliers have already begun.
“We’ll be stocking everything from cut meat, fresh food, groceries, electronics, hardware and clothing bad credit payday loan. And jewellery,” Noone said.
With its slim margins and low-cost structure, Costco has the ability to aggressively challenge rival retailers on price, analysts said. Customers pay an annual fee to shop at the company’s warehouse locations.
Costco is one of three foreign companies trying to break into the Australian grocery sector, and Noone said he has plans for stores in most major cities given the lack of competition.
Australia’s grocery sector is dominated by Woolworths Ltd’s (WOW.AX: Quote, Profile, Research, Stock Buzz) 770 supermarkets and the Coles chain of 740 stores, owned by Wesfarmers Ltd (WES.AX: Quote, Profile, Research, Stock Buzz).
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