Economic Impact Assessment - Moorabbin Airport/media/Files/Sites/Moorabbin Airport... · Costco Warehouse in accordance with ... This Economic Impact Assessment report has been prepared

1 8 F e b r u a r y 2 0 1 4

Economic Impact Assessment

Costco MDP Project

Prepared for

Costco Wholesale Pty Ltd

by

Essential Economics Pty Ltd

Authorship

Report Author Date

Final report Sean Stephens and Austin Miller 18 February 2014

Disclaimer

Although every effort has been made to ensure the accuracy of the material and the integrity of the analysis presented herein, Essential Economics Pty Ltd accepts no liability for any actions taken on the basis of the contents of this report.

Contact details

For further details please contact:

Essential Economics Pty Ltd 96 Pelham Street Carlton Victoria 3053 Australia PH 61 3 9347 5255 FAX 61 3 9347 5355 EMAIL [email protected] WEB www.essentialeconomics.com

ABN 92 079 850 427

Our Reference: 13138

Contents

Introduction ........................................................................................................................ 1

1 Project Overview ....................................................................................................... 5 1.1 Project Location and Description ...................................................................................................... 5 1.2 Moorabbin Airport ............................................................................................................................ 9

2 About Costco ........................................................................................................... 11 2.1 Background ..................................................................................................................................... 11 2.2 The Costco Model ........................................................................................................................... 11 2.3 Costco Warehouse .......................................................................................................................... 12 2.4 Competition .................................................................................................................................... 13 2.5 Costco Site Requirements ............................................................................................................... 14

3 Planning Policy Context ............................................................................................ 16

4 Retail Market Assessment ........................................................................................ 19 4.1 Trade Area Definition ...................................................................................................................... 19 4.2 Trade Area Population .................................................................................................................... 20 4.3 Retail Spending Analysis .................................................................................................................. 24 4.4 Costco Turnover Forecast ............................................................................................................... 26 4.5 Retail Market Share Analysis ........................................................................................................... 27 4.6 Conclusion ....................................................................................................................................... 28

5 Retail Impact Assessment ......................................................................................... 29 5.1 Costco Market Share ....................................................................................................................... 29 5.2 Costco Competition with Other Retailers ....................................................................................... 29 5.3 Competition .................................................................................................................................... 30 5.4 Potential Trading Impacts ............................................................................................................... 35 5.5 Regional Impact ............................................................................................................................... 37 5.6 Conclusion ....................................................................................................................................... 38

6 Net Community Benefit Considerations .................................................................... 39 6.1 Consistency with Approved Airport Master Plan (2010) ................................................................. 39 6.2 Contribution to Specialised Role of Moorabbin Airport ................................................................. 39 6.3 Competition Benefits ...................................................................................................................... 40 6.4 Employment Outcomes ................................................................................................................... 40 6.5 Investment ...................................................................................................................................... 41

7 Key Findings ............................................................................................................. 42

Appendix: Selection oF Trade and Business Products Sold at Costco .................................... 43

C O S T C O W A R E H O U S E A T M O O R A B B I N A I R P O R T E C O N O M I C I M P A C T A S S E S S M E N T

E s s e n t i a l E c o n o m i c s P t y L t d

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I N T R O D U C T I O N

Background

Moorabbin Airport Corporation (MAC) is preparing a Major Development Plan (MDP) for a Costco Warehouse in accordance with the Airports Act 1996 (the Airports Act). The purpose of an MDP is to provide the details of a major development at an airport and to ensure that the proposed development is consistent with the requirements of the Airports Act. As such, an MDP is a comprehensive report about the project, including an outline of the development, an assessment of the impacts and an explanation of the consistency with matters outlined in the Airports Act.

This MDP is for a site located in the area defined as Precinct D in the Moorabbin Airport Approved Master Plan (2010). Precinct D is located in the north-east of Moorabbin Airport and is for the development of a wide range of employment generating land uses, including retail. This project and report is known as the “Costco Warehouse - Major Development Plan” (MDP).

This Economic Impact Assessment report has been prepared by Essential Economics to determine the effects on the local and regional economy, and thus inform the preparation of the proposed Costco MDP Project. The report presents a market assessment of the potential for the development of a Costco Warehouse at Moorabbin Airport on the subject site. Analysis of the potential trading impacts associated with the development on the existing hierarchy of centres is also provided, as well as an assessment of economic aspects associated with the achievement of a net community benefit.

The analysis in this report has been informed, in part, by a phone survey of 400 respondents undertaken in October 2013. The survey area included all of the identified main trade area (MTA) for the proposed Costco Warehouse as identified in Chapter 4 of this report. Respondents were filtered to ensure that the primary shopper in each surveyed household answered all questions. Filters were also used to ensure that an appropriate age mix was surveyed.

Objectives

The objectives of this report are to:

1 Assess the market potential for a Costco Warehouse at Moorabbin Airport as proposed in the Costco MDP Project,

2 Consider relevant aspects relating to the potential for economic impacts arising from the development of a Costco Warehouse as proposed in the Costco MDP Project, and

3 Outline the economic and land use policy implications of the Costco MDP Project.



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Notes on Report Analysis

The analysis in this report is based on an understanding of expected economic outcomes at the time of writing. As with any economic impact assessment, actual outcomes may be affected by changes in factors such as underlying economic conditions or unexpected urban development outcomes. On this basis, we note:

The south-east region of Melbourne is experiencing ongoing population growth associated with both infill and broad-hectare residential development, rates of population growth may be impacted either positively or negatively by a wide range of economic and social factors in the future.

Significant transport infrastructure projects have the potential to influence shopping patterns, known examples include a new train station at Southland and the Dingley Bypass.

The Victorian Planning System is currently undergoing a process of reform, including the implementation of new planning zones, developing a new Metropolitan Planning Strategy and other changes that in some instances have not been finalised and fully implemented at the time of writing.

It is expected that some individual urban development projects will be proposed and developed over the forecast period that have not been explicitly taken into account in the economic impact assessment. Nonetheless, the underlying conclusions of the analysis will not be materially affected where the general pattern of urban development remains consistent with that identified in this report.

This Report

This report contains the following chapters:

Chapter 1: Description of the proposal and examination of the regional context

Chapter 2: Overview of the Costco business model

Chapter 3: Overview of relevant Planning Policy documents

Chapter 4: Assessment of the market opportunity for retail development to serve the surrounding trade area population

Chapter 5: Discussion of the general and specific likely trading impacts on other retailers and centres associated with the proposal

Chapter 6: Identification of employment and other relevant net community benefit considerations

Chapter 7: Summary of the key report findings.



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Summary of Report Conclusions

The analysis undertaken in this Economic Impact Assessment has identified the following key conclusions in relation to the proposed Costco Warehouse at Moorabbin Airport:

1 The proposed Costco MDP Project incorporates a Costco Warehouse of approximately 13,624m2, as well as a petrol outlet. A site has been identified in the north-east of the Moorabbin Airport site that is flat, easily developable and suitable for the proposed use. The subject site is located adjacent to the existing Chifley Business Park.

2 A Costco Warehouse at Moorabbin Airport will provide residents across south-east Melbourne with direct access to a relatively new retail format, in the Australian context. The proposed site has strong north-south and east-west access, and is one of few sites in the region of a sufficient size and configuration able to accommodate the significant land requirements of the large-scale Costco retail format.

3 Costco differentiates itself from traditional retailers by following a membership-based model, with an emphasis on a limited range of merchandise for which bulk purchases are the primary option. Costco typically has about 4,500 individual products (stock-keeping units, or SKUs) on its floor at any one time, and this is much less than the 30,000 or more SKUs typically on the shelves at a full-line supermarket, or around 40,000 SKUs on offer in a large discount department store such as Kmart, Big W or Target.

4 A Main Trade Area (MTA) has been defined reflecting the broad trading patterns associated with the Costco model and the ability of the warehouse to benefit from visitation generated by other on-site uses at Moorabbin Airport including the existing DFO outlet centre. The population of the MTA is estimated at 1,145,660 persons in 2013 and with a population of 1,311,070 persons forecast by 2026. This represents a total increase of approximately 165,000 residents at an average growth rate of 12,700 persons per annum.

5 The existing employment base at Moorabbin Airport of 3,300 jobs provides an additional source of patronage for the proposed Costco. In addition to the direct employment located on-site at Moorabbin Airport, an estimated additional 17,200 jobs are located in the adjacent industrial and commercial areas of Braeside, Dingley and the light industrial precinct adjacent to Grange Road. These adjacent businesses are also expected to benefit from access to the Costco Warehouse.

6 Total sales of $150 million are forecast for the Costco Warehouse at Moorabbin Airport in 2016, considered to be the first full year of trading. An estimated $102 million, or just over two-thirds of total sales, will be retail sales to the household sector. The Costco Warehouse at Moorabbin Airport would achieve a market share of 0.5% of the $16,923 million retail spending by residents of the MTA in 2016.

7 Trading impacts associated with the proposed Costco Warehouse at Moorabbin Airport are forecast to be within the normal bounds of retail competition. An economic impact assessment of 26 competing centres shows that the largest trading impact is expected on Chadstone (-$9 million). Among the centres located closest to the proposed Costco Warehouse at Moorabbin Airport, trading impacts are expected to range from -1.5% at Bentleigh, -0.6% at the DFO Moorabbin/Kingston Central and -2.0% at Dingley Village.



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8 The proposed Costco Warehouse at Moorabbin Airport is consistent with the approved Airport Masterplan (2010) which envisages the potential for retail development on the subject site. The Costco MDP Project also supports strategic land use policy objectives related to employment and investment at Moorabbin Airport specifically (Kingston Planning Scheme), and in suburban areas of Melbourne more generally (Plan Melbourne).

