4. What does Costco Australia need to consider to ensure that it will be competitive in the long term in the Australian retail industry?

The Australian supermarket and grocery industry can be aptly described as hypercompetitive. In 2018–2019, the retail industry in Australia generated $103.4 billion of revenue and $4.2 billion of profit. The duopoly of Coles and Woolworths is being increasingly challenged by newer and leaner competitors such as ALDI and Costco, which have entered the industry with different business models designed to provide customers with value for money.
One of the relatively newer players in the Australian retail industry is Costco Wholesale Australia, which is a subsidiary of the US-based Costco Wholesale Corporation. Costco has established 11 stores in Australia based in Victoria, New South Wales, Queensland, South Australia and the Australian Capital Territory, with plans to open two more stores in Western Australia in 2020. According to Patrick Noone, the managing director of Costco Australia, the company is projected to operate up to 60 stores in Australia within the next 30–40 years. Costco’s business model is a unique one, with customers purchasing an annual membership for $60. This annual membership allows customers to shop in Costco at a discounted price and buy in bulk.
The company sells a large variety of products, including fresh food, groceries, electronics, diamonds, tyres and petrol, among other things. According to Roy Morgan’s Discount Department Store Satisfaction Report, Costco achieved the highest customer satisfaction rating among the leading discount stores in Australia in 2018.