Costco set to rival Aussie supermarket giants with expansion plan

US discount retailer Costco Australia is looking to expand its operations in 2016, revealing the location of three new stores on Australia’s east coast.

The move follows its a $1.3 billion revenue in 2014/15.

The retailer currently has eight stores across the country in Adelaide, Brisbane, Canberra, two in Sydney and three in Melbourne.

The new stores will be located in Marsden Park, in Sydney's north-west, Epping, in Melbourne's north, and another in Brisbane.

Also read: Costco the next threat to Coles & Woolies

Managing director Patrick Noone told A Current Affair Costco Australia is also looking to expand outside of the major cities.

"The second-tier cities [like] Newcastle and Wollongong and Darwin and those places. They're the next places for growth for sure," he said.

Noone said he also wanted every new store that opened to have a petrol station attached to it.

"We have an extremely efficient business model. If you look, everything is on a palette, we have an open-frame ceiling, we have a concrete floor. We have very low costs and overheads," he said.

"We can continue to drive prices down rather than drive prices up."

Also read: Why I avoided Coles and Woolworths for a year

Costco's strategy to expand could help drive prices down for consumers by introducing more competition within the industry.

In October last year, Costco achieved a 1.2 per cent slice of Australia’s $88 billion supermarket industry despite only owning eight stores across the country.

It sounds inconsequential against German discounter Aldi's 8.1 per cent share, and Coles and Woolworths' combined 70 per cent share, but fill in the details and the Costco threat becomes more obvious, according to a recent IBISWorld report.

Its ongoing expansion, and diversification into petrol stations, means it is expected to capture more of the market and heap more pressure on heavyweights Coles and Woolworths.