I visited Costco (Australia) and my blood ran cold

Many Australians are aware that the US behemoth Costco, bulk retailer extraordinaire, opened its first warehouse in Melbourne recently. Costco has received more than a bucket of free promotion through all the media attention it got (and I guess I’m not helping). I’ve been to Costco in the US and wanted to see what the Australian experience would be like. It’s striking how a novelty in one context (me being a tourist in the US) feels so different on my home turf.

In case you don’t know, Costco is a membership-only ($60/year) retailer specialising in large packages or multipacks of edible and non-edible consumer goods, plus occasional items like TVs or iPods or office chairs which are a little harder to sell in lots of ten. An enduring memory of my US visit was a large (two-pound?) bag of pine nuts and enormous trays of meat. The lack of diversity of brands was noticeable (there’s a house brand, and usually at most one or two competing familiar brands stocked for any product). The concept of buying very large quantities of, well, anything, seemed to work well with that USAmerican large-is-better approach to so many things.

But in Melbourne it seemed excessive, inappropriate and depressing. I’m not sure how many consumers can buy a kilo of soft goat’s cheese and eat it all before it goes off. Why do we need 15-inch (approx) ready-to-bake pizzas? They don’t even fit in the average Australian oven. Is it a good idea to only sell wholesale-size boxes of chocolate bars? Or one-thousand-ChupaChup containers? Why in hell do we need imported packages of “American cheese” slices (think fast food burger plastic cheese) or mixed grated cheese? How many people eat a sack of melons before they go off? A kilo of strawberries?

If all that interests you is cheap cheap cheap, then Costco might be for you (though not everything is cheap, some tech is actually uncompetitive). If you don’t mind a large company squeezing brand and product diversity in the Australian market even further (Coles and Woolworths do quite enough of that already), promoting the lowest-common-denominator approach to (in particular) food retailing, then I’m sure you won’t mind the place. But for me much of the experience stank of the same low-diversity, low-quality approach that strikes many foreign consumers who walk into average (not all, but far too many) North American supermarkets.

Whether the annual membership fee will be worth it for you depends on what you can save on (do you have space for 124 nappies or a bazillion rolls of toilet paper?). There will no doubt be specials and occasionally attractive products, especially as they stock tech, kitchenware, stationery, clothes and more. But for anyone who loves fresh food and brand/product diversity, it might be difficult, especially if your household is only one or two people.

What can Costco contribute positively in Australia? Despite importing crap American cheese slices, Costco Melbourne does have an impressive range of cheese (though no quality American cheese, unless I overlooked it). Good roquefort, poor quality gruyère, goat’s cheese, buffalo mozzarella (defrosting on the shelf!), some bries and camembert and some familiar local stuff. Also French butter! The meat looked decent (prices between Vic Market and horrendous Coles/Woolworths) and there was a good range of cuts. Costco might end up being the go-to place for meat amongst those who despair at our existing supermarkets. (But just take a detour to the Queen Victoria Market for goodness sake!)

Perhaps we’ll see a move by the local chains to lift their game and compete more on quality. But many Australian consumers have been successfully brainwashed into prioritising cheap at all cost by those same local chains, so I’m not holding out hope for positive developments.

26 thoughts on “I visited Costco (Australia) and my blood ran cold”

  1. Hi Duncan,

    Did you see what sort of booze they stock? Can you buy single bottles of gin (Litre or 750ml)?

    Just wondering if the $60 is worth it to me?

  2. Great minds think alike Duncan. Your post beat me to it.

    I went to Costco on Saturday and I too left feeling cold and overwhelmed. I even got a headache just from all the chaos.

    After the initial hype wears off, I wonder if this type of selling will be sustainable. It will be extremely interesting to see. I can for one say I won’t be going back anytime soon because I just don’t think I would buy much to save me that much money to make up the hassle of going there.

    I agree with you regarding the cheese and butter. I wanted to buy the Meredith Goats cheese which I have bought previously as it is fantastic. Also, the Lescure butter was indeed a bargain (half price) but the queue was way too long to justify it.

  3. I have no desire to go there or support such undercutting of quality and local businesses – I find that buying less and using it makes more environmental (and often health and budgetary) sense than buying in bulk.

    I imagine it might appeal to people with large families and those that do lots of entertaining. Although I notice that the middle eastern stores near us also sell in bulk so am not sure if people would go to costco rather than such shops

  4. Wow, such a negative response from so many of you for a company that has members willing to que down the road just to get in, then again just to make a purchase. I have been to Costco’s in Canada and the US. Very popular but I have no doubt once our many fellow Aussie employees (should be about 250 of them working there in Melbourne) get cashiering down, lines will be managable. Compare apples to apples, the same specs of meat and other food with the “big 2” and other establishments. Costco is all for high quality while mixing in some big name brands, saw just about 1kg of Vegemite on the shelf, good on ya!

