Costco’s 40% Profit Surge: 7 SME Growth Lessons

Costco Australia just posted a 39.4% year-on-year profit increase, with reported profits rising to $389.1 million (up from $279 million) for the year ending 31 August 2025. That’s not a feel-good headline. It’s a clear signal about what’s working in Australian retail right now: tight offers, strong retention, operational discipline, and a membership-style relationship with customers.

If you run a small business, your first reaction might be, “Sure… but that’s Costco.” Different scale, different buying power, different everything.

I don’t buy that. The scale is different. The principles aren’t. And if you’re building your 2026 marketing plan (or trying to rescue it after a chaotic Christmas trading period), Costco’s numbers are a useful benchmark for what modern customers reward—especially in a price-sensitive, comparison-happy market.

This article sits inside our Australian Small Business Marketing series, so I’m going to translate the Costco story into practical, doable moves for Australian SMEs: what to copy, what to ignore, and what to implement this quarter.

What Costco’s profit spike really tells us about Aussie buyers

Answer first: Costco’s profit surge suggests Australian consumers are actively rewarding businesses that deliver clear value, consistent availability, and a “membership” feeling of belonging and savings.

From the source report: Costco’s Australian business (which also covers Taiwan operations) saw profits jump to $389.1m, while revenue for the year was reported at $10.8b. It operates 15 warehouses in Australia, and it’s planning further expansion (another site in Victoria and one in WA by 2027). That growth doesn’t happen because of clever slogans. It happens because the customer decision is easy: people trust they’ll get value.

Here’s the small business translation: in 2026, marketing doesn’t compensate for a fuzzy offer. Your ads, socials, and emails work best when the value proposition is instantly understood.

The market dynamic SMEs can’t ignore in 2026

Answer first: Customers are more deliberate with spending, but they’ll commit when the offer reduces risk.

Post-holiday budgets are tight in January, and shoppers are in “reset mode”: clearing credit card bills, returning items, and reassessing subscriptions. At the same time, many households still prioritise convenience and reliability—especially for staples.

That’s why models that emphasise:

• predictable savings
• repeatable experiences
• low decision fatigue

…keep winning.

Lesson 1: Make your offer so clear it feels unfair

Answer first: Costco wins because the value is obvious before you walk in; SMEs should engineer the same clarity in their pricing and packaging.

Costco’s whole model is built on a simple promise: pay a membership fee, then access consistently sharp value. You don’t need to copy the membership format to copy the clarity.

Here’s what works for small businesses:

Try “signature packages” instead of endless options

If your customers have to assemble their own solution, you’re asking them to do work they don’t want to do.

Examples:

• Service business: “Starter + Growth + Premium” packages (with a recommended option)
• Retail: “Buy 2, save 15%” bundles around common pairings
• Hospitality: fixed-price “midweek menu” or “family box” (summer-friendly for January)

A good package has three traits: named, priced, and outcome-based.

A strong offer is one a customer can explain to a friend in one sentence.

Lesson 2: Build retention before you chase reach

Answer first: Costco turns customers into repeat buyers; SMEs should prioritise repeat purchase and reactivation before spending harder on new acquisition.

Costco has a built-in retention engine: the membership. Most SMEs don’t, which is exactly why you need your own version.

Your “membership” can be simple

You don’t need an app. You need a reason to come back.

Options that work well in Australian small business marketing:

• VIP list (email + SMS): early access, monthly specials, limited drops
• Loyalty card: every 7th coffee free, points-based rewards
• Service care plan: priority bookings, discounted check-ups, included consumables

If you want a quick KPI: aim for 20–30% of monthly sales from returning customers (higher is common in local service businesses).

Lesson 3: Use scarcity the right way (fewer SKUs, stronger story)

Answer first: Costco succeeds with a curated range; SMEs should reduce clutter and sell fewer things better.

Costco doesn’t try to be everything to everyone. The warehouse format is big, but the selection is curated compared to a traditional supermarket.

SME version:

• cut low-margin, high-complexity products
• standardise what can be standardised
• push your best sellers harder

A practical audit you can do this week

Pull your last 90 days of sales and categorise each item/service:

1. High margin + high volume (protect and promote)
2. High margin + low volume (train sales, improve offer)
3. Low margin + high volume (bundle or upsell)
4. Low margin + low volume (consider removing)

Most businesses find they’re spending marketing effort on category #4 without realising.

