Bulk retailer Costco strikes local chord

Costco's strategy of encouraging consumers to buy their goods packaged in bulk appears to have won the hearts and minds of Australians, with the US warehouse retailer poised to double its outlets in the country and achieving a profit for the year to September 2012.

The company set up shop in Australia in 2009 when it opened its first warehouse outlet in Melbourne's Docklands. This store has since been joined with sites in Auburn, in Sydney's west, and in Canberra.

Costco's entry into the Australian market signalled a new approach to retail and packaging in this market. Following the strategy of its US stores, all items are packaged in bulk and large sizes. Customers also pay a membership fee to shop at its stores.

The company has now been granted planning approval for a second Sydney store at Casula, near Liverpool. Projected to attract more than 670,000 shoppers a year, the Casula store will cover 14,000-square metres and is expected to cost $40 million to construct. It will join the chain's second Melbourne store, in Ringwood, due to open later this year. It's also believed to be planning its first foray into the Queensland market, with a store in the south-east of the state in the planning stages.

The existing Melbourne and Sydney stores are believed to have approximately 100,000 members each.

According to documents lodged with the Australian Securities and Investment Commission, the company achieved sales of $610 million and a profit of $9.73 million for the 12 months to September last year. This goes a long way to offsetting the estimated $38 million in losses it has incurred to start up in this country.