9 Economic and Community benefits associated with the proposed Costco Warehouse at Moorabbin Airport include:

- Construction investment of $35 million

- A total of 80 direct jobs created during the construction phase of the project, with approximately 130 indirect jobs created in the wider economy through the employment multiplier

- At full development an estimated 375 direct on-site jobs are expected to be created on an ongoing basis, with an additional 225 indirect ongoing full-time equivalent jobs created through the wider economy as a result of the employment multiplier

- A high share of employees are expected to live locally in the City of Kingston and other areas of south-east Melbourne

- Enhanced shopping and service facilities for local residents, workers and visitors

- Providing a new retail format to south-east Melbourne

- Ability to achieve greater employment self-sufficiency in the region through local employment generation, including opportunities for young people to enter the workforce through the important role of the retail sector as an employment “gateway", as well as the opportunities generated by Costco for older workers – including many people re-entering the workforce

- Creation of an additional revenue stream for Moorabbin Airport which contributes to the maintenance and investment in infrastructure.



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1 P R OJ EC T OV E RV I E W

This chapter of the report provides a description of the proposed Costco Warehouse at Moorabbin Airport, including project background and the strategic land use policy context.

1.1 Project Location and Description

Location

A Costco Warehouse is proposed for a site at Moorabbin Airport, approximately 21km south-east of the Melbourne CBD.

Moorabbin Airport comprises approximately 294 ha of land which is currently used for a mix of aviation, industrial, retail and commercial purposes. The site is bounded by Centre Dandenong Road to the north, Boundary Road to the east, Lower Dandenong Road to the south, and Grange Road and Bundora Parade to the west.

The proposed Costco Warehouse is to be located on Chifley Drive, in the north-east part of the Moorabbin Airport. The subject site is located on the eastern side of Chifley Drive, at the southern end of its existing extent. The Chifley Business Park is located immediately to the north, while a large drain reserve is located immediately to the east.

In accordance with the approved Master Plan, it is proposed to extend Chifley Drive to form a full connection between Centre Dandenong Road in the north and Boundary Road in the east.

Both Boundary Road and Centre Dandenong Road are important road links connecting Melbourne’s south eastern suburbs. Centre Dandenong Road links the Nepean Highway in the west with Cheltenham Road and Dandenong in the east, while Boundary Road connects with Clayton Road in the north and is an important link road to the Mornington Freeway in the south.

Located a short distance to the east of the subject site is the proposed alignment of the Mornington Freeway extension. This will ultimately join with the Dingley Bypass approximately 2km to the north that is scheduled to commence construction in 2014. It is anticipated that once both are completed, accessibility to the subject site from the surrounding region will be further enhanced.

The subject site is flat, unencumbered, easily-developable and, as identified in the Approved Master Plan (2010), is not required for the core aviation functions of the airport.

The regional context of the Costco Warehouse site at Moorabbin Airport is shown in Figure 1.1.



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Figure 1.1 Location Map

Source: Streetpro and Essential Economics Note: (p) Proposed



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Description

Moorabbin Airport Corporation (MAC) is preparing a Major Development Plan (MDP) for a Costco Warehouse in accordance with the Airports Act 1996.

Costco is a membership based organisation for both business and private customers. The proposed Costco Warehouse will provide consumers with a wide selection of merchandise, plus the convenience of specialty departments and discounted fuel.

The subject site is contained within Precinct D as defined within the Approved Master Plan (2010) for Moorabbin Airport. The subject site is located south-east of the existing alignment of Chifley Drive, in the north-eastern area of the Moorabbin Airport.

The subject site is approximately 5.8 hectares and is located on Commonwealth Land (Airport land).

The proposed development comprises the following:

A Costco warehouse with a building area of 13,642 square metres with an additional 122 square metres for pump/ switch/sprinkler valve rooms

A Costco service station with a site area of 5,245 square metres

Provision of 727 car parking spaces including 16 disabled/accessible spaces and 32 bicycle spaces

A total loading dock area of 395 square metres

Extension of Chifley Drive through to Boundary Road (in accordance with approved Master Plan 2010)

Provision of a fully signalised intersection at the new Boundary Road/ Chifley Drive intersection (in accordance with approved Master Plan 2010).

The purpose of the MDP is to provide the details of a major development on a Commonwealth airport and to ensure that the proposed development addresses the legislative requirements of the Airports Act 1996.

The final development plan is shown in Figure 1.2 and the Moorabbin Airport Approved Master Plan (2010) is shown in Figure 1.3.



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Figure 1.2 Costco MDP Project Development Plan

Source: Costco Wholesale

Access to the subject site will be provided directly from Chifley Drive, which is can be entered from Boundary Road (proposed) and Centre Dandenong Road (existing). Accessibility from surrounding road networks is strong with excellent north-south and east-west connections.

Chifley Drive is the central connector road for the Chifley Business Park. Chifley Business Park is an important office park and logistics centre located on Moorabbin Airport land immediately north of the subject site.

Approximately 1km west along Centre Dandenong Road is the existing Moorabbin DFO retail complex and the adjacent Kingston Central shopping centre. Each of these is also located on Moorabbin Airport land.

These existing retail destinations at Moorabbin Airport are regularly accessed by shoppers from across a broad geographic region – as indicated in a phone survey undertaken in October 2013 and which is discussed in more detail in the balance of this report.



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Figure 1.3 Site Context Plan

Source: Costco and Moorabbin Airport Corporation

Other uses at Moorabbin Airport include:

Aviation activities which occupy the majority of the site, including runways, hangars and support services

Industrial and commercial activities (including Chifley Business Park) located at various locations.

To the south and east of Moorabbin Airport is the Braeside employment area, a major hub for light industry and general business activities.

In general, the proposed Costco Warehouse at Moorabbin Airport will have a high degree of accessibility from the wider region. This is enhanced by the integration of the Costco store into a rapidly growing mixed-use and specialised activities precinct at Moorabbin Airport, and the regional role of the adjacent Braeside employment area.

1.2 Moorabbin Airport

Moorabbin Airport is consistently one of Australia’s top 4 busiest airports, with approximately 231,000 aircraft movements in the year to June 2013 (Airservices Australia). The airport is a focus for general aviation services with:



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16 flight schools operating from the site

A total of approximately 800 flight students (including a large share of international students) training at the airport

Approximately 50 aviation organisations based on-site

Approximately 350 aircraft based permanently at the airport

Mix of flight training, charter and regular passenger transport flights

Large leisure component including joy flights and Royal Victorian Aero Club

Well-established aviation infrastructure and support facilities (air Traffic Control Tower, hangars, runway lighting etc).

In 2010, the Moorabbin Airport Master Plan was approved by the Commonwealth Government. The Approved Master Plan (2010) provides the framework for the future growth of aviation and non-aviation activities at Moorabbin Airport, including detailed strategic land use planning for the site.

A particular emphasis of the Approved Master Plan (2010) is on consolidating the important and specialised role of the airport as an important employment and business precinct which includes a mix of office, industrial, retail and commercial uses. Such an outcome is consistent with the increased importance of Moorabbin Airport to the economy of south-east Melbourne, with total employment on the site increasing to approximately 3,300 jobs currently, up from approximately 800 jobs in 1999.

The proposed Costco Warehouse is to be located in Precinct D, one of five precincts identified in the Approved Master Plan (2010). Precinct D is intended to be a strong employment and activity node which includes retail as well as office, warehouse, showrooms, conference and other commercial activities.

Precinct D reflects the growing role of airports across Australia as a focus for a range of non-aviation activities, including business parks and retail. These non-aviation activities ensure that the economic contribution of airport land is enhanced, and provide revenue streams for airport owners which can be used to raise funds for aviation activities. Such an outcome is supported by the Airports Act and is reflected in the Approved Master Plan (2010).



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2 A B O U T C O S TCO

2.1 Background

Costco opened their first Warehouse in Melbourne in August 2009. The company is one of the world’s largest retailers, with over 620 warehouses in the US, Canada, Mexico, UK, Taiwan, Korea, Japan and now Australia, and employs over 170,000 people around the world. Total membership is in the order of 67 million members globally.

At present, five Costco Warehouse’s are trading within Australia in Melbourne, Canberra and Sydney. Approval has been granted for an additional Warehouse at North Lakes in Brisbane. Costco Warehouses are also proposed at Marsden Park in Sydney, Kilburn in Adelaide and Epping on the northern fringe of metropolitan Melbourne.

The growing popularity of the Costco Warehouse model in Australia is reflected in phone survey data from October 2013 that suggests name recognition from over 90% of consumers, despite Costco operating from just three locations nationally at the time of the survey. Approximately 53% of surveyed shoppers would consider becoming a Costco member if a warehouse opened in their local area.

2.2 The Costco Model

Originally set up to supply the needs of small to medium size businesses with competitively priced wholesale goods, Costco leverages the cost benefits associated with buying in bulk, and passes these savings on to customers.

Although Costco now also serves a retail market, the emphasis on bulk buying remains. Importantly, this means that retail customers use Costco for a limited range of merchandise for which bulk purchases are an option.

Costco is not typically used by consumers as a replacement for the local store or the nearby supermarket. This is reflected in an average basket size at Costco of more than $200 per transaction compared with an average basket size of between $35 and $45 at a traditional supermarket. On average Costco members visit a warehouse 8 times per year, compared to supermarkets which are typically visited once or twice a week by most consumers.

The Costco business model is an example of a ‘wholesale club’ which uses purchasing power to deliver high quality branded products to its members at low cost. Revenue is generated from charging for membership which means that profit margins on goods sold can be kept much lower than usual in the retail industry. Typically, Costco achieves sales margins of 10% or less, and this margin is against the total cost of goods sold, not just the wholesale price. By comparison, margins can be more significantly above 30-40% for some competing retailers.

