Supermarket Sleuths: Costco and Aldi battle it out for their share of the Aussie grocery market

Costco and Aldi are continuing their expansions in the Australia market, hot on the heels of supermarket giants Coles and Woolworths.

According to the latest profit results, Costco has beaten Aldi over the past 12 months when it comes to after tax profit results.

Costco Australia has earned a profit of $499.2m according to financial reports published by the Sydney Morning Herald.

Aldi Australia earned a profit of $430.7m during that same 12 month period.

The success of Costco's bulk-purchase warehouse model is plain to see.

Costco warehouses sell not only groceries, but electronics, jewellery, and clothing as well as toys, furniture and outdoor equipment, not to mention the occasional toilet or coffin.

The grocery items they do sell are sold in large and bulk packages and are typically priced lower than the major supermarkets.

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Aldi's focus is on discount grocery items, as well as a selection of electronics, clothing, toys and small furniture items as part of their Special Buys range.

Gavin Northey, Associate Professor at the Department of Marketing at Griffith University, links Costco's success to the "current cost-of-living crisis most Australians are facing".

"Costco focuses on a very specific market segment (large households that opt for low-cost bulk purchases), so their competitive positioning is different to the others," Northey explains.

"Their 15 warehouse stores are located in areas that typically have a lower socio-economic demographic, yet are areas experiencing rapid growth.

"A big thing to remember is that Costco has around 1.5 million members in Australia.

"With memberships costing between $65 and $130, that means Costco is bringing in over $100 million in membership revenue even before a product is sold.

"As a result, Costco has just recorded an incredible 39 per cent year-on-year increase in profit, so these things must be working for the firm."

Aldi is also doing well in Australia, however Northey said it's difficult to compare the two retailers as they "serve different market segments".

"That said, Aldi serves over five million customers per week in Australia, so a large portion of the population sees value in their offerings.

"And really, at the end of the day, the Aldi 'tribe' loves the brand because it really does offer something different to the big two, while also being very cost effective.

"In the current economic climate, cost effective grocery shopping is always going to be popular."

Costco has plans to expand its presence in Australia, with three new warehouses in the works.

Chris Tingman, Country Manager for Costco Australia, previously told AFR when deciding on new warehouse locations, the focus is to find lots that are close to our members, and are large enough to house our comprehensive range of goods, specialty services, fuel stations, and car parks.

"We are pleased with Costco's steady growth within Australia and plan to continue reviewing new opportunities to open more warehouses in the future".

Costco at Brisbane Airport is scheduled to open in late 2026. Two more locations are in the works for Pakenham, Victoria, and Alkimos, WA, with both set to open in 2027. This is in addition to its 15 current locations.

Aldi operates over 600 stores in Australia, with plans for new locations at Toowoomba and Townsville in Qld and Parkmore in VIC in 2026.

Both Costco and Aldi have gained loyal followings thanks to their unique business models and exclusive offerings.

Costco operates a membership model which starts at $65 per year. Aldi's design is based on affordability and simplicity.

Still, Coles and Woolworths continue to dominate in Australia.

According to the Australian Competition and Consumer Commission (ACCC), as of early 2025, Woolworths accounted for approximately 38 per cent of the Australian grocery market, followed by Coles at around 29 per cent.

Next there was Aldi at nine per cent of the Australian grocery market, followed by IGA at seven per cent.

Costco's percentage of the Australia grocery market is unclear but is thought to be at around four per cent.

With options such as Costco and Aldi, Aussie shoppers are increasingly "splitting" their grocery shopping between multiple grocery retailers in an effort to save as prices continue to increase, approximately 35 per cent of consumers. This has also been referred to as "cross shopping".

Based on the ACCC's 12-month inquiry, Australian grocery prices have experienced significant increases.

The inquiry's final report, released in March 2025, found that grocery prices rose by 24 per cent over the five years leading up to early 2025.

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