Costco's High-Volume, Low-Margin Philosophy Strikes Chord With Consumers

Our anticipation of dampened consumer confidence due to a potential domestic property meltdown in Australia leaves us confident that US wholesale retail giant Costco will be able to sustain its initial success in the Australian market over the near term. The retailer set up its first Australian warehouse-style outlet in August 2009, where the company sells products at low prices and at very high volumes across a range of product categories including groceries, clothing and home wares, and posted sales of AUD9mn (US$8.73mn) for the first two weeks of its operations (the only data released by the firm to date in relation to its Australian operations).

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