Costco Attempts to Be 3rd Major Supermarket Giant in Australia

While Coles and Woolworths are busy battling their price wars, Costco is building its capacity in a bid to become the third major supermarket in Australia.

Costco, a U.S. supermarket giant that sells in bulk and operates on a membership strategy announced on Thursday its second Melbourne store in Ringwood, an eastern suburb. The second store, to cost $65 million, would come three years after Costco opened its first outlet in the city in Docklands.

In between the two Melbourne stores, Costco also opened outlets in Sydney and Canberra. The Ringwood store, similar to the Sydney outlet in Auburn, is located in the middle of Melbourne's suburbs unlike the Docklands outlet which is away from other retailers.

Costco Managing Director Patrick Noone said work on the Ringwood store is expected to being in August and the store is scheduled to open in July or August 2013. The outlet is expected to create 375 to 400 jobs, half of which would be fulltime and the remaining half parttime.

Mr Noone said that Costco expects to compete with the two giants by taking advantage of its differentiation from Coles and Woolies which he described as two companies doing the same thing.

Coles, besides battling Woolies, is also dragged in the labour problem of Toll Holdings, the operator of the Coles warehouse in Somerton, Melbourne. Since the industrial action is on its second week and the blockade not lifted despite an order from the Victoria Supreme Court, Coles Chief Executive Ian McLeod admitted being worried by the impact of the industrial dispute on the supermarket's operations.

His admission contrasts with previous announcements made by Coles spokesmen who insisted the ongoing strike has minimal impact on the firm.

Mr McLeod said that Coles is not participating in talks between Toll and the striking warehouse workers, which was ordered by the court.

Justice Anne Ferguson, who issued the order, also extended the order to ban the National Union of Workers and 25 union members from blocking the warehouse access to seven more days from just two days, which should have ended 4:30 p.m. of Wednesday.