Moorabbin: Costco’s first Melbourne fuel site

CostcoPetrolThe latest Costco Wholesale warehouse opened at Moorabbin, in south-east Melbourne, in November, giving the city’s motorists their first opportunity to buy from Costco’s Kirkland Signature fuel options.

This is the eighth Costco warehouse in Australia, with at least three more slated to open in 2016. All future sites will sell fuel as Costco looks to offer a strategic benefit to its members, with convenient fuel access on its large-footprint car park perimeter.

The Moorabbin warehouse is built in the traditional Costco model with surrounding flat-level parking. On the opening day, ULP 91 was selling at $109.7¢ per litre. Nearby fuel competition comes from Liberty, Coles Express Caltex and 7-Eleven.

Signing up for Signature access

Costco’s first fuel offer in the Melbourne metro area, with its private-label Kirkland Signature options, is designed to attract interest from a number of nearby arterial routes, including Boundary Road, Centre Dandenong Road and Lower Dandenong Road.

Under the Costco model, motorists cannot just breeze in and buy fuel. They need to sign up for Costco’s annual membership card before accessing all the Costco offers.

The warehouse is built on land owned by Moorabbin Airport Corporation, whose CEO, Paul Ferguson, mentioned in an official opening speech that Costco and the airport had been working together for the past two years to achieve this latest addition to the terminal’s growing retail tenant list.

Costco Country Manager Patrick Noone is pleased to have a third site in the metro area and added at the opening that the next Melbourne Costco to open, at Epping in the city’s north, would give Costco a good geographical spread.

Several checks on the patronage of the Costco fuel canopy during the opening morning noted a steady stream of customers, rather than queues of vehicles, waiting to obtain their low-priced fuel. The site has 18 pumps, including two dedicated high-flow diesel units.

Typically, a new Costco fuel site drives down local prices and when North Lakes Brisbane opened, it lowered the price of 91 RULP by around 15¢ per litre.

Premium additives and fully trained attendants

Supply of Costco’s Kirkland Signature- branded fuel comes from Mobil. The Moorabbin site has the ability to fit smaller- style trucks through the forecourt, with high- flow diesel pumps strategically positioned for access and exit.

The nature of a Costco fuel site is different to that of most other Australian service stations, operating entirely on a pay-at-the-pump basis and, to ensure customers receive help if necessary, trained attendants are available on the forecourt.

These attendants must pass a certification test before they can work at a Costco fuel station. They patrol the fuel islands, ready to respond immediately to any safety or environmental issue.

The Costco Kirkland Signature fuel range includes additives designed to minimise engine deposits that can affect a vehicle’s performance and emissions. Costco says its additives are a superior blend, pointing to awards for its fuel quality in the US. There, its fuels meet a standard of ‘Top Tier’, which was initiated by US car makers interested in how fuel additives clean engines.

The Top Tier standard was designed to transcend the US standards set by the country’s Environmental Protection Agency.

Costco expanding again in 2016

Costco now has Melbourne warehouses at Docklands, Ringwood and Moorabbin and its presence must be taking sales from somewhere. For every member that fills up at the Costco ‘Gasoline’ station, it is less volume for surrounding service stations.

The Melbourne sites have been strategically located to provide each warehouse with around one million people in their trading areas, although Mr Noone said there was some crossover between Ringwood and Moorabbin, with the Princes Highway being the demarcation line.

The latest estimated annual turnover for Costco in Australia is around $1.3 billion. This is total sales and there is no breakdown available for fuel and non-fuel sales.

Epping in Melbourne and Marsden Park in Sydney are next on the horizon for the Costco Australia team as they continue to seek out the best sites on which to plant a 14,000sqm warehouse with a huge petrol area alongside.

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