For a fee of $60 per annum (or $55 for business card holders) – high quality merchandise is available at a significantly lower price when compared against competing outlets.



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Another important outcome is that small businesses such as corner convenience stores can purchase wholesale goods at low prices, with sufficient opportunity to resell those goods (typically repackaged as individual items) at prices that are competitive with supermarkets.

While Costco has an emphasis on high quality branded merchandise, the company actively engages with and sources goods and services from local suppliers and vendors in the regions surrounding their stores.

Costco also provides the opportunity for local suppliers to export goods to Costco Warehouse’s in other countries; for example, Australian meat and dairy products are currently being exported to Costco in Japan, South Korea and Taiwan.

A review of supplier data by Costco also shows that in the past four years, approximately $120 million of wholesale products have been sourced from firms that are based in south-east Melbourne. As the Costco store network expands in Australia, the volume of products sourced from businesses located in south-east Melbourne is expected to increase further.

2.3 Costco Warehouse

Costco typically has about 4,500 individual products (stock-keeping units, or SKUs) on its floor at any one time, and this is much less than the 30,000 or more SKUs typically on the shelves at a full-line supermarket, or around 40,000 SKUs on offer in a large discount department store such as Kmart, Big W or Target.

The range of products at a typical Costco Warehouse is very wide, from fresh food (eggs, bread, meat, vegetables, etc) to clothing, jewellery, leisure goods (tents, BBQs, etc), whitegoods, dry groceries, frozen food, electrical equipment, wine and liquor, sheets, towels, and pet food.

Costco also sells a range of products targeting trade and business customers including:

Office supplies

Office furniture

Cash registers

Basic shop fittings

Tiles

Power and trade tools

Product storage and display equipment, and

Restaurant and kitchen supplies.

Appendix 1 to this report provides a number of photos showing a selection of these trade and business supplies being sold at Costco Warehouse.



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Other products sold by Costco include optical glasses, hearing aids and motor-vehicle tyres.

A comparison of the main operational features for different types of store formats is presented in Table 2.1, and this highlights the dissimilarity between a Costco store and the alternative store types listed.

Table 2.1: Comparison of Store Types

Store format Full-line

supermarket

Discount Department Store

(DDS) Department Store Costco

Floorspace (GFA) 3,000-4,500m2 5,000-8,000m

2 10,000-25,000m

2 13,625m

2

Employees ≈60-80 EFT

(120-160 total) ≈50-80 EFT

(100-160 total) ≈70-170 EFT

(150-350 total) 275 EFT

(375 total)

Product line/SKUs ≈30,000+ ≈50,000+ ≈70,000+ ≈4,500

Membership? No No No Yes

Location Shopping Centre Shopping Centre Shopping Centre Free Standing

Total turnover $25-50m $20-40m $30-60m $150m

% turnover to business

<2% <5% <5% 32%

Population catchment

8,000+ persons 30,000+ persons 100,000+ persons 700,000+ persons

Source: Essential Economics Note: These are indicative estimates, and ignore the substantial variation for particular stores

2.4 Competition

Costco competes with a very wide range of alternative shopping locations, including supermarkets, discount department stores, specialty stores, bulky goods or homemaker outlets, individual retailers, and wholesale outlets.

By bringing its unique retail model to Australia, Costco has substantially increased the level of competition in the retail market. The potential benefits for consumers relate to the potential price savings associated with this competition, which has the potential to encourage price reductions by other businesses as they adjust their operations to maintain market share. Costco’s unique product offer also serves to increase customer choice and increase the variety of goods and services available in the retail marketplace.

The very wide regional trade area served by each Costco store means that any competitive trading impacts are distributed very widely and thinly, with individual centres and stores not impacted to a great degree.

This has already been the experience in Melbourne, where the membership base is spread across the whole metropolitan area, and adverse competitive impacts have not been noticeable from the Docklands store in the four years it has been open.



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2.5 Costco Site Requirements

Costco is a retail operation with particular site requirements that are a typical characteristic for large destination retailers. These criteria relate to factors such as:

The size of the land and its configuration

The ability to accommodate a preferred warehouse design

The potential cost of development

The exposure of the site to the regional catchment and the potential access arrangements that can be achieved

Whether the site has any planning constraints that need to be overcome (e.g. heritage controls, flood-prone, etc.), and

The potential to resolve urban design issues such as the interface with adjoining uses, among others.

Of particular importance from a retail-economic perspective is whether the site is consistent with the Costco business model, in which retail shoppers and business customers are drawn from extensive catchments. Each site must have sufficient exposure and ‘destinational appeal’ to attract people from at least a 30 minute drive time catchment.

In this context, a summary of the main location criteria relevant for planning a new Costco Warehouse is provided below.

Development Opportunity

Availability: Sites can only be developed where they are available for sale or lease. Importantly, where consolidation is required (refer below in the context of size requirements), site development is more difficult and more costly.

Land cost: The Costco model of delivering low prices to members depends on a number of factors, including the ability to secure favourable supply contracts, ensuring very efficient operating costs, and attracting large numbers of members. At the development level, Costco also has certain requirements in terms of land costs, although these of course vary according to the potential market opportunity and subsequent store performance in each location.

Development cost: Construction and other costs can be significantly higher for sites that are difficult to develop; for example, where there is sloping land or where difficult interface issues exist, or where existing buildings require demolition or modification.

Site and Location Suitability

Size: This is a very important criterion having regard for the typical size of the Costco building (usually in the range 12,000-16,000m2) and the requirement for a large number of car parking spaces (preferably provided at-grade). The minimum site area is approximately 4ha in most locations – with 5ha or more preferable for a location with all



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parking provided at-grade. Critically, the site for a Costco needs to have a minimum depth (at least 150 metres) in order to accommodate the normal requirements for customer and supplier access, store configuration, and provision of accessible car parking.

Strategic road access: In order to serve a large regional trade area, Costco stores need to be easily accessible from major highways and arterial roads. Preferably, the connections need to be strong radially around the site so that a large regional catchment can be served.

Public transport: This is not normally a significant priority, as the nature of Costco (as a location for bulk purchases) means that customers mainly use private vehicles to shop at the store. However, public transport can be beneficial to allow convenient travel for store employees and a very small share of customers.

Market Opportunity

Accessibility from regional catchment: As noted above, Costco stores need to have very good access from a large surrounding regional catchment in order to generate sufficient trade.

Synergy with existing destination uses: Costco is a destination retailer; that is, the store attracts people to undertake shopping visits to the local area. Where a number of destination retailers can co-locate, a critical mass can be achieved, thereby making the precinct well known as a shopping location and potentially extending the catchment it serves. At Moorabbin Airport this synergy can be achieved with the existing DFO Moorabbin and other retail and commercial uses on Airport land and in the nearby Braeside employment area.



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3 P L A N N I N G P O L I C Y C O N T E X T

This section of the report considers in general terms the planning policy context for the Costco MDP Project. Note that a separate planning report is being prepared as input to the Costco MDP Project by Aecom Australia Pty Ltd.

Moorabbin Airport Master Plan

The Moorabbin Airport Master Plan was approved in June 2010 by the Federal Minister for Infrastructure, Transport, Regional Development and Local Government. The Approved Master Plan (2010) represented an update of the earlier 2004 Master Plan, with the broad strategic and planning directions retained.

The vision for Moorabbin Airport is identified as follows:

“To continue to develop an efficient and fully functioning airport of Regional and State significance, supported and enhanced by quality land use, which will significantly contribute to and improve and support the operation and growth of the airport and the economic and social base of south eastern metropolitan Melbourne, particularly its local community” (p17).

Key outcomes of the Approved Master Plan (2010) which support this vision include the following:

Protection of the aviation function of the Airport, including the retention, improvement and expansion of aviation infrastructure

Growth in aviation support services, including pilot training and education, and increased aircraft storage

Development of office, industrial, retail and commercial business uses on land not required for aviation purposes

Greater integration between land uses on airport land and the broader regional economy.

As a result of the Approved Master Plan (2010), considerable growth in the scale and intensity of activity at Moorabbin Airport is expected over the coming decades, including uses such as the proposed Costco Warehouse.

Kingston Planning Scheme

Being located on Commonwealth land, Moorabbin Airport operates outside the Victorian planning system and the local planning policies contained in the Kingston Planning Scheme. Nonetheless, the Kingston Planning Scheme recognises the importance of Moorabbin Airport in the Moorabbin Airport Environs Policy (Clause 22.05). The policy basis is described in Clause 22.05-01, which was incorporated on 19/01/2006 is noted as:



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“The Municipal Strategic Statement recognises the significant role played by the Moorabbin Airport in the local and regional economy and in the state’s transport infrastructure.”

Objectives associated with this policy relate to planning for off-site use and development of land within the area covered by the Kingston Planning Scheme.

Kingston Retail and Commercial Strategy

The Kingston Retail/Commercial Development Strategy was prepared by Charter Keck Cramer in June 2006 for the City of Kingston. The Strategy analyses long-term retail and commercial office development opportunities for the municipality. Of particular relevance are the following findings in relation to retail activity:

Ensure the consolidation of retailing activity within existing commercial centres

Monitor future planning and development of restricted retail activities at the Moorabbin Airport and take account of those developments in planning for Kingston's restricted retail precincts

Ensure that development on Moorabbin Airport does not undermine existing activity centres.

The potential for ongoing retail development at the Moorabbin Airport is explicitly identified in the Strategy. Furthermore, the Strategy also recommends that Council recognise the increased role of Moorabbin Airport in supporting retail and commercial activities in its own strategic policies.

