Costco amps up threat to Coles and Woolworths with discount petrol plans

Retail giant Costco may have brought its own style of big-box retailing to Australia – but now it’s attempting to break into a new industry altogether with plans to open petrol stations.

Costco Australia managing director Patrick Noone has said the business will attempt to move into the multi-billion dollar petrol market controlled by supermarkets with stations attached to upcoming stores.

”If you can sell vegemite at a cheaper price on a full pallet, or a kilo tub, why can’t we sell gasoline?” he told Fairfax.

Noone was contacted by SmartCompany this morning, but was not available prior to publication.

Costco has already threatened both Coles and Woolworths with an aggressive expansion plan. Moving into petrol would further confirm the company is aiming to disrupt the existing duopoly.

The company is planning for petrol stations to be attached to a second store in Sydney and a store in Brisbane – both of which are still in the planning stages. The company’s existing stores, including a site under construction in Ringwood, Victoria, won’t carry petrol stations.

Noone said the company will search for sites that allow petrol stations as part of its rollout plan, saying he believes the company will be able to sell petrol at cheaper prices than customers can receive at supermarkets.

”The petrol stations [in the US] are busy all the time…the [petrol] is usually a few pennies per litre better off and it attracts members, for sure.”

The major supermarkets offer discounts for petrol if customers spend money in-store, with discounts ranging from as low as a few cents per litre to as much as 40 cents during certain discounts or limited offer periods.

It’s certainly been a huge year for the US retail giant.

In February it was revealed the company received $140 million from its parent to fuel national expansion, with a plan for as many as 20 stores.

It also confirmed it would open a second store in Melbourne, in the suburb of Ringwood, with Noone saying at the time the company was planning for multiple sites in each major city.

‘It’s a dynamic business model,” Noone told SmartCompany at the time. “We do one, and if it does well, then we do a second, and then a third or a fourth, and so on.”

This article first appeared at SmartCompany.