Costco has become a serious contender in Australia’s grocery market, with annualised sales now estimated at $5 billion. Since entering the market in 2009, the US-based bulk-buying retailer has steadily expanded its influence through its membership-only model, attracting consumers looking for savings on large-volume purchases.
Operating 15 warehouse-style stores across the country, Costco is now a key player behind Woolworths, Coles, Aldi, and the Metcash-aligned independent stores in the $120 billion Australian supermarket industry. Each store is believed to service around 100,000 members, contributing to an estimated national membership base of 1.5 million. However, industry observers suggest its true household reach is even greater due to the common practice of shared memberships across families or neighbourhood groups.
Costco’s model encourages customers to make fewer but larger shopping trips, typically once a month, focused on non-perishable pantry staples and household essentials. This shift is impacting traditional supermarkets, which rely on more frequent visits and impulse purchases for revenue growth. As consumers increasingly divide their grocery budgets between multiple retailers, known as cross-shopping, the dominance of conventional supermarket chains is facing new pressure.
The company’s financial filings for the 12 months to September 2024 show overall sales of $11.366 billion, but this figure includes Costco Taiwan, which is reported under the same corporate structure as Costco Australia. While the Australian-specific breakdown is not disclosed, internal sources report that local operations have reached $5 billion in annualised sales, with continued double-digit growth.
In 2023, Costco Australia’s recorded sales hit $4.4 billion, a 19.8% increase from $3.67 billion in 2022. That year also saw a jump of 30% compared to 2021, highlighting the consistent growth trajectory of the business. This strong performance contrasts with more moderate growth in the broader Australian supermarket sector, where established retailers are finding it harder to maintain momentum.
Analysts point to Costco’s ability to offer clear value and pricing benefits through its bulk model as a major factor in its rise. With a membership fee of $65 per year, consumers are making calculated decisions to save more over the long term by consolidating their large shops at Costco. These infrequent but high-volume trips are reducing customer reliance on weekly or bi-weekly supermarket visits.
This trend is particularly disruptive to chains like Coles and Woolworths, which have long optimised their store layouts to encourage impulse buying through strategic placement of goods. As customers reduce their store visits, the chance of unplanned spending – a significant revenue stream – also diminishes.
Costco’s growing footprint also taps into broader consumer behaviour shifts. Households are becoming more budget-conscious, and the appeal of buying in bulk for better value is stronger during times of economic pressure. The retailer’s business model is well-suited to families or shared households seeking to stretch their budgets further.
Another notable aspect of Costco’s model is its community-like membership culture. Although official numbers are not released, reports from company insiders suggest that each warehouse services around 100,000 paying members. However, the reach extends further, as many households share memberships or shop in groups, increasing the brand’s influence well beyond its official figures.
Costco’s rise is not only introducing another powerful competitor to the market, but also shifting how Australians shop for groceries. Its focus on monthly, planned shopping experiences contrasts sharply with the frequent, convenience-driven trips that traditional supermarkets rely upon.
As Costco continues to build momentum, the broader supermarket landscape in Australia is undergoing a quiet transformation. With strong sales growth, a growing member base, and a clear value offering, Costco is becoming a significant alternative for Australian consumers—and a growing challenge for long-established supermarket giants.
For the latest retailer news and information, check out the IndiHub website or to speak to us about how we can help your business contact us.