Plan Melbourne: Metropolitan Planning Strategy

The Plan Melbourne metropolitan strategy was released for public comment in October 2013 and is expected to be finalised in early 2014 after a public review process.

To replace the existing Melbourne 2030 metropolitan strategy released in 2002, Plan Melbourne identifies seven overarching outcomes and objectives:

1 Delivering jobs and investment

2 Housing choice and affordability

3 A more connected Melbourne

4 Liveable communities and neighbourhoods

5 Environment and Water

6 A state of cities

7 Implementation.



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Each outcome and objective is supported by a specific set of directions, that are themselves supported by various initiatives identified in the strategy.

In relation to the proposed Costco Moorabbin, particular directions that are relevant include:

Direction 1.1 Define a new city structure to deliver an integrated land use and transport strategy for Melbourne’s changing economy

This direction seeks to provide opportunities for business development at locations that support productive use of land or meet a market gap.

Direction 1.2 Strengthen competitiveness of Melbourne’s employment land

This direction seeks to ensure that Melbourne has available commercial and industrial land in the right locations to support industry growth. In particular, the strategy notes the future growth in demand for retail floorspace in Melbourne and the need to support increased employment levels. On this basis, the proposed location for Costco at Moorabbin Airport supports this direction.

Direction 1.5 Plan for jobs closer to where people live

This direction highlights the importance of promoting appropriate development in suburban areas that generates benefits including reduced travel demand, economic productivity, employment and use of existing infrastructure.

Victoria The Freight State

The Victorian Freight and Logistics Plan (known as Victoria the Freight State) identifies Boundary Road, which runs along the eastern boundary of the Airport, as part of the Principal Freight Network. The Plan recognises the importance and potential growth of industrial and employment areas in the broader south-east region of Melbourne surrounding Moorabbin Airport.

The accessibility of Moorabbin Airport to transport infrastructure will also be enhanced by the completion of the Dingley bypass that is expected to begin construction in 2014.



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4 R E TA I L M A R K E T A S S ES S M E N T

This Chapter provides a market assessment of the proposed Costco Warehouse at Moorabbin Airport, including an analysis of trade area population and spending.

4.1 Trade Area Definition

A retail trade area describes the geographic region from which a retailer is expected to draw the majority of its turnover.

The extent of the trade area is defined by a number of factors which include:

The location of existing and proposed retail competition

The surrounding arterial road and freeway network

Existing travel patterns, such as travel to work

Physical barriers to movement (such as water courses, railway lines, etc).

For Costco, another relevant consideration is the network of future Costco stores that will be progressively developed to serve the metropolitan area. This includes the existing Costco Warehouse at Docklands and the proposed new store at Ringwood.

Typically, Costco stores draw around 80% of their sales from within approximately a 30-minute drive time. This trading pattern reflects the experience of Costco in other markets such as USA, Canada and UK, as well as the new stores in Australia.

For this reason, the trade area for a Costco and reflects the fact that people are attracted from an extensive geographic region due to the strong destinational appeal of the format.

Costco Moorabbin Trade Area Definition

A Main Trade Area (MTA) has been drawn to identify the likely trading influence of a Costco Warehouse at Moorabbin Airport, and is shown as Figure 4.1. The MTA generally reflects a 30 minute travel time, but with consideration also to the location of competitive stores/centres, and overall levels of accessibility to the subject site.

A further consideration for the Costco Warehouse MTA is the existing presence of uses at the Airport that are already drawing patronage from a wide regional catchment. This includes the existing DFO outlet centre that has been trading on the Airport since the 1992 and is a well-established destination for fashion and other goods for residents living across south-eastern Melbourne.

The proposed Costco Warehouse is accessed by Chifley Drive via Centre Dandenong Road (28,000 vehicles per weekday) and Boundary Road (34,000 vehicles per weekday). This location on two arterial roads allows for easy access to the site from the surrounding region due to the excellent east-west and north-south transport connections.



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The trade area for the proposed Costco Warehouse at Moorabbin Airport comprises:

A Primary Trade Area (PTA), containing the Moorabbin Airport and the surrounding industrial and residential areas. The PTA extends north to the Monash Freeway incorporating parts of Mulgrave and Oakleigh and to the east as far as the alignment of the Eastlink Tollway. In the south, the PTA extends as far as Patterson Lakes and Carrum. The PTA represents the area in which the proposed Costco Warehouse will generate its highest market share.

A Secondary North Trade Area (STA-North) which generally includes the suburbs bound by the Monash Freeway in the north, Punt Road and Albert Park in the west, and the suburbs of North Brighton and Caulfield South. The STA-North is characterised by densely populated suburbs located in the inner south-east of Melbourne. At its furthest extent, the boundary of the STA-North is 17km north-west of the subject site.

A Secondary East Trade Area (STA-East) extends to the east of the Eastlink tollway to include Dandenong and newer suburban areas further to the west and south, including Narre Warren, Cranbourne and Berwick. The STA-East includes the Cranbourne West urban growth area that will be developed over the next 15 or so years. At its furthest extent east, the STA-East is 26km from the subject site.

A Secondary South Trade Area (STA-South) is also defined to include the bayside area around Frankston and suburbs further east including Langwarrin and Carrum Downs. The STA-South extends 22km south of the subject site and includes a mixture of well-established residential areas, and more recently developed suburbs.

The Primary and Secondary trade areas combine to form the Main Trade Area (MTA). The MTA shows the geographic areas from which the majority of trade at the proposed Costco Warehouse will be generated.

4.2 Trade Area Population

Historical, current and forecast population for each trade area sector between 2011 and 2026 is shown in Table 4.1.

The population projections have been prepared with reference to the following data sources:

New dwelling approvals data

Lot production data prepared by the Urban Development Program 2010

Population Forecasts prepared by the Department of Planning and Community Development in the “Victoria in Future 2012” publication

Id Consulting forecasts for selected areas commission by local Councils

ABS Estimated Resident Population data and trends.



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Figure 4.1 Main Trade Area Map

Source: DPCD, StreetPro and Essential Economics



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The proposed Costco Warehouse at Moorabbin Airport will serve a large MTA, with an estimated resident population of approximately 1.15 million persons in 2013, including approximately 500,000 people in the PTA, as shown in Table 4.1.

Table 4.1 Main Trade Area Population, 2011 to 2026

2011 2013 2016 2021 2026

Population (No.)

Primary Trade Area 492,970 502,890 514,430 532,620 550,740

Secondary Trade Area

- Secondary North Trade Area 242,010 247,900 254,260 264,200 274,130

- Secondary East Trade Area 287,490 300,460 319,300 350,800 380,930

- Secondary South Trade Area 92,510 94,410 96,960 101,120 105,270

Total Secondary 622,010 642,770 670,520 716,120 760,330

Main Trade Area 1,114,980 1,145,660 1,184,950 1,248,740 1,311,070

Average Annual Growth (%)

Primary Trade Area - +1.0% +0.8% +0.7% +0.7%


- Secondary North Trade Area - +1.2% +0.8% +0.8% +0.7%

- Secondary East Trade Area - +2.2% +2.0% +1.9% +1.7%

- Secondary South Trade Area - +1.0% +0.9% +0.8% +0.8%

Total Secondary - +1.7% +1.4% +1.3% +1.2%

Main Trade Area - +1.4% +1.1% +1.1% +1.0%

Average Annual Growth (No.)

Primary Trade Area - +4,960 +3,850 +3,640 +3,620


- Secondary North Trade Area - +2,950 +2,120 +1,990 +1,990

- Secondary East Trade Area - +6,490 +6,280 +6,300 +6,030

- Secondary South Trade Area - +950 +850 +830 +830

Total Secondary - +10,380 +9,250 +9,120 +8,840

Main Trade Area - +15,340 +13,100 +12,760 +12,470

Note: Figures are rounded Source: ABS; DPCD, Victoria in Future 2011; id Forecast for selected LGAs and Essential Economics

Population growth is forecast to occur throughout all the trade area sectors, whereby in 2016, the likely first full year of trading for the proposed new Costco, the MTA is forecast to have a total population of approximately 1,184,950 residents, including 514,430 residents in the PTA, and a combined 670,520 residents in the Secondary trade area sectors.

Between 2013 and 2016, the MTA served by the Costco Warehouse at Moorabbin Airport will have increased by approximately 39,290 residents, or an increase of 13,100 persons per annum.



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Beyond 2016, continued population growth is also expected for all trade area sectors. For the foreseeable future, the proposed Costco Warehouse at Moorabbin Airport will be trading in an environment of moderate population growth, and increased demand for retail goods and services by the residents living in this catchment.

Worker Population

At present an estimated 3,300 jobs are located on-site at Moorabbin Airport, based on industry standard employment ratios that are relevant to retail, industrial and commercial office activities. This includes:

Aviation-related: Approximately 670 staff employed on-site in aviation activities. This figure includes pilots, training instructors and general airport staff undertaking maintenance and repairs.

Industry-related: An estimated 1,250 industrial-related jobs are currently supported at Moorabbin Airport.

Retail: An estimated 850 jobs (approximately) are supported by retail at Moorabbin Airport including the DFO, Kingston Central and The Good Guys outlet.

Other ancillary: An estimated 25 jobs are generated by a variety of uses located at the periphery of the Moorabbin Airport site (garden centre, petrol stations etc)

Office-based: A total of approximately 480 office-based jobs are currently supported in the office precinct.

Support services: Including Cafe, gym, child care facilities which provide approximately 20 jobs.

Flight School Students: approximately 800 positions for flight training school students are located at the airport. These students are not included in the employment estimate.

This existing employment base provides an additional source of patronage for the proposed Costco Warehouse. This includes sales associated with shopping visits undertaken at lunchtime and on the way home, as well as business related shopping visits. Note that Costco has a strong role in providing a wide range of goods to the business sector, including special opening hours for business members.

