Costco’s accretive expansion strategy continues

Costco Wholesale Store ExteriorBig box retailer, Costco, has continued its slow but steady expansion strategy across Australia, after announcing plans for a new Costco in Victoria.

Pacific Epping is the fourth Victorian site chosen by Costco in nine years, with a 13,788 sqm store set to facilitate a catchment of one million people. It will be the second Costco in Victoria with a fuel station and will create over 250 full-time and part-time jobs.

Patrick Noone, managing director of Costco, told IRW that there were multiple opportunities in the growing catchment.

“A lot of energy goes into site selection, ensuring the site can facilitate our particular layout specifications and that it delivers on the overarching business strategy and follows consumer demand,” he said.

“Epping is a growing area and we are excited about the opportunities that will come with that growth.”

The store will be similar internally to other Costco locations around the country but will also have a fuel station – one of only five other Aussie locations to offer the facility.

Noone described the big-box retailer’s expansion strategy as accretive and that the decision to incorporate the fuel business was made on a “case by case basis”.

“Ideally we would have fuel stations at all of our warehouses if we were able, in the case of Pacific Epping, we have the permission and the space.”

In August last year, Noone said Costco had set its sights set on smaller demographics containing approximately half a million people across Australia including Tasmania, Darwin, Cairns and Townsville. These are all options for the retailer as it seeks out smaller markets in the future – though these may not happen any time soon, given it is difficult to find suitable sites for the bulk-discount retailer, said Noone.

Patrick Noone

“A lot of time and energy goes into picking the right location for each of our stores”

“A lot of time and energy goes into picking the right location for each of our stores, ensuring it aligns with our growth strategy and follows consumer demand,” he explained.

Graham Terry, chief executive of Pacific Centres, told IRW that Costco was a good fit for the centre.

“As an internationally recognised retailer, the introduction of Costco to Pacific Epping no doubt extends and strengthens our retail offer and position in the market,” he said. “In doing so, it increases visitation, frequency and duration from within and outside of our catchment area, increasing activity on the site”.

The arrival of Costco is needed for the fast growing outer northern suburbs, according to Terry.

“As a trade area, the population is set to grow by 3.9 per cent – greater than Melbourne – so it’s a huge asset to be able to offer more jobs and an increase competitive retail offering through the introduction of Costco”.

Meanwhile, the retailer has also recently announced that it is increasing its annual membership fees by $5 for its US and Canada markets. The Australian market is not affected as yet with Noone confirming membership prices are remaining the same for local members.

This story first appeared in Inside Retail Weekly, issue 2131. To subscribe, click here

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