21 January 2011

Costco to fill out the empty space at Brand Depot

| johnboy
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Last October we noted that retailing giant Costco was gearing up to move into Canberra.

Today Chief Minister Stanhope is celebrating this vindication of his economic leadership.

“This is good news for Canberra, good news for shoppers and a good sign of the confidence that a major international company such as Costco has in the strength of our economy,” Mr Stanhope said.

“Costco will be a welcome addition to the retail and supermarket choices for the Canberra consumer and provide further competition to the supermarket sector, both as a retail supplier as well as a wholesale provider.”

“This will be only the third Costco site in Australia, following on from Melbourne and Sydney. To have the fourth biggest retailer in the US and one of the top 10 worldwide choose the ACT as one its first sites in Australia shows just how strong our economy is, and how much faith Costco has in its continued good health.”

The retail giant has announced plans to open up an outlet at the Brand Depot site. The size of the store is expected to be about 13,500sq, more than four times the size of an average supermarket of around 3,000sqm.

Patrick Noone, Costco Country Manager of Australia said the company was looking forward to opening up in the national capital.

“We are delighted with the investment in Canberra and we are looking forward to being a supplier to businesses and part of the competitive retail market.”

Mr Stanhope said the Costco store would help the Government achieve the aims of its Supermarket Competition Policy, by increasing the competition and diversity in the full line retail supermarket sector in the ACT.

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dvaey – Campbells don’t have as big a range as Costco so some companies might be happy to justify a $55 annual fee, which would be at least partly tax deductible, in return for more choice. Although I’ve only ever shopped in store at Campbells, their range might be bigger through online ordering. Fyshwick is probably even further to travel than Majura for some northside people too.

Also, companies that bulk order through these kinds of warehouse stores tend to do so in very large quantities. An annual fee of $55 is unlikely to make a difference to a company spending thousands of dollars a year.

I agree that a $60 annual fee for non-company shoppers might put some people off, I think it all depends whether you’ll make that money back in savings at the store or not. My parents, now shopping for just the two of them would not be interested in paying $60 to go out to Majura for a shop. I on the other hand estimate I will more than cover my investment over a 12 month period and have the space to store any stuff I might pick up there. People have pointed out its not just bulk stuff, but I do find it hard to believe that people would pay to regularly shop out there just for the hell of it. As someone else said, it’s not the kind of store that relies on passing traffic.

People who’ve been going to Campbells and are happy with their range and service are obviously going to stick with them, they wouldn’t switch and pay a fee for no reason.

dvaey said :

Wouldnt it make sense to wait until the store is open? Otherwise by the time the store opens, your 12 month membership will probably only have 10 or 11 months left. I have to wonder how many business customers they will attract with a $55 joining fee, when Campbells charge nothing.

The Costco website assures suckers like me that the clock doesn’t start ticking on Canberra memberships until opening day. Although presumably that means I can’t go get the card and run down and use it in Melbourne without starting things off.

Primal said :

I bought my Costco membership online last night.

No, I’m not sure why…

Wouldnt it make sense to wait until the store is open? Otherwise by the time the store opens, your 12 month membership will probably only have 10 or 11 months left. I have to wonder how many business customers they will attract with a $55 joining fee, when Campbells charge nothing.

I think some people have a misconception that all you can get at Costco are bulk size things or packets. They do also sell sizes that most people would use, and as puggy said, they sell things that other supermarkets don’t sell and often have really good specials.

Primal said :

I bought my Costco membership online last night.

No, I’m not sure why…

Because you just can’t wait for the once a month shop for the mega box of cereal, cookies and electronics at decent prices. I used to love Oreos until I bought a Costco size pack. Too much of a good thing.

You’re also getting excited about the really random cheap stuff they have in the middle section of the warehouse. What will you find this week? From my experience in the US, it went from $5 Calvin Klein t-shirts (knock offs or not, they were good quality, better than Gap) to $500 Natuzzi sofas the next.