Future growth in on-site employment at Moorabbin Airport is expected to increase demand for supporting retail and business facilities. According to the development outcomes identified in the Approved Master Plan (2010), more than 7,500 jobs are expected to be located on-site at full development.

In addition to the direct employment located on-site at Moorabbin Airport in 2011, an estimated additional 17,200 jobs are located in the adjacent industrial and commercial areas of Braeside, Dingley and the light industrial precinct adjacent to Grange Road. This estimate is based on ABS Journey-to-Work data.



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In effect, the employment area identified in Figure 4.2 is estimated to generate approximately 20,500 jobs in total, including Moorabbin Airport (3,300 jobs) and balance of the employment area (17,200 jobs).

On this basis, local businesses are expected to be an important customer base for the proposed Costco Moorabbin Airport.

Figure 4.2 Moorabbin Airport and Adjacent Employment Areas

Source: Essential Economics & NearMap

4.3 Retail Spending Analysis

Estimates of per capita retail spending by MTA residents have been prepared with reference to the MarketInfo retail spending model. MarketInfo is a micro-simulation model prepared by MDS Pty Ltd which uses data from the ABS Household Expenditure Survey, the ABS Census of Population and Housing, Australian National Accounts, and other relevant sources.

Note that these spending forecasts do not include the spending which may be generated by the workforce population located in proximity to the proposed Costco Warehouse, where these workers live outside the MTA. Conservatively, only spending generated by the residents of the MTA are incorporated in the following analysis.

Table 4.2 present estimates of per capita retail spending in 2013 by trade area sector and compares these with the Melbourne average.



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The spending data is presented in the following major spending category groupings:

Food, Liquor and Groceries: includes fresh food, dry groceries, tobacco, pet food and pharmaceutical groceries and liquor consumed away from a licenced premises.

Food Catering: meals at cafes and restaurants, as well as fast food and takeaway food.

Apparel: includes clothes, shoes, infants clothing (e.g. nappies), clothing accessories, watches and jewellery.

Homewares: household goods including curtains, haberdashery, small electrical items, pre-recorded media (CDs, DVDs), kitchenware, household decorations etc.

Bulky Merchandise: includes large items such as whitegoods, hardware, carpets, furniture and other products requiring a large display area.

General Merchandise: a category covering a wide range of retail goods including toys, newspapers and magazines, leisure goods, stationery and other general products.

Services: dry cleaning, hair and beauty services, repair of household goods, clothing hire and other retail services.

Average retail spending per capita by MTA residents is estimated at $13,420 in 2013, approximately 0.7% higher than the metropolitan Melbourne average of $13,330 (figure in constant 2013 dollars).

Spending is highest in the STA-North, with per capita spending of $15,760 in 2013; while retail spending levels are lowest in the STA-East, with per capita spending of $12,010.

Table 4.2 Main Trade Area Per Capita Retail Expenditure, 2013 ($2013)

Trade Area Food,

Liquor, Grocery

Food Catering

Apparel Home- wares

Bulky Merch

General Merch

Retail Services

Total

Per Capita Retail Spending

Primary Trade Area $5,220 $1,750 $1,420 $1,010 $1,280 $2,110 $550 $13,340

Secondary North Trade Area $5,400 $2,500 $1,860 $1,330 $1,420 $2,520 $730 $15,760

Secondary East Trade Area $5,030 $1,410 $1,210 $890 $1,230 $1,820 $420 $12,010

Secondary South Trade Area $5,170 $1,430 $1,180 $860 $1,270 $1,840 $430 $12,180

Total Secondary Trade Area $5,190 $1,830 $1,460 $1,060 $1,310 $2,090 $540 $13,480

Main Trade Area $5,210 $1,790 $1,440 $1,040 $1,300 $2,100 $540 $13,420

Metro Melbourne $5,200 $1,750 $1,430 $1,030 $1,300 $2,090 $530 $13,330

Variation from Metro Melbourne average

Primary Trade Area +0.4% +0.0% -0.7% -1.9% -1.5% +1.0% +3.8% +0.1%

Secondary North Trade Area +3.8% +42.9% +30.1% +29.1% +9.2% +20.6% +37.7% +18.2%

Secondary East Trade Area -3.3% -19.4% -15.4% -13.6% -5.4% -12.9% -20.8% -9.9%

Secondary South Trade Area -0.6% -18.3% -17.5% -16.5% -2.3% -12.0% -18.9% -8.6%

Total Secondary Trade Area -0.2% +4.6% +2.1% +2.9% +0.8% +0.0% +1.9% +1.1%

Main Trade Area +0.2% +2.3% +0.7% +1.0% +0.0% +0.5% +1.9% +0.7%

Source: MarketInfo and Essential Economics



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In 2013, the residents of the MTA had total available retail expenditure of approximately $15,772m (in 2013 dollars). This substantial level of expenditure reflects the extensive trade area that the proposed Costco Warehouse would serve.

Table 4.3 Main Trade Area Forecasts Retail Expenditure, 2013 to 2026 ($2013)

Retail Category 2013 2016 2021 2026 AAGR 2013-2026

Food, Liquor, Grocery $6,175 m $6,481 m $6,999 m $7,531 m +1.5%

Food Catering $2,187 m $2,343 m $2,619 m $2,918 m +2.2%

Total Food $8,362 m $8,825 m $9,618 m $10,449 m +1.7%

Apparel $1,593 m $1,712 m $1,939 m $2,189 m +2.5%

Homewares $1,220 m $1,351 m $1,607 m $1,905 m +3.5%

Bulky Merchandise $1,524 m $1,647 m $1,869 m $2,112 m +2.5%

General Merchandise & Leisure

$2,442 m $2,704 m $3,217 m $3,815 m +3.5%

Total Non-Food $6,780 m $7,414 m $8,632 m $10,021 m +3.1%

Retail Services $630 m $685 m $803 m $940 m +3.1%

Total Retail Spending $15,772 m $16,923 m $19,053 m $21,410 m +2.4%

Source: Population forecasts (Table 4.1), MarketInfo and Essential Economics Note: Average Annual Growth Rate (AAGR)

Total retail spending by residents of the MTA is shown in Table 4.3, including spending and growth details for individual retail categories. The spending forecasts to 2026 reflect real growth in average per capita spending (i.e. excluding inflation) and forecast growth in the MTA population, as shown in Table 4.1.

In terms of spending by retail category, considerable growth is forecast in non-food retail expenditure, with average annual growth of 3.1% in spending by MTA residents over the period 2013 to 2026. Spending growth for food retail is forecast at approximately 1.7% per annum over the same period.

In the forecast period to 2026, total retail expenditure by residents of the MTA is forecast to increase from $15,772m in 2013 to $21,410m in 2026. This represents a very considerable increase in spending capacity to support new retail development, including the proposed Costco Warehouse at Moorabbin Airport.

4.4 Costco Turnover Forecast

The proposed Costco Warehouse at Moorabbin Airport is forecast to achieve total sales of approximately $150m (2013 dollars) in 2016, the first full year of trading. This reflects our expectations of trading performance, as well as discussions with Costco and consideration of sales levels achieved at other stores in Australia.



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Approximately 68% (or $101.6m) of sales are expected to be retail sales generated by households, with the balance of 32% generated by sales to (mainly small) businesses. This is a feature of the Costco operation worldwide, where membership is available to both households and businesses.

Table 4.4 shows the estimated distribution of Costco sales by retail category and indicates the proportion of sales in each category that would be expected to be supported by household spending (as opposed to business spending). This allocation of sales by retail type takes into account Costco trading features in Australia and worldwide, although modified for the anticipated trading situation at the subject site.

Table 4.4 Costco Moorabbin Forecast Turnover, 2016 ($2013)

Retail Category Estimated

Allocation of Sales

Estimated Total Sales by

Type

Estimated Allocation of

Sales to Households

Estimated Sales to Households

Share of Total Sales to

Households

Food, Liquor, Grocery 69% $103.5 m 65% $67.3 m 66.2%

Food Court/Cafe 1% $1.5 m 90% $1.4 m 1.3%

Apparel 4% $6.0 m 100% $6.0 m 5.9%

Homewares 6% $9.0 m 80% $7.2 m 7.1%

Bulky Merchandise 6% $9.0 m 75% $6.8 m 6.6%

General Merchandise 11% $16.5 m 70% $11.6 m 11.4%

Retail Services 1% $1.5 m 95% $1.4 m 1.4%

Non-Retail 2% $3.0 m 0% na na

Total 100% $150.0 m 68% $101.6 m 100%

Source: Costco Wholesale, Essential Economics

Sales of Food, Liquor and Groceries are expected to represent 65% of the total sales to households at the proposed store.

4.5 Retail Market Share Analysis

In this assessment, calculations of market share are based on Costco drawing 90% of its sales from within the MTA, and with 10% from beyond the MTA.

Typically, Costco stores draw 80% of sales from the MTA, and this would mean lower market share and, in general, lower trading impacts than indicated in the subsequent analysis contained in this report. Assuming 90% of sales are from within the MTA reflects a ‘worst-case’ scenario in terms of trading impacts on other centres.

The proposed Costco Warehouse at Moorabbin Airport is expected to generate sales to households of $101.6 million in 2016 (i.e. total sales of $150 million x 68%), which would be the first full year of operation. An estimated $91.4 million or 90% of these sales would be expected to be drawn from across the MTA, as earlier defined, and with the balance of $10.2 million or 10% of sales captured from beyond this trade area (dollar figures rounded).



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Total sales of $91.4 million from the MTA in 2016 result in a market share of just 0.5% overall, as shown in Table 4.5. This outcome is consistent with the typical market share for a Costco store of between 0.5% and 1% of total retail spending.

