THE COSTCO REVOLUTION

Since opening in Sydney in July 2011, Costco shoppers have been enjoying the cheap prices and bulk buys, but can we actually learn and embrace this new culture of shopping? And how will this affect our local supermarkets, Coles and Woolies? Naeun Kim reports for The Milk Moustache.

VO: The Costco model is simple. Bigger is better. Instead of buying one litre of apple juice, you’ll find a pack of two-litre bottles. Rather than buying two lamb chops, you’ll need to buy a whole tray. Since opening in July, the Sydney Costco store in Auburn has been luring shoppers with its upsized products. Costco’s managing director, Patrick Noone, says it’s a win-win situation for consumers.

Patrick Noone: You know everything is reasonable; it’s not too big. It’s about value. We package it for value. So you can see the wraps, we have the bigger sizes there; juices, vegemite pales are one kilo.

VO: But could us Aussies get used to this new format of bulk-buying? Head of Marketing at UTS Business School, Professor Sandra Burke, explains the mind of a Costco shopper.

Sandra Burke: I’m going to go for my once-a-month warehouse shop to get all of their really big bulk stuff because you know, if I’m only going once a month I don’t mind the inconvenience, and I’ll stock up on everything that I can stock up on and get it at dirt cheap prices. I’m not going to do that every week, and I’m not going to do that every day, but will I do it once a month or so? Yeah.

VO: Marketing expert from the Centre for the Study of Choice, Dr David Waller, believes there’s another reason why shoppers are flocking to Costco.

David Waller: It’s a big thing in Melbourne. I’ve been to Melbourne and people say, ‘Have you been to the new Costco yet?’ It’s almost like one of the tourist destinations.

VO: And travelling that extra mile is not a problem for most shoppers.

David Waller: One of the problems with Costco is that there’s only one store in the city, and so to go to Auburn, they might have to travel several kilometres. But it may also be seen as a bit of a trip, something that’s nice for them to do and they get the experience of going there, so it wouldn’t be an everyday thing or every week thing.

VO: So has there been a change in the way Aussies are shopping? Mother of four, Gina, still shops at Coles, but has squeezed Costco into her shopping routine.

Gina Tapp: I would definitely come here and buy my bulk stuff and store it at home, and definitely save money. My first bill I saved about $150, so I’ll probably come here every two months and stock up the things like tomatoes, corn and drinks that I need, so it’s definitely worth it. And we used to have a Costco in the UK and I’ve been waiting ten years for them to come to Australia!

VO: So what does this mean for the Aussie duopoly Coles and Woolies?

Sandra Burke: I think they should be threatened. They’re not going to lose that weekly business because people shop in different places for different reasons, and there is going to be the need for the Coles and Woolies. But are they going to lose business to Costco? Of course they are, because those things that people can get at a much lower price. There’s a good proportion of the Australian population who will do that.

VO: But Costco says it is not on the same level as Coles or Woolies.

Patrick Noone: They have an Australian-wide reach, I don’t. I’ve only got three buildings right now; Melbourne, Sydney and Canberra. So where we are, we’re very competitive.

VO: The Nielson Costco Report states that Aussie shoppers are quickly learning how to shop at a Costco outlet, and Patrick Noone has seen the results.

Patrick Noone: Melbourne’s been open for two years and it’s still increasing memberships, so I think this will be the same in Sydney as well.

VO: The report also estimates that once Costco hits its target of 15 stores in Australia, it would cost the retail industry up to $1.5 billion. In the meanwhile, Costco will continue doing what it does best.

Patrick Noone: So this is really it. Where else could you buy a bathroom tissue and pick up a grand piano on the way out?

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