Costco Warehouse reveals expansion plans across Australia and New Zealand

Costco Warehouse Australia’s Managing Director, Patrick Noone, announces the retailer’s expansion with a further four warehouses across Australia.

Costco’s first Australian store opened in Melbourne’s Docklands precinct in 2009. It now has four warehouses in Victoria, four in NSW, two in Queensland, and one warehouse in each of Adelaide, Perth and Canberra.

This expansion plan means Costco has ambitious plans for significant expansion across Australia in the next five years.

Costco is also on track to open its first New Zealand warehouse in August.

Increases to construction costs have not affected Costco’s development plans. However, inflation has affected areas of supply for the business, specifically in the fresh area and imported goods due to currency exchange issues.

Despite challenges to the supply chain, inflation has provided a competitive advantage for the membership-only retailer as consumers seek to minimise costs on everyday products by buying bulk, discounted items.

Australia

Ideally the expansion will progress over the next five years with eyes set on Sydney, Wollongong, Hobart, north Perth, south Adelaide, and Geelong.

Mr Noone explains “those are the kind of hotspots that we’re trawling through all the time looking for good sites,” with additional sites in Sydney as the priority.

“When you look at the markets in Australia, the Sydney market definitely is a great market for Costco and we only have three Costcos here with about six million people.”

The process of establishing a suitable location is extensive due to the nature of the retailer, including the requirements it must satisfy in terms of size and demographic.

Costco Warehouses are typically around 14,000 sqm and require approximately 800 carparks on one lot, servicing a population size of around 400,000 to 500,000 people with a trade area of a 45-minute drive time.

Costco’s fourteenth warehouse will open in Casuarina, WA in November 2022, and the $75 million fifteenth site commenced construction in Coomera, QLD in late June 2022.

Mr Noone said the 14,000 sqm warehouse will open in the first half of 2023.

“We’re looking at another building in Melbourne in Officer which is currently going through planning at this point in time so that gives us five in Melbourne and 16 through the country,” he added.

The Officer site is a part of a $150 million investment in three new Costco sites in Victoria, as announced in June.

The priority focus for the discount retailer is to bring savings and value to the local market, particularly for large families that require bulk purchases for discounted prices.

Therefore, it has been particularly important to include a customer only petrol station with the exception of a few sites across Australia.

The opening of these stores also offers a significant opportunity with employment as most sites employ around 220-250 people, half of which on full-time employment.

New Zealand

Costco will open its $100 million Auckland warehouse in late August, with an ambitious plan to potentially open several new Costcos in New Zealand in the next three to five years.

“Costco is very excited to open our first warehouse in New Zealand and to be a part of this community,” said Mr Noone.

“That will be our first one of probably several in that country.

“I think we’re really the first global retailer to have this presence there.”

The store is expected to cover three floors, with a petrol station attached.

There will be 3 hectares’ worth of car parking across two levels on top of 1.4 hectares of retail floor.

The mega store will be located in Westgate, a growing regional town centre located in Auckland’s northwest.

Ahead of the warehouse opening, Costco opened the petrol station in April for members.

Costco is considering opening sites in other major cities including Christchurch and Wellington.