There is a spot for Costco in the market. Unike the Supabarn warehouse, you just buy massive packets of things, not the entire case of normal size packets.

I bought my Costco membership online last night.

No, I’m not sure why…

Gungahlin Al9:50 am 28 Jun 11

qbngeek said :

dpm said :

Re: Costco, everyone needs a tub of Vegemite the size of a 4L paint tin! 🙂

Hell yeah, a 4L tin of Vegemite will sstill only last 3-4 weeks in my house. We go through the bigest jars that Coles have in about a week. Vegemite toast for 4 people every day, Vegemite and cheese sandwiches for lunch each week day for 3 of us plus I use it in my cooking.

Must be in the Army to need that much boot polish.

Mrs Blowers went to Costco in Melbourne the other week using the membership bought here a month ago. She was blown away by the variety and price. We also visited a Tesco in Thailand a few months ago and it had everything you wanted and a lot of known brand items cheaper than local markets.
Yes, its not going to be the place to do a weekly or daily shop. but if a visit every couple of months saves us then its a good thing. Sick of being ripped off by the other US companies Woolies and Coles. And as others have said, great for those on the land. The only downside is the news about the former Brand Depot being filled by Woolworths and Coles?? Costco will laugh at the competition.

dpm said :

Re: Costco, everyone needs a tub of Vegemite the size of a 4L paint tin! 🙂

Hell yeah, a 4L tin of Vegemite will sstill only last 3-4 weeks in my house. We go through the bigest jars that Coles have in about a week. Vegemite toast for 4 people every day, Vegemite and cheese sandwiches for lunch each week day for 3 of us plus I use it in my cooking.

Grail said :

I’m amused by the folks crowing about how much money you save when shopping at a bulk retailer……

The part i’ll find interesting is how much Woolies et al change their prices to match. Basically, the Big Two have been screwing us (and their suppliers and farmers moreso!) for years. Then, as soon as the small Aldi makes a bit of a difference, they BOTH start crowing about their ‘Prices are down and staying down’ BS, like they’re doing us a favour! Ha! They went as long as was possible with higher prices before lowering them slightly due to some buyers changing store.
Can’t wait to see what happens with a bit more competition…. Magically they’ll find even more savings for us, out of the goodness of their hearts (I pity the poor farmers in this).

On another note, at least the ‘prices are stying down’ scheme may make some things at the Big Two cheaper for a while, does anyone remember the old Woolies ‘Rollback’ crap? What a joke, things were ‘rolled back’ one week then went back to normal prices! WTF was that about? More like a normal weekly special than a ‘rollback’….

Re: Costco, everyone needs a tub of Vegemite the size of a 4L paint tin! 🙂

Grail said :

I’m amused by the folks crowing about how much money you save when shopping at a bulk retailer.

Are you the same folks complaining about feral teenagers, or the lack of job opportunities for unskilled workers?

I think you’ll find that Costco will create quite a lot of job opportunities for both skilled and unskilled workers in the region. I know they’re still advertising plenty of positions in the store that need to be filled when they open it.

A place like Costco wont cause Woolworths and Coles supermarkets to close down, so there’ll be no job losses there. It might encourage the big 2 to stop being such sacks and start providing some better service and products, and maybe better staff entitilements too.

In fact Coles and Woolies will probably create more job losses in their own stores by implementing more of those stupid auto-checkout facilities, increasing their profit, not reducing their prices and at the same time reducing their employment rates, a strategy I’ve no doubt they’ve been cooking up for some time.

I highly doubt something like costco would have any effect on IGA stores at all since the majority of people (specifically the market costco will be aimed at) don’t do their weekly/fortnightly ‘big’ shop at an IGA. They mostly go in for a few items here or there with some chocolate bars and a paddle pop thrown in, and they’ll still do this. So no job losses there.