Lesson 4: Turn operations into a marketing advantage

Answer first: Costco’s consistency is operational; your marketing improves when fulfilment, availability, and speed are reliable.

Small businesses often treat marketing as “the thing you do online.” Customers don’t. They experience your brand through:

• stock being available (or not)
• jobs finishing on time (or not)
• refund/returns being easy (or painful)
• communication being proactive (or silent)

If you want better Google reviews and more referrals, fix two operational basics first:

Two ops upgrades that drive immediate marketing ROI

• Set expectation templates: booking confirmation messages, delivery updates, “here’s what happens next” emails
• Remove friction: clear pickup times, transparent turnaround, one-click rebooking

This is unglamorous. It also works.

Lesson 5: Win the “value” conversation without racing to the bottom

Answer first: Costco owns value through trust and scale; SMEs should own value through proof and positioning.

Discounting is addictive. You train customers to wait.

Instead, build value using:

• evidence (reviews, before/after, guarantees)
• comparisons (what’s included vs typical market offers)
• bundled outcomes (buy the result, not the parts)

A value statement template that converts

Use this on landing pages, ads, and in-store signage:

• “For $X, you get A, B, and C, delivered in Y days, with Z guarantee.”

It reads basic because it is. Basic is what customers understand.

Lesson 6: Treat local SEO as your warehouse frontage

Answer first: Costco’s physical presence drives habit; for SMEs, local SEO is the digital equivalent of being on the main road.

Most Australian small businesses underestimate how many customers start with:

• “near me” searches
• Google Maps
• “open now” filters
• review sorting

If you want more leads, your Google Business Profile needs the same attention you’d give your shopfront.

The local SEO checklist I’d prioritise in January

• Update holiday hours back to normal (people still check)
• Add fresh photos (team, products, interior, new menu/service)
• Write 2–4 short posts to your profile (offers, events, new arrivals)
• Ask for 10 reviews in 14 days (script it, don’t wing it)
• Make sure your top services/products are listed and accurate

January is perfect for this because competitors are slow and customers are actively planning.

Lesson 7: Make expansion a system, not a gamble

Answer first: Costco expands because its model is repeatable; SMEs should document what works and scale the channel, not the chaos.

The report notes Costco’s planned expansion in Australia by 2027. Expansion is easier when you’ve nailed the repeatable parts.

For SMEs, “expansion” might mean:

• adding a second location
• hiring another tech/stylist/trainer
• increasing ad spend
• launching ecommerce
• wholesaling into other stores

The biggest mistake is scaling before your acquisition and fulfilment are predictable.

A simple “ready to scale” scorecard

If you can tick 4 out of 5, you’re in a strong position:

1. You know your top 2 lead sources (and their cost per lead)
2. You have a consistent conversion process (scripts, follow-ups)
3. Your fulfilment is documented (SOPs/checklists)
4. Repeat purchase or referrals are measurable
5. Your cashflow can handle a slow month without panic

Scale is what happens when your best week becomes your average week.

Common questions small business owners ask (and straight answers)

“Do I need a membership model to copy Costco?”

No. What you need is a retention mechanism: a reason to return and a simple way to re-buy.

“Is price the only reason Costco is growing?”

Price gets attention. Trust and consistency create the habit. SMEs can compete on trust faster than they can compete on price.

“What’s the fastest Costco-style win I can implement?”

Create one bundle/package that’s easy to say yes to, then market it via email/SMS to past customers and through your Google Business Profile.

Where to focus next (and what to do this week)

Costco’s near-40% profit surge is a reminder that clarity beats cleverness. Australians will pay when the offer makes sense, the experience is consistent, and the business earns repeat visits.

If you want leads (not just likes), do these three things this week:

1. Package your most popular offer into a single “hero” option
2. Reactivate your past customers with a simple return incentive
3. Fix your local SEO so you show up when buyers are ready

This is the heart of Australian small business marketing: get found locally, give people a confident choice, and build repeatable demand.

Costco can open more warehouses. You don’t need warehouses. You need a system that makes customers come back—what would you change first: your offer, your retention, or your local visibility?