Costco Forces Groceries to Grow in Size at Coles and Woolworths

8 March 2017

If you’ve noticed that things seem to be ‘super-sizing’ at Coles and Woolworths then you are not alone. This is a tactic the supermarkets are using to fend off competition from the large discount supermarket chain Costco.

Costco is a membership-based retailer that opened its doors in Australia in 2009. If Coles and Woolworths didn’t think Aldi was doing enough damage by itself, the addition of Costco is really hurting their performance. Therefore the growing  maximum packaging sizes of our groceries is a direct result that offer customers greater value for money.

 

Lets look at some examples, back in February 2015 the best value for money washing powder that one could buy from Woolworths was a 1.8kg pack made by Fab. Only two years later and you can save considerably more money by buying a 4kg or 5kg pack of exactly the same powder in Woolworths. This is something Costco has been doing for years and that’s why the discount chain claims to save families up to 27% off its typical family shop.

If you hadn’t already noticed, then Woolworths spending $1 billion on lowering its prices should be a clear sign that they recognise the threat. The retail analyst, Thomas Kiernay recently visited Costco and found that since Woolworths invested $1 billion into lowering its own prices, the cost difference between the price points of the two stores has moved from 37% in 2015, down to 24% today. To give you an example, Thomas Kiernay found that on certain dishwashing tablets, Costco worked out to be 50% cheaper, whilst blueberries were 10% more expensive.

 

Shopping Basket Comparison

The following items were all purchased at Costco in supersized packets and the total bill reached $513:

  • Radox shower gel
  • Palmolive hand wash
  • Finish dishwashing tablets
  • Huggies nappies
  • Omo Laundry powder
  • Cottonell toilet paper
  • Lurpak butter

Buying the equivalent basket of goods, calculated by weight cost roughly $706 at Coles and $676 in Woolworths.

If this information is new to you, but you still feel that Costco is too far away from where you live then you will be happy to hear that the supermarket chain has plans to open 16 more warehouses by the year 2020. Currently Costco only has two Sydney stores with a third under construction. There are three in Melbourne and one in each of the following cities, Brisbane, Adelaide and Canberra.

Costco Membership cardsIn August 2016, UBS released a statement that Costco may be raising its membership prices by 10% and this may be a direct result of their expansion to have over 25 warehouses across Australia. However, the price hike may not scare many customers due to the fact that the money that can be saved on a shop as shown in the example above more than covers the cost. The membership prices would only increase 10%, meaning the Gold Star and Business memberships would increase to $66 and $60.50 respectively.

Ultimately, we all should be on the look out to save money via discounts and bargains and if you can’t find enough money saving deals on the Buckscoop deals page, then the following blog articles will certainly help you avoid paying extra:

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