Table of Contents
Executive Summary
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- The issues
- Overall growth predicted, but pace of growth may slow
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- Figure 1: Total net sales and fan chart forecast of leading US warehouse club stores, at current prices, Fiscal years 2012-22
- Membership requirements do not protect warehouse clubs from outside competition
- Membership fees remain a key barrier
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- Figure 2: Reasons for not shopping the channel, by generation, March 2017
- Bulk buying does not have universal appeal
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- Figure 3: Shopping barriers related to bulk buying, March 2017
- The opportunities
- Boost e-commerce
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- Figure 4: Method of shopping, March 2017
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- Figure 5: Online shopping interests and behaviors, by generation, March 2017
- Improve speed at checkout and product selection
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- Figure 6: TURF Analysis – Desired improvements, March 2017
- Tap into satisfied current members as brand ambassadors
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- Figure 7: Reasons for shopping the channel, March 2017
- What it means
The Market – What You Need to Know
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- Sales continue on an upward path
- Increases in consumer confidence and household income bode well for the sector
- Warehouse clubs not protected from outside competition
Market Size and Forecast
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- The future looks good
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- Figure 8: Total net sales and fan chart forecast of leading US warehouse club stores, at current prices, fiscal years 2012-22
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- Figure 9: Net sales at US warehouse club stores, at current prices, fiscal years 2012-22
Market Perspective
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- Are warehouse clubs losing some exclusivity?
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- Figure 10: Big Bargain Buys selection at Mariano’s, Chicago, May 2017
Market Factors
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- Consumer confidence and unemployment levels set records
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- Figure 11: Consumer confidence and unemployment, 2008-March 2017
- Household income slowly climbs upward
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- Figure 12: Median household income, in inflation-adjusted dollars, 2005-15
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- Figure 13: Household income distribution by race and Hispanic origin of householder, 2015
- Shopping incidence increases with household size
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- Figure 14: 2016 Households by percentage of members vs any warehouse club shoppers, by household size, March 2017
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- Figure 15: Average number of people per household, by race and Hispanic origin, 2016
- Less space in the home presents an issue for bulk-sized products
- Not all households are the same
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- Figure 16: Distribution of households, by type of household, 2016
Key Players – What You Need to Know
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- Costco leads the category
- BJ’s reportedly for sale
- Non-food categories such as beauty and apparel represent opportunity
- E-commerce not a main priority
What’s Working?
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- Category dominated by two major players
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- Figure 17: Net sales at US warehouse club stores, at current prices, by segment, fiscal years 2012-16
- Figure 18: Global sales distribution by product category, fiscal year 2016
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- Figure 19: Costco bedding and jewelry inventory, Chicago, May 2017
- Figure 20: Net sales at Costco, fiscal years 2011-16
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- Figure 21: Total global membership fees at Costco, fiscal years 2011-16
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- Figure 22: Global sales distribution by product category, FY 2015
- Figure 23: Net sales at Sam’s Club, fiscal years 2011-17
What’s Struggling?
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- BJ’s Wholesale Club reportedly for sale
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- Figure 24: Net sales at BJ’s, fiscal years 2014-16
- Opportunity for beauty and clothing improvements
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- Figure 25: Costco apparel department, Chicago, May 2017
- Figure 26: Sam’s Club apparel department, Chicago area, May 2017
What’s Next?
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- Where does e-commerce fit in?