  5. Just in case other readers are unsure, the above commenter Nate is a Costco employee.

    @Nate: queues down the road has nothing to do with quality and everything to do with the extensive free publicity you got. People buy tickets on Tiger Airways or Ryanair too, but it has nothing to do with quality or even (sometimes) a liking for the product. My article above already acknowledges the possibility that Costco’s meat could be better than Coles/Woolworths, so you don’t need to come in and do your PR line on my site. As for “high quality” — the muffins and “cupcakes” and birthday cakes on display had *nothing* to do with quality. Defrosting tubs of buffalo mozzarella have *nothing* to do with quality (though hopefully just a storage glitch). The crap gruyère you’re selling has *nothing* to do with quality. Imported “American cheese” slices have *nothing* to do with quality. Some other products might well be of a decent quality, but again, spare me the PR line and accept that not everyone thinks Costco is the best thing since sliced bread.

  6. Nate wrote, “once our many fellow Aussie employees (should be about 250 working there in Melbourne”

    Well, the employment arguement is usually a red herring. It sounds good and nobody can really argue against job creation, but what those 250 jobs don’t take into account are jobs that are lost by smaller businesses as people switch to Costco and other large retailers.

    It also doesn’t take into account how many more jobs there would be if each department was represented by a smaller business – a butcher, a greengrocer, a deli, and so on.

    And while we’re discussing smaller retail options, there is going to be far less scope for skills development for the Costco employees. A person working as a cashier for Costco is probably going to stay a cashier. Someone who starts working a butcher selling goods over the counter has some chance of changing roles and learning the trade. The cashier at Costco isn’t expected to know anything about the products you sell. The people selling cheeses at the delis at Queen Vic will be able to tell you about their products.

    As Duncan pointed out, Costco isn’t competing on quality. IT’s competing on price and volume.

  7. Duncan, how could you see inside without becoming a member? I thought only members (with one guest) can enter?

    Having worked for many years in a two isle shop which was overtaken by a slightly larger (eight isle and therefor able to sell cheaper) supermarket, which was subsequently closed due to a Coles, I am not particularly keen to see a tighter strangle hold on our choice of product. I refuse to purchase supermarket’s own brand products, I don’t shop at Aldi, and I feel as strongly that a Cosco-type situation doesn’t suit me. We are a family of five, but it seems even if cost was the only criterion we couldn’t work within the Costco rules, we just don’t have the storage space!

    It’s about as far for me to travel to get to Vic Market, and you have confirmed the produce is better there in quantity, quality and price thanks Duncan – no need for me to change the way I shop!

  8. It’ll be interesting to see whether Costco takes off here and manages to spread beyond Melbourne (I’m sure if its advance across Australia is anything like Ikea’s, I’ll be checking out my local Adelaide Costco in, oh, about ten years).

    Buying in bulk doesn’t have to be an excessive, “US-style” quality. For long-storage items such as canned tomatoes, dried pulses, etc, I like to buy in bulk. It’s economical and convenient, and if you look for it you can get it now, without paying anyone membership fees. The non-chain ethnic supermarkets are normally happy to sell you a pallet of something (at a discount) if you ask.

    Buy can Costco contribute positively to Australia? Probably not. Fact is, most people don’t care about food the way you or I do, and are happy to save money on food to put towards the things they do care about. Right now they’re shopping at the big supermarket chains or non-Costco bulk discount stores and it suits them fine. These are the place that will lose business to Costco.

    What matters is how the chains react. Will they focus on their care-about-quality customers and use their buying power and market presence to make quality produce more affordable and accessible? Or will they try to keep their base and lower prices even further, which means putting more pressure on growers to produce food that lasts longer and is cheaper to produce? Since their entire existing business model is based on option 2, sadly I think I can guess.

  9. Well, even a bazillion rolls to loo paper never seems to be enough for us…

    But no, no way, not interested. Not sure I’d make my $60 back given the kind of eating that goes on in this place. Glad you explored it for me, Duncan.

  10. My other half lived in the US and is very excited about Costco opening in Melbourne. Interestingly, an old school friend who also spent time living in the US was similarly excited by Costco in Melbourne. My other half wants to buy things like toilet paper, paper towelling, baby wipes, etc. in bulk and store it in the garage.

    However, I’m drawing the line at food. She once bought some tinned Italian tomatoes from Aldi, but when I opened it, I found it was half liquid – so it’s a false economy.

  11. Duncan, my wife and I went to Costco in Melbourne and we thought it was very average. We have been to a few Costco while we were living in Japan and it seemed to work there. There were a few advantages shopping there – meat could be bought in bulk and prices were comparatively better than local Japanese supermarkets. There also seemed to be strong demand, most shoppers would have full trolleys (they are probably 2-3 times bigger than your average supermarket trolley).

