Metcash takes on US giant Costco with discount warehouse at Eagle Farm

Chris Herde
December 13, 2012
The Courier-Mail

Cost cutting: A shopper checks reading a product label at Costco Wholesale in Mountain View, California. Source: AP

AN Australian company is thinking big – taking on US giant Costco in the battle for the hearts and minds of Brisbane shoppers.

Grocery, liquor, hardware and automotive parts wholesale distributor Metcash will open the doors of its first Value Depot discount warehouse on Saturday.

The mega store at Amy Johnson Place, Eagle Farm, will trade seven days a week and aims to compete with bulk warehouse giant Costco.

But the catch is shoppers wanting to roll their trolleys around Value Depot and find a bulky bargain will need to have an Australian Business Number or ABN, before obtaining free membership.
After the Brisbane pilot, Metcash aims to extend the national network of bulk purchase wholesale warehouses to NSW and Victoria.

The rollout will include new sites, as well as the conversion of many of the 18 existing CCC outlets.

Value Depot will stock more than 10,000 lines and offer access to more than 35,000 products through the Metcash parent company, which owns IGA stores, Mitre 10, Automotive Brands Group and Australian Liquor Marketers.

It will feature specialty stores within the warehouse, including a confectionery outlet Sweet Spot; Catering Connection for hospitality operators; Baby Boulevard; Auto Car Care; Fresh and a large general merchandise section.

Metcash food and grocery business chief operating officer Silvestro Morabito said at this stage alcohol would not be offered at Eagle Farm.

Mr Morabito said the Value Depot concept took shape after a “significant amount of brainstorming”.

“Value Depot is a hybrid of Costco, which is a membership-based group, and large hypermarket-like businesses,” he said.

“It’s designed to bring everyday low prices to ABN holders and traditional Campbells’ customers like cafe owners, restaurant owners and small mum and pop convenience stores.”

Costco, which has stores in Sydney, Melbourne and Canberra, plans to build a giant bulk discount warehouse at North Lakes, north of Brisbane.

However, that has run into legal problems with retail giant Westfield trying to block it.

The Newman Government has taken steps to “call in” the development, halting a legal stoush that could have dragged on for years.

Costco has a $60 joining fee but does not require an ABN.