- E-sampling extends a beloved in-store experience online
The Consumer – What You Need to Know
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- Warehouse clubs gain traction
- Core shoppers are young, affluent, and likely to be parents
- Household memberships are the most common
- Member satisfaction is high
- Membership fees and bulk-sized packages main barriers
- Faster checkout and improved production selection key opportunities
Changes in Shopping the Channel
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- Nine out of 10 shopping more or the same
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- Figure 27: Changes in shopping the channel, March 2017
- Men shopping more than women
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- Figure 28: Changes in shopping the channel, by age and gender, March 2017
- Those who shop more also have more income
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- Figure 29: Changes in shopping the channel, by household income, March 2017
- Significant share of Hispanics shopping more
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- Figure 30: Changes in shopping the channel, by race and Hispanic origin, March 2017
Retailers Shopped
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- Costco maintains a competitive edge
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- Figure 31: Retailers shopped, March 2017
- Demographic patterns emerge
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- Figure 32: Costco shoppers, by key demographics, March 2017
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- Figure 33: Sam’s Club shoppers, by key demographics, March 2017
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- Figure 34: BJ’s Wholesale Club shoppers, by key demographics, March 2017
- Shoppers look to warehouse clubs to stock up but also for fill-in needs
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- Figure 35: Shopping frequency, by retailers shopped, March 2017
- BJ’s seeing higher shopping rates of late
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- Figure 36: Changes in shopping the channel, by retailers shopped, March 2017
Types of Membership
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- Household memberships most common
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- Figure 37: Types of membership, March 2017
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- Figure 38: Membership type repertoire, personal or business membership, March 2017
Reasons for Shopping the Channel
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- Price/value relationship in check for satisfied shoppers
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- Figure 39: Reasons for shopping the channel, March 2017
- Keep up the sampling
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- Figure 40: Percentage of consumers who like the samples warehouse clubs offer, by age, March 2017
- Multicultural segments appreciate the no-frills, one-stop shopping aspects
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- Figure 41: Reasons for shopping the channel, by race and Hispanic origin, March 2017
Reasons for Not Shopping the Channel
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- Membership fees remain the biggest barrier
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- Figure 42: Reasons for not shopping the channel, March 2017
- Bulk buying is not for everyone
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- Figure 43: Barriers related to shopping in bulk, by household size, March 2017
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- Figure 44: Costco, select bulk-sized packaged goods, Chicago, May 2017
- Some shoppers think warehouse clubs can’t meet their shopping needs
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- Figure 45: Shopping barriers related to grocery and household goods selections, by age, March 2017
- Half of non-shoppers are open to shopping the channel
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- Figure 46: Reasons for not shopping the channel, by openness to shopping the channel, March 2017
Shopping Behaviors
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- Women browse aisles while men take more of a direct route
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- Figure 47: General shopping behaviors, by age and gender, March 2017
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- Figure 48: Costco Kirkland brand vs Nestle name brand product comparison, Chicago, May 2017
- Food courts offer a nice treat
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- Figure 49: Store sections shopped, by gender and age, March 2017
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- Figure 50: Sam’s Club food court, Chicago area, May 2017
- Mobile app usage remains low
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- Figure 51: Other services used, by gender and age, March 2017
Desired Improvements
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- Biggest source of sales is also the biggest opportunity area for improvement
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- Figure 52: Desired improvements related to product selection, March 2017
- The lines are too long
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- Figure 53: Desired improvements related to shopping efficiency, March 2017
- Figure 54: Costco in-store layout, Chicago, May 2017
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- Figure 55: Sam’s Club In-store signage, Chicago area, May 2017
- TURF analysis further explores areas of opportunity to maximize reach
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- Figure 56: TURF Analysis – Desired improvements, March 2017
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Abbreviations and terms
- Abbreviations
Appendix – The Market
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- Figure 57: Net sales at US warehouse club stores, at inflation-adjusted prices, 2012-22
- Figure 58: Household income distribution, 2005-15
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Appendix – Key Players
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- Category information
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- Figure 59: Net sales at US warehouse club stores, at current prices, by segment, 2012-16
- Costco information
- Product category descriptions
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- Figure 60: Costco store count, fiscal year 2011-16
- Sam’s Club information
- Product category descriptions
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- Figure 61: Sam’s Club store count, fiscal year 2011-16
Appendix – The Consumer
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- Membership information
- Costco
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- Figure 62: Costco membership types, 2017
- Sam’s Club
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- Figure 63: Sam’s Club membership types, 2017
- BJ’s
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- Figure 64: BJ’s membership types, 2017
- Additional information
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- Figure 65: Items purchased at warehouse clubs, August 2016
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- Figure 66: Membership type repertoire, any primary membership,* March 2017
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