Who doesn’t love the idea of free samples while you shop and the best deals on your household goods in bulk!

Have you ever heard of anyone going to retail giant Costco and coming out empty handed? I have not! Costco the US based membership retail giant made its debut into the Australian market just over six years ago. After opening its first store in Melbourne’s Docklands the retailer is now looking to add another three superstores to its operations. These locations are reported to be in Osborne Park in Perth, Moorabbin in Melbourne, and Marsden Park in Sydney.

Costco currently has two outlets each in Sydney and Melbourne and one each in Adelaide, Canberra and Brisbane. While the unassuming giant has expansion plans in Australia some worry that their local supermarkets are being threatened. Costco is not the only giant moving into town, German based Aldi has already established over 350 stores pulling more and more business from local markets.

Supermarket locations have long had good luck and have been known to be recession proof. This has allowed them to lock in long term leases and favorable rent terms. Supermarkets have always been a favorite for portfolio managers because they were steady businesses and safe investments. However, with the growth of giants like Costco those sure bets are beginning to change.

Costco is placing their stores far away from strip malls and closer to major highways and roads providing easy access to its customers. The retailer has also started offering fuel at some its locations becoming the ultimate one stop shop. Older supermarket businesses that have been around and their adjacent neighbors need to become extremely aware of the changing climate in the industry and how they will be affected by the growth of retail giants like Costco. These giants will drive away traffic from their locations and which is surely to affect sales and retail returns for portfolio managers.