Across each product category the market share is relatively low and varies between 0.9% for Food, Liquor and Groceries and 0.1% for Food Catering.

Table 4.5 Costco Moorabbin Airport Forecast Market Share from MTA, 2016 ($2013)

Retail Type Food,

Liquor, Grocery

Food Catering

Apparel Home-wares

Bulky Merch

General Merch

Retail Services

Total Sales to

MTA

Sales to H'hlds $67.3 m $1.4 m $6.0 m $7.2 m $6.8 m $11.6 m $1.4 m $101.6 m

Sales from MTA

$60.5 m $1.2 m $5.4 m $6.5 m $6.1 m $10.4 m $1.3 m $91.4 m

MTA Spending $6,481m $2,34 m $1,71 m $1,351m $1,647m $2,704m $685m $16,923m

Market Share 0.9% 0.1% 0.3% 0.5% 0.4% 0.4% 0.2% 0.5%

Source: Essential Economics

The relatively low market shares described in Table 4.5 reflect that the Costco store will be serving a geographically large trade area, with a resident population of some 1.19 million people during its first full year of trading in 2016.

As a comparison, traditional retail stores such as supermarkets and department stores tend to have more tightly-defined catchments in which a higher market share is achieved. For example, supermarkets can capture up to 70% or so of available grocery spending in the surrounding catchment, which typically extends in a radius of about 2-3 km from the supermarket.

The proposed Costco Warehouse at Moorabbin Airport will serve a trade area extending more than 20km from the subject site (refer Figure 4.1).

4.6 Conclusion

The resident population in the MTA is forecast to increase from 1,145,660 persons in 2013 to approximately 1,311,070 persons in 2026. The Costco Warehouse will also serve the growing business uses located on the Moorabbin Airport site, as well as businesses in the extensive Braeside employment area located adjacent to the Airport.

Forecast sales of $150 million are expected in 2016, and this represents a market share of just 0.5% of total retail spending by residents of the MTA – a market share which is considered achievable.



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5 R E TA I L I M PA C T A S S ES S M E N T

This chapter provides an analysis of general and specific trading impacts on other retailers and centres associated with the proposed Costco Warehouse at Moorabbin Airport.

5.1 Costco Market Share

In undertaking a retail impact assessment, a key consideration is the market share of available spending that is generated by a new or proposed development. A higher market share implies a greater potential to re-direct spending from existing retailers and centres, while a lower market share implies a lesser potential impact.

The market assessment in Chapter 4 shows the Costco Warehouse would achieve a market share equivalent to just 0.5% of the available spending of households in the MTA (refer Table 2.6). On this basis, Costco would attract only $5 in every $1,000 of available spending by these households.

5.2 Costco Competition with Other Retailers

Costco represents a new form of retail development in Australia, which has been extremely well received by shoppers. Several stores are now trading across Australia, with trading characteristics similar to those experienced overseas.

The membership-based model of Costco and the emphasis on a limited range and bulk purchasing means that the typical shopper at a Costco Warehouse will still regularly visit conventional supermarkets, department stores, discount department stores and specialty stores located in conventional shopping centres in order to meet their full household shopping requirements.

For example, it may be satisfactory for the shopper to travel, say, 20 or 30 minutes or more for a visit to Costco, attracted by specials on a range of specific retail merchandise, but the same shopper will continue to find that shopping at the supermarket nearer to home will be most convenient for day-to-day and weekly household needs.

In terms of shopping patterns, it is noted that a Costco store only carries some 4,500 SKUs (stock-keeping units), whereas a typical full-line supermarket stocks some 30,000-plus SKUs and a discount department store stocks some 40-50,000 SKUs. Thus, there is far more choice at these conventional shopping facilities, and they will continue to serve their existing and expanding retail markets.

A Costco store cannot replace these conventional retail formats. Instead it serves as a retail destination that the typical customer will visit an average of 8 times per year. Costco stores trade ‘thinly and widely’ from their main catchment. The impacts of a store are therefore spread across a large number of competing centres.



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It is also important to recognise that Costco also has an important role as a wholesale supplier to trade and business customers, approximately 30% of turnover at a Costco Warehouse is generated by trade and business customers.

5.3 Competition

A Costco Warehouse at Moorabbin Airport will serve a MTA that extends across much of south-eastern Melbourne (as described in Section 4.1). Within this region, a large number of centres and freestanding big box and other retailers serve the retail needs of residents.

A list of the 26 main centres are identified as competing with the Costco Warehouse for a share of retail spending by MTA residents is shown in Table 5.1.

This list of the main competing centres has been developed with the assistance of a phone survey undertaken in October 2013 that identified the shopping patterns of MTA residents.

In addition to the centres listed in Table 5.1, many smaller neighbourhood and local centres serve the convenience retail and service needs of MTA residents. These centres (with the exception of Dingley Village, the closest centre to the proposed Costco Warehouse) have not been explicitly identified for the purposes of this assessment. This is because they are unlikely to experience any meaningful trading impact from the proposed Costco store which offers regional level destination retailing.

Figure 5.1 shows the MTA and a selection of key activity centres across the broader south-east region of Melbourne, including those centres specifically considered in Table 5.1. Centres are shown by their activity centre hierarchy classification (subject to limited change when the new metropolitan strategy is implemented).

Dandenong is the closest Central Activities District, located approximately 12km east of the subject site.

The closest Principal Activity Centre is Southland approximately 5km to the north-west. Major Activity Centres are located at Cheltenham (5km to the west), Parkmore Keysborough (6km to the east) and Moorabbin (approximately 8km to the north-west).



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Figure 5.1 Competition Map

Source: DPCD, Streetpro and Essential Economics Note: Only neighbourhood centres located in the PTA are shown.



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Table 5.1 Selected Competing Centres by Trade Area Sector, 2013

Centre Estimated

Retail Floorspace

Department Store

Discount Department

Store Other Tenants

Primary Trade Area

Chadstone 155,000 m2 David Jones,

Myer Kmart, Target

Coles, Woolworths, Best & Less, ALDI

Southland 128,000 m2 Myer, David

Jones Kmart, Target,

Big W Harris Scarfe, Coles, Woolworths, ALDI

Oakleigh 41,000 m2 - - Coles, Woolworths, IGA

Springvale 40,000 m2 - - Woolworths

Waverly Gardens 39,000 m2 - Big W, Target Coles, Woolworths, Best &

Less, ALDI

Parkmore 37,000 m2 - Big W, Kmart Woolworths, Coles

Bentleigh 25,500 m2 - - Coles, Woolworths, IGA

DFO Moorabbin 24,000 m2 - - Major chain fashion and

homewares

Brandon Park 22,500 m2 - Kmart Coles, ALDI

Hampton 20,590 m2 - - Woolworths

Church Street - Brighton 19,500 m2 - - Coles, Woolworths

Dingley 5,300 m2 - - Woolworths

Secondary North Trade Area

Prahran/South Yarra 120,000 m2 - - Coles, Woolworths, IGA

Malvern 57,500 m2 - Target Coles, Woolworths

St Kilda/Balaclava 72,750 m2 - - Coles, ALDI

Carnegie 27,750 m2 - - Woolworths x2

Elsternwick 18,800 m2 - - Coles

Secondary East Trade Area

Fountain Gate 170,000 m2 Myer Big W, Kmart,

Target Coles, Woolworths, Bi:Lo,

ALDI

Dandenong 135,000 m2 Myer Kmart, Target Coles, Woolworths, ALDI

Cranbourne Town Centre 46,000 m2 - Kmart Coles, Wooolworths,

ALDI, IGA, Harris Scarfe

Endeavour Hills 30,000 m2 - Big W, Kmart,

Target Coles, Woolworths, ALDI

Secondary South Trade Area

Frankston 111,000 m2 Myer Kmart, Target Coles, Woolworths, Best & Less, Rebel Sport, ALDI

Karingal 41,500 m2 - Big W Woolworths x 2, Best &

Less

Centres beyond the MTA

Glen Waverley 60,000 m2 David Jones Target Coles, Woolworths, Harris

Scarfe

Stud Park 24,000 m2 - Kmart Coles, Woolworths,

Mount Waverley 12,000 m2 - - Woolworths, SupaIGA Source: Essential Economics and published sources Note: Woolworths denotes both Safeway and Woolworths branded supermarkets



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Detailed calculations of current (2013) turnover performance for these 26 centres is shown in Table 5.2.

Turnover estimates are based on published data, where available, and where data is not available, on the application of typical average retail performance.

According to these estimates, the identified centres serving the MTA have combined annual turnover of approximately $8,520m in 2013.

The estimated share of total centre turnover that would be derived from MTA residents is also estimated in Table 5.2 and is based on our understanding of likely trading patterns.

According to this analysis, approximately 73% of all turnover achieved by the selected centres can be attributable to spending by residents in the MTA. Having regard for the level of available retail spending in the MTA ($15,800m in 2013), this represents an aggregate market share of approximately 40% of total MTA spending.

The remaining spending is directed to other, mostly smaller, retail facilities and to individual stores located throughout the MTA, as well as major shopping destinations outside the trade area, including the Melbourne CBD. A share of sales will also be internet-only retail spending, that is, sales via the internet that do not have a local ‘bricks and mortar’ component.

The most significant individual centre in terms of market share is Chadstone Shopping Centre, which captures a total of 5.7% of total spending by MTA residents, followed by Southland with 4.7%.

Importantly, individual neighbourhood-level activity centres achieve only a very small share of the overall spending generated by MTA residents. For example, Dingley Village, the closest activity centre to the proposed Costco, achieves a total market share equivalent to just 0.2% of total retail spending by residents of the MTA.

