Discount retailer wars: Could this be the end for Kmart?
Costco has unveiled plans its giant Australian distribution centre that will service all their stores nationwide as well as their new online store, which will be launched next year.
The $78 million facility will be finished in March 2019, with the company planning to move the store online in Australia shortly after that.
Experts say that the retail giant’s online store could pose a huge threat to other discount stores, such as Kmart.
The distribution centre in Sydney’s west will allow for more Australians to sign up to the $60 annual membership to get products delivered to their door.
“Everything we do makes people change. The warehouse concept wasn’t here 10 years ago so we’ve had some impact on the retail scene,” Costco Australia General Manager, Patrick Noone, told Nine News.
The online store will still require a Costco membership, with the company promising to have exclusive online offers around home appliances, furniture and other big-ticket items.
Earlier in the year, market research firm Roy Morgan reported that Costco Australia was narrowly beating Kmart in customer satisfaction.
Kmart had a nine per cent profit in the first quarter of 2018, which was largely attributed to the retailer’s online store.
Costco’s online store will try to compete with other Aussie retailers by stocking the equivalent of 30 stores worth of stock.
QUT international business expert Gary Mortimer believes Costco will “absolutely” be able to compete online in Australia, reported The New Daily.
“Costco is certainly concerned about Amazon's entrance to the Australian market,” he said.
“Ultimately, it does represent a threat to incumbent supermarkets and department stores in Australia.”
Costco’s distribution centre, which is the size of 17 Olympic football fields, will create close to 1000 jobs and have the capability to distribute to 30 warehouses.
“This location is ideal for housing our depot and providing hundreds of jobs in Sydney's booming west,” Mr Noone said.
Last week, Costco opened a $55 million warehouse in Epping, Melbourne.
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