The pay-to-save retail model popularised by Costco is spreading across Australia, with new entrants using memberships to promise cheaper groceries and fuel – and forcing a rethink of how big-box stores and servos plug into local catchments.
In Western Sydney, Grosco – quickly dubbed the “Indian Costco” – has opened in Penrith with the trappings of a warehouse club: bulk packs, a paid entry system and an appeal to families determined to cut the weekly bill.
Launched in March, it carries more than 1000 products in both bulk and standard sizes and targets Australia’s fast‑growing Indian and South Asian communities while still stocking Australian staples.
MORE NEWS
Costco targets 20 new stores in Aussie price push
Reject Shop axed as takeover moves ahead
Couple close popular campsite over $1m road bill
Grosco opened its doors in March to much fanfare. Picture: Facebook
Like its US inspiration, Grosco insists its business runs on member fees rather than fat margins.
“Traditional grocery stores mark up products 30–50 per cent. We don’t do that. Grosco runs on razor‑thin margins because we’d rather have thousands of members saving money than charge a few customers inflated prices. The membership fee is what keeps our business running,” a spokesperson said.
Shoppers who joined in launch month paid $79 before the annual fee shifted to $99 from April.
MORE NEWS: Woolies rolls out major change to 700 stores
Grosco claims to save people more than $1000 over the course of a year.
However, the business appears to run monthly membership discount initiatives
The company claims a family spending $100 a week on Indian groceries could save roughly $1200 to $1800 a year versus other Indian grocers – a pitch that’s resonated, with Grosco saying it recruited 800 new mums in May via a Mother’s Day free membership offer.
LMCT+: Adrian Portelli’s subscription playbook
Billionaire entrepreneur Adrian Portelli is also taking a leaf out of Costco’s playbook, expanding his LMCT+ rewards empire into a subscription-based supermarket chain.
The first LMCT+ supermarket is set to open in Melbourne’s western suburbs, integrating grocery and fuel discounts under a single $99 “Everyday Saver” membership.
Members paying the annual fee will gain access to discounts on both groceries and fuel at LMCT+ branded stations, including the flagship location in Preston.
Adrian Portelli says LMCT+ members will get instant access to the supermarkets and higher-tier in-store discounts. Picture: NewsWire / Andrew Henshaw
The initial supermarket location is reportedly the IGA in Deer Park, Melbourne, which Portelli appeared to confirm he had acquired.
The revamped IGA already boasts an expanded product range, including a butcher and Tattslotto services, aiming to be a comprehensive one-stop-shop.
Portelli also indicated that his new venture would provide a platform for small Australian businesses to get their products on shelves.
An AI-generated image of how the first LMCT+ supermarket in Melbourne could look.
In a characteristic move, he used the announcement to deliver a colourful rebuke to unnamed rivals, accusing them of copying his strategies.
Beyond groceries and fuel, the LMCT+ platform offers “Mates Rates” and exclusive discounts from over 1,000 partner businesses across various sectors, alongside its highly regarded giveaways of luxury supercars, cash, and real estate.
Kogan First: The digital membership model
Not every membership looks like a shed on an arterial.
Online, Kogan First has become a digital analog to a wholesale club, trading a $129 annual fee (or $14.99 monthly) for member‑only price drops, free shipping and reward credits across electronics, pantry items and everyday essentials.
The company says the program now drives more than 10 per cent of total revenue.
However, it hasn’t been without controversy.
The 14‑day free trial can be pre‑ticked at checkout, and customers who don’t untick it can find themselves rolled onto a paid plan when the trial ends – a reminder to check renewal settings before you buy.
Costco: The established template
The gravitational centre of this trend still belongs to Costco, which set the template locally: a compulsory membership to shop, with two personal tiers – Gold Star at $65 a year and Executive at $130 – each including a free household card for someone at the same address. Executive members get an annual 2 per cent cashback on eligible purchases.
Shannon Hendry shopping with daughters Cleo, 3, and Charlie, 4, at Costco Warehouse in Bundamba. Picture: Tara Croser.
Join online or in‑warehouse, present a non‑transferable card for entry and at checkout, and shop across a global network for 12 months from the primary cardholder’s enrolment date. Business memberships sit at similar price points.
The pay-off is bulk buys and sharp pricing on brand‑name groceries, electronics and clothing, with fuel at many locations, and renewals handled online or in‑store.
The future of membership retail
In a cost‑of‑living crunch, the calculus is straightforward: if you shop often enough – and have the storage – the fees can pay for themselves; if you don’t, the maths unravels quickly.
The competitive ripple effects are real: sharp fuel pricing from a membership operator can pressure nearby servos, while a $99‑a‑month bundle could create micro‑catchments where members default to a single network for both the weekly shop and the tank fill.
All of which brings the story back to Costco’s next act – and why the market’s watching closely.
Bailey Rock fills his car with discounted items he purchased at Costco. Picture: Eleni Tzanos
The retailer has 15 warehouses across the country and is set to add two more next year in Victoria and Western Australia, while actively hunting additional sites in North and South Sydney, Perth and Adelaide.
First‑time entries into Tasmania and Geelong underline a push into new catchments.
If the pioneers of membership retail continue to expand while challengers like Grosco and LMCT+ carve out niches, the pay‑to‑save model won’t just reshape how Australians shop; it will keep redrawing the retail map itself, one oversized box – and bowser – at a time.