This highlights the relatively dispersed nature of potential trading impacts generated by Costco, particularly for neighbourhood-level activity centres meeting the day-to-day needs of surrounding residents.



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Table 5.2 Estimated Market Shares for Competing Centres, 2013

Centre Retail

Floorspace Average Sales/m

2 Total

Sales/Yr

Share to MTA

Residents

Total Sales from MTA Residents

Market Share

of MTA Spend

Primary Trade Area

Chadstone 155,000 m2 $8,940/m2 $1,385.0m 65% $900.3m 5.7% Southland 128,000 m2 $6,100/m2 $785.0m 95% $745.8m 4.7% Oakleigh 41,000 m2 $5,506/m2 $225.7m 90% $203.2m 1.3% Springvale 40,000 m2 $5,300/m2 $211.0m 90% $189.9m 1.2% Waverly Gardens 39,000 m2 $4,700/m2 $185.0m 65% $120.3m 0.8% Parkmore 37,000 m2 $6,500/m2 $240.0m 95% $228.0m 1.4% Bentleigh 25,500 m2 $7,500/m2 $191.3m 100% $191.3m 1.2% DFO Moorabbin 24,000 m2 $6,000/m2 $144.0m 75% $108.0m 0.7% Centro Brandon Park 22,500 m2 $5,800/m2 $130.0m 65% $84.5m 0.5% Hampton 20,590 m2 $7,800/m2 $160.6m 100% $160.6m 1.0% Church Street - Brighton 19,500 m2 $8,000/m2 $156.0m 100% $156.0m 1.0% Dingley 5,300 m2 $6,500/m2 $34.5m 100% $34.5m 0.2%


Prahran/South Yarra 120,000 m2 $5,500/m2 $655.0m 65% $425.8m 2.7% Malvern 57,500 m2 $5,500/m2 $316.3m 85% $268.8m 1.7% St Kilda/Balaclava 72,750 m2 $4,250/m2 $309.2m 85% $262.8m 1.7% Carnegie 27,750 m2 $6,750/m2 $187.3m 75% $140.5m 0.9% Elsternwick 18,800 m2 $7,250/m2 $136.3m 100% $136.3m 0.9%


Fountain Gate 170,000 m2 $4,100/m2 $705.0m 70% $493.5m 3.1% Dandenong 135,000 m2 $5,185/m2 $700.0m 75% $525.0m 3.3% Cranbourne Town Centre 46,000 m2 $5,200/m2 $240.0m 65% $156.0m 1.0% Endeavour Hills 30,000 m2 $4,800/m2 $145.0m 80% $116.0m 0.7%


Frankston 111,000 m2 $4,500/m2 $499.5m 60% $299.7m 1.9% Karingal 41,500 m2 $5,700/m2 $235.0m 60% $141.0m 0.9%


Glen Waverley 60,000 m2 $5,500/m2 $330.0m 35% $115.5m 0.7% Stud Park 24,000 m2 $6,700/m2 $160.0m 30% $48.0m 0.3% Mount Waverley 12,000 m2 $7,500/m2 $90.0m 40% $36.0m 0.2%

TOTAL SELECTED CENTRES 1,478,390m2 $5,764/m2 $8,522.1m 73% $6252.5m 39.6% Source: Essential Economics and published sources



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5.4 Potential Trading Impacts

An estimate of the likely impact that the introduction of Costco would have on existing retailers has been undertaken by applying the following approach:

1 Calculate likely trading performance of each centre in 2016 in the absence of the Costco Warehouse development.

2 On the basis of a phone survey of trade area residents undertaken in October 2013 that asks questions on shopping patterns, estimate the potential re-distribution of sales to the proposed Costco at Moorabbin Airport from each centre in 2016.

3 Present these calculations of expected loss of turnover at existing centres in 2016 as a proportional loss of turnover when compared against the turnover performance that would otherwise have been achieved in the absence of the Costco development.

The analysis in Table 5.3 shows that the introduction of a new Costco Warehouse at Moorabbin Airport would have the effect of reducing centre turnover by a small margin across a wide range of competing centres, when compared against the turnover that these centres would have achieved in the absence of Costco.

Of the 26 competing centres identified, the total trading impact is estimated at approximately -$63.2 million. The balance of trading impacts will be on a wide range of other centres and individual retailers.

The centres with the overall greatest trading impact is expected to be Chadstone (-$9.0 million) and Southland (-$8.3million). Among the centres located closest to the proposed Costco Warehouse at Moorabbin Airport, trading impacts are expected to range from -1.5% at Bentleigh, -0.6% at the DFO Moorabbin/Kingston Central and -2.0% at Dingley Village.

Dingley Village serves a neighbourhood convenience role, while DFO at Moorabbin is a regional destination for discount apparel and homewares and Bentleigh has a very strong food and grocery offer.

As previously noted in Chapter 1, Costco with a membership model and emphasis on bulk purchases, does not undermine the role of Dingley Village, and other neighbourhood-level retail centres, in providing the basic goods and services that local residents need to satisfy their weekly shopping requirements.

The results of this retail trading impact analysis indicate that the introduction of Costco at Moorabbin Airport will not generate any significant disruption in the operation of the retail hierarchy serving the region. This includes no reasonable expectation that the proposed Costco Warehouse will lead to the closure of major traders, or create a change in the range and quality of retail provision in surrounding centres.

The results of the analysis for a Costco Warehouse at Moorabbin Airport are also supported by the outcomes of the Costco stores at Docklands and Auburn(NSW); following the construction of these stores no significant adverse trading impacts have been reported at any nearby centres.



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Table 5.3: Estimated Retail Trading Impacts on Selected Centres, 2016 ($2013)

Centre Total Sales in

2013

Total Sales in 2016 (No

Costco)

Distribution of Costco

Impact

Total Sales in 2016 (With

Costco)

Costco Impact on 2016 Sales

Primary Trade Area Chadstone $1,385 m $1,586 m -$9.0 m $1,577 m -0.6%

Southland $785 m $842 m -$8.3 m $834 m -1.0%

Oakleigh $226 m $242 m -$3.0 m $239 m -1.2%

Springvale $211 m $226 m -$0.2 m $226 m -0.1%

Waverly Gardens $185 m $199 m -$1.5 m $197 m -0.7%

Parkmore $240 m $258 m -$2.5 m $255 m -1.0%

Bentleigh $191 m $205 m -$3.2 m $202 m -1.5%

DFO Moorabbin $144 m $155 m -$1.0 m $154 m -0.6%

Centro Brandon Park $130 m $139 m -$0.6 m $139 m -0.4%

Hampton $161 m $172 m -$0.5 m $172 m -0.3%

Church Street - Brighton $156 m $167 m -$0.2 m $167 m -0.1%

Dingley $34 m $47 m -$0.9 m $46 m -2.0%

Sub-Total of Selected Centres $3,848 m $4,239 m -$30.8 m $4,208 m -0.7%


Prahran/South Yarra $655 m $703 m -$3.3 m $700 m -0.5%

Malvern $316 m $339 m -$2.7 m $337 m -0.8%

St Kilda/Balaclava $309 m $332 m -$1.9 m $330 m -0.6%

Carnegie $187 m $201 m -$1.0 m $200 m -0.5%

Elsternwick $136 m $146 m -$0.9 m $145 m -0.6%



Fountain Gate $705 m $756 m -$5.2 m $751 m -0.7%

Dandenong $700 m $751 m -$3.1 m $748 m -0.4%

Cranbourne Town Centre $240 m $258 m -$4.7 m $253 m -1.8%

Endeavour Hills $145 m $156 m -$0.9 m $155 m -0.6%



Frankston $500 m $536 m -$4.6 m $531 m -0.9%

Karingal $235 m $252 m -$2.1 m $250 m -0.8%

Sub-Total of Selected Centres $735 m $788 m -$6.8 m $781 m -0.9%


Glen Waverley $330 m $354 m -$1.5 m $353 m -0.4%

Stud Park $160 m $172 m -$0.3 m $171 m -0.2%

Mount Waverley $90 m $97 m -$0.1 m $96 m -0.1%

Sub-Total of Selected Centres $580 m $622 m -$1.9 m $620 m -0.3%

Total Selected Centres $8,557 m $9,291 m -$63.2 m $9,228 m -0.7% Source: Essential Economics, Fieldforce Phone Survey of 400 respondents October 2013 Note: Figures quoted in 2013 dollars



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5.5 Regional Impact

Analysing the impact of the proposed Costco Warehouse at a regional level helps to place the scale of the potential impact in perspective. As noted earlier, the new Costco Warehouse at Moorabbin Airport would generate approximately $150m in turnover in 2016. An estimated $91.4m would be drawn from retail sales to residents of the MTA. Taking this into consideration, the total amount of retail spending by MTA residents that will be available to other retailers is forecast to increase by $1,060m over the 2013 and 2016 period.

This available spending will be directed to centres within the MTA and beyond, supporting existing retailers and leading to opportunities for retail expansion. For example, with a broad average turnover performance across the retail sector of $5,800/m2

in 2016, the $1,060m in additional spending could theoretically support approximately 180,000m2

of new retail floorspace development, over and above the floorspace associated with the proposed Costco store.

An assessment of the overall regional impact arising from the introduction of a new Costco at the subject site in 2016 is presented in Table 5.4.

Table 5.4 Costco Warehouse Regional Impact Assessment, 2013 to 2026 ($2013)

2013 2016 2021 2026

Costco Warehouse at Moorabbin Airport Costco Warehouse Turnover from Main Trade Area ($m)

1 $91.4 m $102.9 m $102.7 m

Main Trade Area Retail Spending ($m) $15,772 m $16,923 m $19,053 m $21,410 m

Main Trade Area T/O to Other Centres ($m)2 $15,772 m $18,951 m $21,410 m $21,227 m

Change in Turnover to Other Centres Relative to 2013 ($m) +$1,060 m +$3,179 m +$5,638 m Source: Essential Economics Note: (1) Assumes constant MTA Market Share; (2) Excludes Costco Moorabbin Airport

The analysis in Table 5.4 considers the extent to which growth in spending in the identified catchment would be captured by the Costco Warehouse, and the available growth in spending that would otherwise be able to support existing and new retail facilities elsewhere.

