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Coles contests Costco price claim

CostcoKierath visited Costco’s new Marsden Park location over the long-weekend with his family to test the price differential between the giant and local players, spending $497 on a 27-product basket, which he said would have cost $622 at Coles or Woolworths.

But Coles has hit back, claiming that Kierath’s analysis is flawed because it doesn’t compare like for like products, The Australian reports this morning.

Many of the product comparisons used in the Morgan Stanley report have not used the largest or cheapest comparable item from Coles,’’ a spokesman said. “Substituting larger pack sizes available at Coles for a fairer comparison, the price differential between Coles and Costco is less than $40 on this basket, a differential of around 7 per cent.”

Costco has now opened nine stores Down Under since launching in 2009, and has recently launched an online-offer from its Docklands location in Melbourne, which is being marketed as a business-to-business wholesale service with a minimum order of $1000.

The giant now has a multi-billion-dollar presence in Australia, presenting a significant threat to the established supermarkets with its wide-ranging category offer that sees it retail everything from eggs to petrol and fine jewellery.

Costco’s local boss Patrick Noone is steadfastly focused on price, utilising the company’s streamlined supply chain and global sourcing capabilities to undercut local players, even amid heavy discounting in the local grocery market. Kierath’s analysis indicates that even after spending more than $1 billion on prices last year Woolworths is still not within an earshot of Costco’s prices.

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