American big box retail giant Costco will launch its second store in Sydney this week, with the company expecting it to be more profitable than its first location, which opened in Melbourne two years ago.
Experts say nearby retailers at the new location will benefit from higher foot traffic as long as they do enough to keep people entering their stores.
Costco Australia managing director Patrick Noone says the store is set to launch next week and that “we’re on the countdown”.
“We’re got merchandise coming in this week and we’re just counting down now,” he says.
Noone says he hopes the store will be more profitable than the Melbourne location but denied claims that was because the Sydney location in Auburn will be more accessible than Melbourne’s Docklands warehouse.
“I think Melbourne is quite accessible through the highway system and Auburn is not dissimilar. We also have the fact Sydney’s store is more in the geographic centre of the city and there are more people to catch,” Noone says.
The opening of the Sydney store comes as the company prepares to open a new store next to Canberra airport.
Crossmark chief executive Kevin Moore says retailers near the Auburn Costco store will be able to benefit from higher foot traffic, hopefully giving their sales a shot in the arm.
“Costco is a membered store and they have a very limited number of products. It’s a destination store so when people go there they will buy things and want to purchase other items as well,” Moore says.
“Independent stores are surely going to benefit.”
Retail experts have previously told SmartCompany independent stores need to adapt if they see larger retailers opening nearby, such as advertising more services rather than products.
Those comments came after Woolworths told SmartCompany last month it had confirmed a spot next to Costco’s future Canberra location in order to benefit from the extra foot traffic the store is likely to receive.
“If you’re around Costco you’ll definitely get a benefit of foot traffic but taking advantage of it is up to the store owners,” Moore says.
Noone says the company is starting to identify different locations across the country where it could be possible to open future Costco stores.
“We’re definitely looking in all the big cities, as well as looking at additional buildings we could do in Sydney and Melbourne although you still have Adelaide and Brisbane that are very attractive cities as well,” he says.
“We have things we want to do, especially as we want to build bigger sites than the first two. We’re simply waiting for sites and prices to see where we can go.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