On this basis, Costco will have only a minor effect on the spending patterns in the wider region.

Beyond 2016 Costco will continue to capture just a small share of the available growth in spending by residents of the MTA.



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5.6 Conclusion

The proposed new Costco Warehouse at Moorabbin Airport is unlikely to create a significant adverse trading impact on other retail centres in the MTA. This reflects the large main trade area (MTA) served by Costco stores, and the fact that trading impacts will be spread ‘widely and thinly’ across many competing centres and individual competitors.

Importantly, the analysis shows that even with the introduction of Costco in 2016, strong ongoing growth in retail spending in the MTA will mean that other opportunities for the continued operation of existing centres and potential retail expansion over the period leading up to the opening of the store (2013 to 2016) and beyond (post 2016) will be supportable across the MTA.



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6 N E T C O M M U N I T Y B E N E F I T CO N S I D E R AT I O N S

This Chapter considers the proposed Costco MDP Project in the context of the achievement of a net community benefit, a desired outcome in planning decision making.

6.1 Consistency with Approved Airport Master Plan (2010)

The proposed Costco Warehouse at Moorabbin Airport is consistent with the objectives and land use outcomes contained in the Approved Airport Master Plan (2010).

Precinct D of the Approved Master Plan (2010) is identified as a location for a wide range of land uses, including:

Industrial

Warehouse

Office

Retail

Restricted retail

Showrooms

Business and corporate related facilities

Conference and hotel facilities.

A particular emphasis of the Approved Master Plan (2010) is on supporting the role of Precinct D in the delivery of business growth, investment and employment that serves the broader south-east region of Melbourne. Precinct D has an important role in achieving the target of 7,000 on-site jobs at Moorabbin Airport contained in the Approved Master Plan (2010).

This potential for Precinct D to support employment growth is will be achieved by developments such as the proposed Costco Warehouse at Moorabbin Airport.

6.2 Contribution to Specialised Role of Moorabbin Airpo rt

On-site development of non-aviation uses has occurred on vacant or under-utilised land at the airport which is not required for an identified current or future aviation use. This has created a new revenue stream which is partly used to subsidise and invest in the ongoing aviation functions at the airport.

The proposed Costco Warehouse at Moorabbin Airport will contribute to supporting the implementation of the Approved Master Plan (2010) that advocates retail and commercial activities in Precinct D, including enhancing the specialised aviation activities of the airport by providing wholesale products to aviation users.



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Furthermore, the proposed Costco is consistent with the growing role of Moorabbin Airport as a regional hub for a wide range of non-aviation activities – including retail.

6.3 Competition Benefits

The Costco Warehouse at Moorabbin Airport will provide a new and unique retail format directly to residents of the south-east Melbourne region. Benefits include improved consumer choice and providing customers, including businesses, with a wide range of products at highly competitive prices. A 66% share of survey respondents who were familiar with Costco agreed that a new store would increase competition and reduced prices.

The competition benefits include product categories including petrol, hearing aids, motor vehicle tyres and optical glasses. According to the phone survey of MTA residents undertaken in October 2013, 53% of respondents disagree with the statement that ‘competition between petrol stations is strong in your area’.

A detailed analysis of the price savings associated with the introduction of Costco was undertaken as part of the economic analysis prepared for the Costco Auburn store (in Sydney). Overall, the analysis showed that prices at Costco are in the order of 10% to 20% lower overall than the price of the same products purchased from competing retailers, and this figure is approximately the same for both household and business card holders. For some products the savings are much lower, while higher savings are achievable for other products. For a very few product lines Costco was more costly than competing stores at the time that prices were collected.

Importantly, the price savings from the introduction of Costco represent a tangible indication of the potential community benefits associated with increased retail competition.

6.4 Employment Outcomes

Approximately 375 direct employment positions are expected to be created by a Costco Warehouse at Moorabbin Airport, and this is equivalent to an estimated 275 Full-Time Equivalent (FTE) positions. In the future, an increase in the number of jobs is likely to occur as the Moorabbin Airport store gains in popularity and as further growth in population and spending occurs throughout the MTA.

Although the retail sector generally is a an important employer of young people, Costco also encourages (as appropriate) employment of older and more ‘experienced’ staff. For this reason, Costco has an employment profile that is more reflective of the age profile in the general community than for other major retailers that often rely on a younger and more casualised workforce.

Many of these new jobs at the Costco Moorabbin Airport are expected to be filled by people living across south-east Melbourne, and this tendency for the take-up of jobs by people living in the general area is observed universally in the retail sector.



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The phone survey of MTA residents undertaken in October 2013 identified that a total of 58% of respondents considered the availability of local employment options to be either ‘important’ or ‘very important’ for the region.

Moorabbin Airport has the potential to make a significant contribution to promoting the economic sustainability and self-sufficiency of south-eastern Melbourne region. At present, approximately 39% of employed residents of south-east Melbourne are employed outside the region. A Costco Warehouse at Moorabbin Airport will allow resident job seekers in Kingston and the wider region to work closer to home, rather than travel long distances to employment locations outside the region, including locations outside metropolitan Melbourne.

In addition to the 275 FTE direct jobs at the Costco Warehouse, a further 250 FTE indirect (or flow-on jobs) would be created indirectly through the employment multiplier effect. These indirect jobs would be located in Melbourne and in other parts of Victoria and interstate, thus reflecting the inter-industry links that are a feature of the national economy.

In essence, the employment multiplier for the retail sector shows that for every ‘direct’ job created, another ‘indirect’ (or flow-on) job is created in the wider economy; in this case, the employment multiplier has a value of ‘1.9’. These employment multipliers are based on Input-Output analyses and National Accounts information published by the ABS (refer Cat.No.5210.0).

6.5 Investment

The Costco Warehouse at Moorabbin Airport would involve an estimated capital investment of approximately $35m, which includes construction costs and store fit-out but excludes land purchase(or lease) cost or the GST component.

Approximately 80 FTE direct construction-related jobs over a 12-month construction period are expected, based on approximately $450,000 construction cost for one FTE job. This is derived from detailed analysis of Australian National Accounts figures by Essential Economics.

In addition, an employment multiplier also applies in this instance (where the multiplier is equivalent to 2.6; i.e. an additional 1.6 indirect jobs are created for every 1 direct job), with the result that another 130 or so indirect or flow-on jobs would be generated during the construction phase. These indirect jobs would be distributed across the national economy, reflecting inter-industry links.

In total, the construction of the proposed Costco Warehouse is estimated to generate approximately 210 direct and indirect FTE construction-related jobs over a 12-month construction period.



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7 K E Y F I N D I N G S

The analysis in this report has identified the following key findings in relation to the proposed Costco Warehouse at Moorabbin Airport and the implications for the local and regional economy.

Market Opportunity for a Costco Warehouse

The proposed Costco Warehouse at Moorabbin Airport will provide residents across south-east Melbourne with direct access to a new retail format in Australia. The main trade area (MTA) to be served by the Costco Warehouse at Moorabbin Airport contains approximately 1.12 million residents in 2013, and this is forecast to increase to 1.3 million persons by 2026. The store is forecast to achieve a market share of just 0.5% of retail spending by residents of the MTA in its first full year of trading in 2016.

Consistent with Approved Moorabbin Airport Master Plan (2010)

Development of a Costco Warehouse at Moorabbin Airport is consistent with the Moorabbin Airport Masterplan. Precinct D of the Masterplan, including the subject site, is intended to be a strong employment and activity node including retail as well as office, warehouse, showrooms, conference and other commercial activities.

The Costco MDP Project also supports strategic land use policy objectives related to employment and investment at the Moorabbin Airport specifically (as referenced in the Kingston Planning Scheme), and in suburban areas of Melbourne more generally (as referenced in Plan Melbourne).

Costco will not undermine Retail and Centres Hierarchy

An average trading impact of just -0.7% has been forecast for the 26 centres of most competitive relevance to the proposed Costco Warehouse at Moorabbin Airport. This assessment can be considered a ‘worst case’ scenario. The forecast level of trading impact is insufficient to undermine the role and function of the identified centres. In overall terms, even with the development of the Costco Warehouse, the total level of spending by MTA residents available to other retailers will increase by $1,060 million over the 2013 to 2016 period as a result of population and real spending growth.

Costco will Generate a Community Benefit

Costco Warehouse at Moorabbin Airport is expected to generate a wide range of community benefits associated with the additional provision of retail and business supplies, competition, price savings, employment growth and investment. A total of approximately 375 employees are expected to work at Costco Moorabbin, including both young people and people seeking to re-enter the workforce. Developing a stronger employment base in south-east Melbourne region is a key strategic policy direction for the State Government.



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A P P E N D I X : S E L EC T I O N O F T R A D E A N D B U S I N E S S P R O D U C T S S O L D AT C O S TC O

Watercoolers & filters Office storage

Photocopy paper & Office supplies Paper shredders & Cash registers

Fireproof safes Shelving & storage

Source: Photos taken by Essential Economics on 26 September 2013 at Costco Docklands Note: Costco also sells a range of other food and non-food products that both businesses and households purchase

Documents

Economic Impact Assessment - Moorabbin Airport/media/Files/Sites/Moorabbin Airport... · Costco Warehouse in accordance with ... This Economic Impact Assessment report has been prepared