Costco competition welcome, says Woolworths

Woolworths boss Michael Luscombe says he would welcome competition from US retail giant, Costco.

Luscombe said Costco’s plan to enter the Australian market next year was a strong endorsement of the Australian economy. “From a Woolworths point of view, we welcome competition,” he added.

Luscombe said Costco’s biggest challenge in entering Australia would be to find sites big enough for its range of food and general merchandise.

“There aren’t too many other places, other than the big airport precincts, where that is possible in Australia unless there is a change in the way state governments deal with this,” he said.

“We would welcome that because it gives us a break and a number of opportunities going forward.”

Luscombe told AAP he was not worried about Costco having an impact on Woolworths’ business, as the general merchandise items it sold did not directly compete with its Big W stores.

“A big part of Costco’s business is selling gold, jewellery, designer watches, golf clubs and high-end apparel,” he said. “They have a marvellous business.

“If I was in the general merchandise side business I would be a bit concerned.”

Costco customers pay an annual membership fee to shop at its stores, which sell everything from toilet paper to diamond rings.

The group operates 520 warehouse “club” stores in the United States, Puerto Rico, and Canada. It also has outlets in Britain, Korea, Taiwan, Japan and Mexico.

Earlier this month, Costco reported that its third quarter net sales had increased to $US20.09 billion ($A22.6 billion), from $US19.5 billion a year earlier.

In the 2006 financial year, its global sales totalled $US60.2 billion ($A68. billion).

Inside Retail