Thursday, January 14th, 2016 - Roy Morgan Research

Costco recently announced it will open three more of its big box membership stores across Australia in 2016—Melbourne’s fourth, Sydney’s third, and Brisbane’s second, for a total of 11 nationwide. However over the past five years, it’s been each city’s first store that has most accelerated the growth in total Australian shoppers, trended consumer retail data from Roy Morgan Research shows.

In the year to September 2015, a total of 667,000 Australians 14+ (3.4%) were Costco shoppers (people who visit in an average four-week period and/or say they mainly or sometimes shop there). Of all these Total Costco shoppers, 420,000 (63%) actually shop there in an average four weeks—a proportion well below the 80-90% among Woolworths, Coles, IGA or ADLI shoppers.  

Each new Costco store adds new shoppers overall, with growth strongest when a new city gets its first outlet. Within two years of its much-hyped Australian store launching in Melbourne’s Docklands in August 2009, Costco gained around 140,000 shoppers—but this showed signs of having peaked. After the second and third stores opened in Sydney and Canberra in July 2011, the total number of shoppers soon surpassed 300,000—but again, after a couple of years, growth appeared to be slowing.

Second stores in both Melbourne and Sydney in November 2013 gained some new shoppers in each city, but growth really accelerated once Brisbane got its first Costco in May 2014 and Adelaide its first in November 2014. This latest data doesn’t yet show the impact of the eighth Costco store that opened in Moorabbin in November; new data covering the last quarter of 2015 will be available soon.

Eight stores and counting – the rise of Costco in Australia

Source: Roy Morgan Single Source Australia, July 2009- September 2015, 12 months sample rolling monthly, average annual n = 18,512 Australians 14+

Despite its warehouses full of bulk-bought discounts, Costco shoppers actually come in with more money to spend than the norm. The wealthiest fifth of Australians by socio-economic are almost 50% more likely than average to shop at Costco. This AB quintile makes up 29% of all Costco shoppers, and another 25% are in the second-to-top C quintile. Middle Australia, the D quintile, is only slightly overrepresented among Costco shoppers (21%), while just one in four shoppers (25%) come from the lower 40% of the socio-economic population in the E or FG quintile.    

The Socio-Economic Status of Costco shoppers

Source: Roy Morgan Single Source Australia, October 2014 - September 2015, sample n = 15,668 Australians 14+

Michele Levine, CEO, Roy Morgan Research, says:

“With data to the end of 2015 available soon, we may well find that, with its latest eighth store included, Costco has pipped 700,000 shoppers across Australia. Costco announced this week that it plans to open another three stores this year, each in cities where it already has at least one outlet.

“Trending the growth in the total number of Costco shoppers nationwide suggests that second stores which opened in Melbourne and Sydney in November 2013 had less of an overall impact than did their first stores in those cities, or the subsequent new stores in Brisbane and Adelaide. We’ll soon know the results of Melbourne’s third store, and be tracking throughout the year as more stores open.      

“Very few Australians do their main grocery shopping at Costco—the vast majority of Costco’s member customers are only occasional visitors. Only around 60% of Costco shoppers have even been to the store in the last four weeks.

“As our recent Spotlight on Retail report showed, we spend over $100 billion a year on groceries and another $110 billion or so on commodities like clothes, electrical goods, jewellery and pet supplies – many things that Costco also stocks. So even though a typical Costco member may still buy most of their groceries at Woolworths, Coles or Aldi, most of their clothes at Myer, Target or online, most of their alcohol at Dan Murphy’s or First Choice, and most of their appliances at Harvey Norman or The Good Guys, each new Costco may take tiny bites out of a whole range of nearby retailers.

“As our shopper profile reveals, Costco shoppers tend to be wealthier than the norm. Other bricks-and-mortar retailers keen to attract and target such cashed-up customers would do well to investigate how the GFC, the rise of online shopping and product research, and flat wages are changing attitudes to deals and bargains, brand names and stores’ own products, and value for money.”

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Roy Morgan Research

Roy Morgan Research is Australia’s best known and longest established market research and public opinion survey company. Roy Morgan Single Source is thorough, accurate, and provides comprehensive, directly applicable information about current and future customers. It is unique in that it directs all the questions to each individual from a base survey sample of around 55,000 interviews in Australia and 15,000 interviews in New Zealand annually - the largest Single Source databases in the world. The questions asked relate to lifestyle and attitudes, media consumption habits (including TV, radio, newspapers, magazines, cinema, catalogues, pay TV and the Internet), brand and product usage, purchase intentions, retail visitations, service provider preferences, financial information and recreation and leisure activities. This lead product is supported by a nationally networked, consultancy-orientated market research capability.
Shaun Ellis
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