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Costco pushes on into Australia

The USís third-largest retailer Costco is stiffening up its resolve in Australia, in the face of resistance to its expansion push there

Costco pushes on into Australia

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Costco currently has one store in Melbourne’s Docklands area and plans to open another six stores across the country in the next three years. In April, Costco was given planning approval for a superstore in Sydney. 

According to reports in the Sydney Morning Herald, however, Costco's chief financial officer and executive vice-president Richard Galanti has said the company sees the potential to increase store numbers 10-fold in the near future, with the total number of stores in Australia potentially swelling to 25.

This expansion target comes despite his claims market rivals Woolworths and Coles are working to block the US retail giant at every step.

Mr Galanti told predominantly US analysts that he was fighting a running battle with Woolworths and Coles as Costco sought to enter and quickly expand in Australia, the newspaper reported.

''In Australia you know, the percentage increase `in store numbers` will be huge, because we have one unit,'' he told the Sydney Morning Herald.

''Our competitors, the two biggest retailers out there'', were fighting Costco at every juncture to slow down the process, ''but we will get a second unit open in Sydney - the first in the Sydney area this coming calendar year, and certainly we will open more there''.

Mr Galanti told the newspaper the Asia-Pacific region, including Australia, South Korea and Taiwan, was ripe for the development of its supermarket warehouses.

However, Dynamic reported that Costco has encountered difficulty in finding bulk-goods-zoned sites in Australia to develop its stores, as planning and zoning laws, and the dominance of Woolworths and Coles, often impede Costco’s ability to increase store numbers.

The website continued on to state the explosion in ‘big box’ retailing as a retail model will work against Costco’s plans for Australia, because the limited number of sites for Costco places it in a bidding war against direct rivals who are also determined to expand their retail footprint.

The planned store in Sydney will have about 14,000m2 of shopping area and about 800 car parking spaces, about three to five times more than a large Woolworths’ or Coles’ outlet.






















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