Melbourne shoppers snap up Costco diamonds

7.7 k views | Posted October 19, 2010 | By Sonia Nair

Consumers on the hunt for bargain diamonds flocked to Costco’s maiden flagship store in Melbourne during its first year of opening, with $5,000 and $10,000 gems being snapped up by eager shoppers.

The world’s ninth largest retailer opened in Melbourne in mid-August last year and by the end of that month it had already secured $8.94 million of revenue from sales and membership fees.

Costco sells a range of household goods, groceries, white goods, furniture, alcohol and luxury items such as loose diamonds and jewellery.

The jewellery department is an important component of the discount retailer’s business, according to Costco.

Costco Australia’s chief jewellery buyer, who refused to be named, said, “The jewellery section at Costco is a department in itself, which shows you how well it is doing.”

In the 2009/10 fiscal year, Costco sold approximately 79,637 carats of diamonds worldwide. Jewellery sales included 8.55-carat diamond oval rings costing US$213,200 ($215,192) each, 10.04-carat diamond earrings costing $US201,000 ($202,879) each and 7.06-carat cushion cut diamonds costing $US193,800 ($195,611) each.

Costco has about 75,000 members in Australia and is set to open a second store in Auburn, New South Wales, next year.

In the company overview on its website, Costco president and chief executive officer Jim Sinegal states, “Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers.”

While market leaders Coles and Woolworths are able to cut shelf prices to maintain market share, smaller jewellery retailers and wholesalers could potentially suffer in the face of Costco’s competitive prices.

The discount retailer’s membership is set to hit 100,000 people across the country.
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