Australia entered its first nationwide lockdown in March 2020 and even though restrictions were eased later in the year, a second wave of the pandemic as a result of the Delta variant resulted in further lockdown restrictions across key cities in 2021. In response, there were reports of consumers panic buying in anticipation of further prolonged home seclusion, forcing sole warehouse club player Costco Wholesale to reinstate purchasing limits.
Costco was forced to apologise for a COVID-19 outbreak at its much-hyped Lake Macquarie warehouse in the weeks before it was set to open. Health officials revealed that an infected worker from Costco’s headquarters was sent to train staff ahead of the new store opening, prompting its classification as an exposure site.
Costco’s expansion to open a second store in West Australia signals growing popularity of warehouses clubs, hinting that there is still room for growth in Australia. Like the German discounter Aldi, Costco is set to offer further competition to other retail channels by undercutting prices that are charged by the supermarket duopoly of Coles and Woolworths.
Australians have enthusiastically embraced US warehouse retailer Costco, the chain that sells a wide range of products including its exclusive private label lines, as it continues to draw sales away from the leading local supermarkets and discounters in Australia. While establishing itself as a major retailing force in the market, e-commerce remains an area of growth that this warehouse club chain can utilise to consolidate its position.
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Warehouse clubs are chained outlets that sell a wide variety of merchandise, typically situated in out-of-town locations, with a selling space of over 2,500 sq metres (and invariably over 4,000 sq metres in total size). Customers have to pay an annual membership fee in order to shop. The clubs are able to keep prices low due to the no-frills format of the stores and large volume SKUs. Example brands include Costco, Sam’s Club (Walmart), and Atacadão. Excludes sales attributable to membership fees and business-to-business sales. Also excludes cash & carry and wholesale outlets (which are typically oriented towards businesses, rather than consumers). Note: Local variants, such as atacarejos in Brazil, are included in this channel.
See All of Our DefinitionsThis report originates from Passport, our Warehouse Clubs research and analysis database.
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