New South Wales

Sydney Costco store faces powerful opposition

COSTCO'S plans for its first store in Sydney has sparked objections from Westfield, AMP and the Shopping Centre Council of Australia. The proposed $60 million store and regional headquarters, to be located on Parramatta Road, Auburn, was to be Costco's second Australian outlet following the successful opening last year of Costco's Melbourne Docklands' store.

Costco's application seeks demolition of the existing distribution warehouse on the land and construction of a new Costco Wholesale and Retail building with a total gross floor area of 16,477 square metres (consisting of 13,727 square metres of retail and 1,999 square metres of commercial office floorspace for the new Costco Australian regional headquarters. The application also seeks approval for a loading dock and 745 car parking spaces.

The Costco proposal does not fit into current planning laws and Costco is hoping to overcome this problem by defining itself as a 'bulky goods retailer' rather than a 'shop' or 'retail premises' which would not be permitted in its proposed location. The Shopping Centre Council of Australia said there is "no distinction between the goods sold at Costco or at any other 'shop' within Australia."

Costco states that it is a 'retail warehouse', "which is not recognised as an individual form of development under the Standard Instrument definitions. Whilst Costco cannot be properly characterised as 'Bulky Goods Retailing' the Costco wholesale and retail warehouse shares many structural and operational characteristics with bulky goods retailing but equally can not be considered to solely be a traditional retail centre development."

In its submission to the Department of Planning, the Shopping Centre Council of Australia outlined a number of concerns including:

  • The proposed location of Costco is inconsistent with the draft Activity Centres Policy;
  • The extent and quality of the information contained within the Environmental Assessment (EA) is insufficient to enable a thorough assessment of the potential impacts of the proposed development;
  • Costco is essentially a large standalone shop in both operational and definitional terms. The precedent posed by allowing such a development to occur in an out-of-centre location could potentially undermine long-standing retail policy;
  • The proposal is likely to impose significant economic costs on Sydney, in the form of additional traffic congestion along a major Sydney transport corridor; and
  • If approved, the development will lead to a significant and unfortunate planning precedent, which has the potential to damage the viability of existing and emerging activity centres.

Costco is the fourth largest retailer in the USA and operates from approximately 554 locations worldwide, including the USA and Puerto Rico (403 stores), Canada (76), Mexico (31), UK (21), Japan (8), South Korea (6) and Taiwan (5). Costco operates on a membership basis, with membership allowing customers to shop at any Costco store (in Australia, costs of individual membership is currently $60 annually and $55 for businesses).

The proposal is currently being assessed by the Department of Planning. Costco have stated that there is a 12 month build time from "whenever the proposal is approved," meaning a Sydney store will not open until at least mid-2011.

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