    In Melbourne though, we were both struck by the fact that prices were generally no different to local prices, the location is inconvenient. The quality of food generally is crap. Just go to Vic market and compare price, quality and freshness – you can’t compare. I hated the food court with the ‘Aussie meat pie’ sign – no shit, it’s Australian.

    Most shoppers had only a few items in their baskets and my bags were checked upon leaving. I found this quite rude. Maybe it’s an American thing.

    Anyway, we won’t be back. The entry charge is also a rip off and the products/price were very disappointing.

    On a positive note, it’s reassuring that local produce at our markets kicks arse and is likely to contribute strongly to the collapse of Costco. I can’t see this business model as being sustainable.

  12. I’m with you Duncan – the place sounds absolutely vile. Shall we compare my usual shopping habits? JB walks to the Vic Markets on Saturdays and buys meat, fish and cheese. I tram 4 – 5 stops away and buy necessities at a locally owned IGA, and fruit from a greengrocer who has known me by name for the last 14 years. I’m so used to his fabulous quality, that I turn my nose up at the fairly decent stuff at the IGA (And feel sick if I walk through the Coles vegie section – I wouldn’t eat any vegies at all if they were my only choice).

    Every second week I go to a farmers market where I buy seasonal, and local from people who I know, who talk with pride about their produce. And I pay $3 a litre for beautiful milk – rather than the 20cents a litre that farmer would get if he sold it to the co-op.

    I shuddered at the pictures of people dragging tonnes of pure white virgin paper toilet tissue to their SUV’s to drive back to their huge houses with storage space for a million baby wipes.

    I don’t have the space in my modest house to store a bulk pack of anything. So I buy fresh, local and often – and love it.

    I wonder if the choice of people to pay to shop in such bulk is any reflection on how horrid it is to shop at Coles or Woolworths? No-one wants to spend anymore time there than they have to.

    Costco is the antithesis of the slow food concept, and the farmers’ market, and the Vic Market, and strip shops and all the things that make me look forward to shopping for my food, not hate it! God I’m lucky! Imagine if you hated shopping for your food?

  13. You’re so lucky, SJ. I would love to shop the way you do, I really, honestly would. (as I re-read this I realised it could be interpreted sarcastically, and I assure you there is no sarcasm intended). See, I’m one of those people who hates shopping for anything, even food.

    Unfortunately there’s a significant lack of markets with decent produce near where I live, and alternatives to the big 2 supermarkets. Sadly, my local grocer has produce that isn’t great quality at all, although the local butcher has some lovely meat, and I always buy from him, when he’s open.

    So if I were to shop for my food the way you do (and believe me, I would prefer it), I would have to drive a fair distance to do it, and I’m afraid convenience and price win the argument for me 🙁 That being said, I haven’t been to Costco yet, but doubt it would become the place I go for my shopping – partly because I lack storage space, and partly cos it’s just so damn far for me to travel.

  14. The person Ross (IP: , d58-105-42-18.dsl.vic.optusnet.com.au, rossdmartin @ yahoo. com. au) submitted two asinine and largely irrelevant comments here yesterday at 12:52 and 19:01, insulting other commenters and me, and positing a spurious correlation between intelligence and the use of clichés and certain words. Unfortunately, this person’s amateurish knowledge of human communication (he presumably couldn’t see his own clichés) was accompanied by an internet-troll-like inability to contribute constructively to the conversation.

    As per the terms of commenting on this site, the person is in breach and his details have therefore been published.

  15. well like most things I will try it and see before I relie on anothers opinion, I will of course list all the prices for the brands I would normally purchase locally in the largest size before I go, as was recommended by a co-worker where I work.

    I do use the Vic Market for fresh produce.However Like many other people who work and have a family to run, I do not have the luxury of the time to attend farmers markets unless Im on holidays. I also believe that some sellers at these markets are not always the producers of the goods they sell.
    So I would say that the value of Costco will depend on what you are looking for, and as you should do whenever you are shopping for goods anywhere, DO YOUR HOMEWORK BEFORE YOU GO.

  16. @liz: Welcome. I agree that it’s always important to make up your own mind if you think there might be something that suits you. I’m all in favour of achieving a workable personal balance. Thanks for your comment.

  17. I thought the experience was quite good, if you have a family most of the bulk stuff will be used up in no time! The nappies actually come in a box of 184, and most people will buy 2-5 boxes when they’re on special at that price a WW or Coles. The meat I noticed was Austalian and not from some foreign country. I have said to friends and family if your having a function/party its worth going there first as you can buy platters, plastic ware, birthday cakes etc.
    Although I think your right when it comes to variety or choice of brand, some products only had 2 brands on offer if that, but then basmati rice had like 5 choices(which I didn’t get).
    Anyway, I will be going back….its great for families!

