Costco drives down Australia's fuel prices
Australia's fuel retailing market has a new player set to push competitors for lower prices as supermarket chain Costco expands its network.
Bulk discount retailer Costco currently only operates seven stores in Australia, yet it already earns more than $1 billion in revenue, accounting for 1.2% of the $88.1 billion supermarket industry.
As it expands its discount business to the fuel retailing sector, research firm IBISWorld has predicted the on-stop model will put greater pressure on leading companies Coles and Woolworths.
Costco first opened a store with fuel pumps in November 2013. Their discount-based model, which has caused headaches for nearby competitors in the areas where they operate, is primarily backed by the company´s $60 annual membership fee, which allows them to offer cheaper prices.
IBISWorld found that, due to the low brand loyalty customers have when it comes to fuel, motorist will always go for the cheapest fuel, making Costco´s discount business hugely successful.
Costco is expected to open several new stores in the next five years, with many of them offering fuelling services, said the report.
“Costco is committed to expanding our fuel offer further in Australia, bringing quality and value to more of our members,” Costco Australia managing director Patrick Noone said in a statement. “We are delighted to have been able to offer significant savings to our members at the pump, just as we do throughout our warehouses, on everything from diamonds to detergent.”
