Consumers Go (Warehouse) Clubbing
Wall Street may have had problems with earnings per share
coming in lower than predicted for Costco and BJ’s yesterday, but the numbers
suggest those two chains along with Sam’s are in a pretty good shape compared
to many others in the grocery business.
Both Costco and BJ’s reported that
memberships, customer traffic and revenues were up over the last quarter and
same-club sales were up nine percent and 4.6 percent respectively. This followed
Sam’s same-club gain of 0.7 percent reported last month.
The three warehouse
club operators have largely maintained their bottom line balance while traditional
supermarket operators have seen revenues and margins erode, despite heavy
There is some thought, however, that tighter pricing by supermarkets may help
the channel gain some share currently held by clubs.
“The warehouse is more of a destination,
more of a trip,” Adam Hanft, CEO of
Hanft Projects, told Forbes.com. “Supermarkets can capture business
from warehouse clubs as they emulate their model because of proximity.”
Hanft said warehouse clubs could create a sustainable difference by not becoming
too set in inventory selection and adding the excitement of the hunt to the
Clubs, he added, have a built-in advantage because club
memberships make consumers “feel
like they’re in a special group, and everyone loves to get past the velvet
Discussion Questions: Are warehouse clubs fully expoiting the advantages
they have over retail food competitors?
Are the clubs, collectively or individually, in need of reinvention or will
they continue to roll along as-is?
- Costco Wholesale Corporation Reports Second Quarter
and Year-to-Date Operating Results for Fiscal Year 2010 – Costco Wholesale
- BJ’s Wholesale Club Reports 4Q Earnings and FYE 2010 Results – BJ’s Wholesale
- Wholesale clubs grow as supermarkets slide – The Associated Press/The Washington
- Tougher Sledding For Wholesale Clubs – Forbes.com
- Warehouse clubs Costco, BJ’s miss profit estimates – Reuters