On the subject of the Supabarn warehouse, yes I feel bad for the staff that may have lost their jobs. But that place was never very good in the beginning so it’s not surprising that it hasn’t gone very well, with or without costco moving in next door. I started shopping there when they opened, their fruit and veg was poor quality, most of it not local (can’t speak for their meat as I don’t buy supermarket meat). Their range of products in general was average for a place billed as a one-stop bulk shop. In my opinion they were ill-equipped to run a store that size effectively. Running a couple of local supermarkets doesn’t mean you can run a massive bulk outlet with a narrow range of stock and crap fresh food.

A bit of variety in the market is a good thing. As someone who lives on property with a young family and buys in bulk, I’m pretty sure I’m one of their target demographics and I’ll be shopping there. At the same time i’ll continue supporting regional producers and companies by shopping at locally for other things and EPIC farmers market on Saturdays, and still getting the odd paddle pop from the local IGA.

Supporting a big company sometimes doesn’t mean people never support the local people, or their staff. And families shouldn’t feel guilty about trying to save money on daily essentials, a service that costco will probably provide.

I’m amused by the folks crowing about how much money you save when shopping at a bulk retailer.

Are you the same folks complaining about feral teenagers, or the lack of job opportunities for unskilled workers?

localfella said :

. Was also told by an employee that they are closing and won’t be re-newing their lease. So much for competition, we just let OS companies come in and take over.

i think its amusing how you link a grocery store closing with a bulk purchase warehouse opening on the other side of the city. What about factors like… rent it too high? myer belco was threatened to shut down for the same reason last year.

localfella said :

I called in to Supabarn on my way home from work to pick up some meat and veges for dinner to find none. Was also told by an employee that they are closing and won’t be re-newing their lease. So much for competition, we just let OS companies come in and take over.

You must have a different defintion of “competition” to most of us.

I called in to Supabarn on my way home from work to pick up some meat and veges for dinner to find none. Was also told by an employee that they are closing and won’t be re-newing their lease. So much for competition, we just let OS companies come in and take over.

allyroger said :

Interseting the negativity towards Costco. …. Would you pay $60 to save a few cents on some beans – probably not but to save a few hundred on a TV and without bargaining? I think so.

i dont think its negativity, but more being realistic. Nobody is going to drive out to Brand Depot to do their daily shopping in order to save a few cents on beans. However, yeah i agree, if i was going to buy a tv (or large items), and i saw one in costcos catalogue (assuming they have one), costo and the membership fee would look ALOT more attractive.

i love how costco’s country manager is ‘pat no-one’… sage advice; clearly not going to go heavy on store access security then.

Interseting the negativity towards Costco. I spend afew years in the USA and love warehouse stores. Not only will it keep the supermarkets honest but the clowns like Harvey Norman too. Good article (from 2004) about Costco.

http://www.usatoday.com/money/industries/retail/2004-09-23-costco_x.htm

Whether they can pull it off in the Australian market with its higher operating costs, I don’t know. If they can keep the markup to 10% then I predict it will be a massive success. An all the comments about 4.8 litre jars etc, yes there is some of that but sometimes they put noraml packs together and sell in say packs of 4, heavily discounted. Would you pay $60 to save a few cents on some beans – probably not but to save a few hundred on a TV and without bargaining? I think so.

I dont think i can justify $60 annual membership to visit a store i would really only visit a few times a year.

I don’t see it as being a particularly big challenge to the existing supermarket sector in Canberra – for a start, why would people travel all the way out to Majura to do their grocery shopping? The couple of times I’ve been out to Brand Depot – including the day before Christmas – it was dead!

Interesting views on this! Having lived in the UK for the last wee while, I have used Costco regularly and have found it to be awesome! Yes, there are some weird and wonderful combinations that you can buy (Vespas and Bleach!!) but the idea is simple. On average, we were saving about 25% on household products each month in comparison to the large supermarkets. You also can stock up on larger quantities of the day to day foods any family would use.

The trick is to not be put off by the lack of packaging, presentation etc. It is what it is!

Great idea for Canberra and the more competition for the lazy, over-priced supermarkets, the better!

A Noisy Noise Annoys An Oyster5:33 am 05 Feb 11

lobster said :

If it’s at Brand Depot then it will probably go broke and close down. It’s the curse of Brand Depot.

