Costco Australia reports a 39.4% rise in profits, reshaping grocery shopping with a membership-driven, bulk buying approach, challenging established supermarket giants and prompting policy attention.
Costco’s Australian arm has quietly rewritten expectations for how a supermarket can compete in a saturated market, reporting a dramatic surge in profitability and reshaping grocery shopping habits in the process.
According to Inside Retail, Costco Australia posted...
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a 39.4% year‑on‑year increase in profits for the year ending 31 August 2025, reaching $389.1 million (before corporate tax and dividends) on sales of roughly $10.8 billion. The result was strong enough to send a near $300 million dividend to its US parent and, by Inside Retail’s calculation, places Costco ahead of ALDI in Australia despite operating just 15 warehouses to ALDI’s hundreds.
The figures underline a business model that deliberately departs from the frequent‑trip logic of Coles and Woolworths. Membership fees , listed on Costco’s Australian site as $130 for Gold Star Executive and $65 for Business membership , convert shopping into a less frequent, higher‑volume activity. According to Inside Retail, that cadence “changes how people think about value,” turning bulk buying into both a financial decision and an experiential ritual. “Customers are loading themselves up,” Retail Doctor Group analyst Dean Salakas told Inside Retail, adding that Costco’s model “is structured to generate profit well before customers reach the shelf.” He also noted that membership revenue has historically underpinned profitability.
Industry observers point to additional structural factors behind the recent jump. Salakas argued that the business may be entering a more mature phase in Australia: “What they haven’t had in the last 12 months is store growth,” he said to Inside Retail, noting that when expansion costs ease, underlying efficiencies become visible in earnings. That dynamic helps explain why Costco appears insulated from the promotional price wars consuming the broader sector: it need not compete on every individual item when its economics are supported by membership revenue and large‑basket behaviour.
The warehouse format is also influencing broader market dynamics. Inside Retail reported Woolworths’ submission to the ACCC supermarket inquiry acknowledging competition from a wider set of rivals, including ALDI, Amazon and Costco. Industry data and market commentary suggest that consumers prepared to drive further and shop less frequently are changing the cadence of grocery demand, forcing traditional chains to reassess how they define value.
Not all sources report identical numbers. Yahoo Finance published higher figures, stating after‑tax profits of $499.2 million and sales of $12.6 billion for the 12 months to August, signalling variation in how outlets present Costco’s results and the components they include. Reporting differences such as these highlight the importance of distinguishing pre‑tax and after‑tax measures when comparing retailers.
Costco’s strategy of exclusivity combined with a “treasure hunt” shopping atmosphere has clearly resonated with Australian consumers. Market commentary published by Indihub estimates an Australian membership base of about 1.5 million, with each warehouse servicing roughly 100,000 members , scale that amplifies the per‑store economics despite a limited physical footprint. The result is a format that captures high spend per visit and sticky loyalty; as Inside Retail notes, anecdotal evidence from store openings shows long queues and customers willing to travel significant distances.
The company has also begun to broaden access without abandoning membership. According to YourLifeChoices, a partnership with DoorDash now allows non‑members in select cities , Sydney, Melbourne, Perth, Adelaide and Brisbane , to order from Costco for same‑day delivery if they live within roughly an hour’s drive of a warehouse. That move could extend Costco’s reach into households unwilling to pay for membership while preserving the core membership proposition for frequent shoppers.
Policy and competitive responses are following. Inside Retail highlighted government moves to increase pricing transparency and bolster the Australian Competition and Consumer Commission’s powers, with Treasurer Jim Chalmers flagging additional funding and potential penalties for breach of rules. While those measures target promotional practices and transparency among major supermarket chains, Costco’s membership model largely operates outside the same regulatory frame applied to everyday retail promotions.
The limits of the model are evident. Sustained profitability depends on high membership renewal rates and continued customer engagement; the format trades breadth of store presence for depth of customer spend. As Salakas observed to Inside Retail, perception matters: “Whether it’s actually cheaper or not is almost irrelevant,” he said, arguing that consumer belief in bulk savings drives loyalty.
Costco’s Australian performance poses a strategic question for incumbents: can they recalibrate not only pricing but the rhythm of shopping itself? The warehouse club has shown that altering how often and how people buy groceries can be as consequential as the price per item. For competitors and policymakers alike, the rise of Costco in Australia underscores a retail landscape being reshaped not simply by discounts but by a different logic of value, access and experience.
Source: Noah Wire Services