  18. Interesting Duncan, I hadn’t heard about this, being up in Sydney. Although it’s pretty much the opposite of what we’ve been doing over the last few years. I refuse to go to Aldi – every time I go there I come out incredibly, throat-slittingly depressed – and am happy buying my bits and pieces locally. However I’d be really interested in taking a look.

  19. Great insight Duncan. I was initially very curious since I haven’t been but I had a bad, bad feeling about it. If anything Costco is doing to our Melbourne city, it’s creating obesity! Like you said, who needs a 15″ pizza and who on earth (as reported by a friend), needs a 2.9kg birthday cake unless you’re turning 100?!

    The way I see it, it’s only great if you are feeding a village of about 100 people. That’s the only time I see anyone needing a whole kilo of goat’s cheese.

    I’m very much like SJ – I’m all for fresh, local, ethical, green. Buhbye Costco!

  20. To the host and the Pseudo Epicurean, As a Canadian who frequents Costco weekly, I would like to offer my insight the the warehouse of stuff on offer.

    Yes costco requires a membership but here, the cost of such is made up with my savings on 4L jugs of milk. As a family of 5, we don’t drink lots of juice because of the sugar, we don’t drink cool drink, we drink milk. At costco here, the milk is $2.30/jug cheaper than the grocery store. 12L of milk a week, there is my membership.

    Tyres. I have bought 3 sets of Michelin tyres at costco. The difference between costco and the michelin dealers ranged from $230 for one set to an astounding $410 for another set, with costco being cheaper.

    Yes it is easy to overindulge at costco but whose fault is that? Not costco’s. If you go there with your grocery list and buy staples, butter (here$1.50cheaper than the grocery stores), milk, bread, fish etc. you will do better.

    Don’t get me wrong, I have seen people make split decisions on tvs, saunas etc.

    Ask yourself, do I need 2 kilos of nuts? Maybe not. Can I benefit monetarily from buying this tray of meat, separating it and freezing the rest for later? I am sure.

    I lived in Australia, a 15″ pizza or 37.5cm pizza (for those who have trouble converting) would certainly fit in an Australian oven. As for the pizza, there are plenty of pizza shops in Australia and pizza goes down well at parties.

  21. From reading the comments so far, you all must be very lucky to have the ability to choose where you want to shop. I come from a small country town and a small IGA is here. Prices and quality are not good. If we wish to avail ourselves of choice it is a 45 Min drive to a larger centre. Aldi does supply some choice as well as many other shops and of course the big 2. We, by necessity buy in large quantities to save fuel as well as shopping dollars. As an interesting note, I have just received an email about costcos cheap chemist counter for prescriptions. I wonder if they will be seling this sort of thing here in Australia? Anyone know? It is always good to have competition if in fact it is competition.

  22. Well I finally went to Costco and I was prepared and had done my homework. I would say do you home work as somethings are Cheap and some are the same price as my local supermarkets. Also if you have the storage space for good yes its great. One item that I purchased was 10kilos of a well known washing powder for front loading washing machine for $35. Now the cheapest my local shops sell it for is $9 for 1 point 5 kilos ie $6 per kilo.Therefore I will have a saving of $25. And as I have a family of teenagers that means my machine is going each day I will use it. For all you doubting thomases I remember approximately 40years ago my mother and a group of her friends getting together every month and driving from the country to shop in Brunswick at an open to the public shop called Half Case Warehouse.The minimum amount you could purchase of any items was half a case. There were other locations as well. At Costco, whats to stop familys or friends groups getting together and buying in bulk. I did see groups shopping together at Costco, and they would go home and split the purchases. Maybe people can share the load and communicate with their neighbours and purchase those bulk items. Of course this would mean actually talking to them

  23. I think we’ve had a range of perspectives here, so I’m going to close comments on this one now.

    Many people focus on the price benefit, rather than the implications for community and diversity, and that’s their choice (though a focus they might regret much further down the track).

    @Andrew (the Canadian): you are wrong regarding Australian ovens — the most common basic models of oven in Australia are not 15″ deep (on the rack). Newer kitchens may differ. Similarly, a tray of meat can certainly by split up and frozen, but as fewer and fewer people have full size freezers, it is again impractical for many.

    A few people mentioned Aldi in the same context as Costco. I’m not sure I agree that they are the same type of animal — Aldi is a basic-supplies concept (though it has grown beyond that) with largely their own set of (re)branded goods. This is nowhere near as evil as the house-brand manipulations played by Coles and Woolworths, or the membership/bulk/waste/import issues of Costco.

    Anyway, thanks for all the interesting contributions.

Comments are closed.