Either that or Paul’s Warehouse will take over the space and open yet another store there.

quietly_watching said :

ACT competition policy overridden by the power of the airport? or sour grapes?

Or 14 year old staffer spreading unsubstantiated speculative BS to customers?

quietly_watching6:51 pm 04 Feb 11

Went shopping at the airport Supabarn this afternoon – signs everywhere stating they are no longer selling single items, meat, fruit & veg and frozen.

While in the line at the single rather lonely checkout, the bloke behind us said he had just been told by a staff member thay they were closing because Costco was opening. He said the staffer had told him it was something about a “no competition” clause in the lease.

ACT competition policy overridden by the power of the airport? or sour grapes?

If it’s at Brand Depot then it will probably go broke and close down. It’s the curse of Brand Depot.

I think it is a good location, it isn’t just for Canberra. Many from the south coast and the Bay will stock up when they are in town.

If you live on a bit of land not in town, you buy in bulk

Surely increasing competition for Coles and Woolworths necessitates putting that competition within walking distance of where those two already are? Or are we only interested in statistical increases rather than real-world improvements?

Deref said :

What an incredibly stupid place to put it.

I’ve got to disagree.
It’s out at Snow-town so the land-cost will be a pittance (relatively speaking).
It’s in the perfect location to drag in people from Goulburn, Cooma and Wagga Wagga (and beyond).
For Canberra shoppers, it’ll be no more than 30 minutes from most homes. Costco is not the sort of store that relies on passing traffic.
And as mentioned in Post #6, with a bit of luck, we will all benefit through the now almost critical duplication of Majura Drive.

Woot! I’m down to my last 5 kilos of canned pineapple, so this news is definitely a relief to me.

What an incredibly stupid place to put it.

EvanJames said :

I wonder what Supa Barn think about it though? The new building is the earthworks they’re doing next to Trade Secret.

Indeed. First they get the news that Aldi are going to be moving in on their doorstep in Kaleen and Wanniassa, now Costco is opening a literal stone’s throw from their new warehouse.

For someone always crying out about supermarket competition, you have to wonder why Stanhope approves all these new outlets in direct competition with Supabarn rather than Woolworths,

I remember browsing a Costco in the States and picking up a packet of Doritos the same size as my torso. I also saw pizzas that wouldn’t fit in an industrial oven. Why anyone would want that much pizza is beyond me.

I’ll bet the store leasees at Brand Depot are on their collective knees praying to their preferred deity that CostCo brings customers in by the busload. Stanhope might even have to duplicate Majura Drive to cope with the additional traffic!

I’m guessing they’ve plumped for Canberra to access the rural market. You see them at Aldi Queanbeyan, with 2 trolleys each, buying up big.

I wonder what Supa Barn think about it though? The new building is the earthworks they’re doing next to Trade Secret.

bitzermaloney2:04 pm 21 Jan 11

Awesome!!! Now we will have somewhere to go if we need to be 1000 rolls of toilet paper, 37 bicycles, a photocopier, 5 wheelbarrows, a Vespa, a fridge and a 200 packet of Oreo’s. (They might add Tim Tams to their oz based products) and only have time to stop at one shop.

” The size of the store is expected to be about 13,500sq, more than four times the size of an average supermarket of around 3,000sqm.

Mr Stanhope said the Costco store would help the Government achieve the aims of its Supermarket Competition Policy, by increasing the competition and diversity in the full line retail supermarket sector in the ACT.”

Isn’t introducing one massive lowest cost player into the market at odds with increasing diversity. If I was a local IGA, then I would know that there was no way I could compete on price – to do so would be suicidal. My only option is the high quality full service strategy and hope that customers place enough value on having a local shop that I can stay in business.

But then maybe that is the plan.

Bloody typical. We can get a Costco, but not an Ikea.

13,500 square meters is pretty big. I guesstimate that Bunnings Tuggeranong is about 11,000 square meters.

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