Warehouse Clubs - US - June 2017

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
The issues
Overall growth predicted, but pace of growth may slow
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
Figure 2: Reasons for not shopping the channel, by generation, March 2017
Bulk buying does not have universal appeal
Figure 3: Shopping barriers related to bulk buying, March 2017
The opportunities
Boost e-commerce
Figure 4: Method of shopping, March 2017
Figure 5: Online shopping interests and behaviors, by generation, March 2017
Improve speed at checkout and product selection
Figure 6: TURF Analysis – Desired improvements, March 2017
Tap into satisfied current members as brand ambassadors
Figure 7: Reasons for shopping the channel, March 2017
What it means
THE MARKET – WHAT YOU NEED TO KNOW
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
The future looks good
Figure 8: Total net sales and fan chart forecast of leading US warehouse club stores, at current prices, fiscal years 2012-22
Figure 9: Net sales at US warehouse club stores, at current prices, fiscal years 2012-22
MARKET PERSPECTIVE
Are warehouse clubs losing some exclusivity?
Figure 10: Big Bargain Buys selection at Mariano’s, Chicago, May 2017
MARKET FACTORS 
Consumer confidence and unemployment levels set records
Figure 11: Consumer confidence and unemployment, 2008-March 2017
Household income slowly climbs upward
Figure 12: Median household income, in inflation-adjusted dollars, 2005-15
Figure 13: Household income distribution by race and Hispanic origin of householder, 2015
Shopping incidence increases with household size
Figure 14: 2016 Households by percentage of members vs any warehouse club shoppers, by household size, March 2017
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
Figure 16: Distribution of households, by type of household, 2016
KEY PLAYERS – WHAT YOU NEED TO KNOW 
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?
Category dominated by two major players
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
Figure 19: Costco bedding and jewelry inventory, Chicago, May 2017
Figure 20: Net sales at Costco, fiscal years 2011-16
Figure 21: Total global membership fees at Costco, fiscal years 2011-16
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?
BJ’s Wholesale Club reportedly for sale
Figure 24: Net sales at BJ’s, fiscal years 2014-16
Opportunity for beauty and clothing improvements
Figure 25: Costco apparel department, Chicago, May 2017
Figure 26: Sam’s Club apparel department, Chicago area, May 2017
WHAT’S NEXT?
Where does e-commerce fit in?
E-sampling extends a beloved in-store experience online
THE CONSUMER – WHAT YOU NEED TO KNOW 
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
Nine out of 10 shopping more or the same
Figure 27: Changes in shopping the channel, March 2017
Men shopping more than women
Figure 28: Changes in shopping the channel, by age and gender, March 2017
Those who shop more also have more income
Figure 29: Changes in shopping the channel, by household income, March 2017
Significant share of Hispanics shopping more
Figure 30: Changes in shopping the channel, by race and Hispanic origin, March 2017
RETAILERS SHOPPED
Costco maintains a competitive edge
Figure 31: Retailers shopped, March 2017
Demographic patterns emerge
Figure 32: Costco shoppers, by key demographics, March 2017
Figure 33: Sam’s Club shoppers, by key demographics, March 2017
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
Figure 35: Shopping frequency, by retailers shopped, March 2017
BJ’s seeing higher shopping rates of late
Figure 36: Changes in shopping the channel, by retailers shopped, March 2017
TYPES OF MEMBERSHIP 
Household memberships most common
Figure 37: Types of membership, March 2017
Figure 38: Membership type repertoire, personal or business membership, March 2017
REASONS FOR SHOPPING THE CHANNEL
Price/value relationship in check for satisfied shoppers
Figure 39: Reasons for shopping the channel, March 2017
Keep up the sampling
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
Figure 41: Reasons for shopping the channel, by race and Hispanic origin, March 2017
REASONS FOR NOT SHOPPING THE CHANNEL
Membership fees remain the biggest barrier
Figure 42: Reasons for not shopping the channel, March 2017
Bulk buying is not for everyone
Figure 43: Barriers related to shopping in bulk, by household size, March 2017
Figure 44: Costco, select bulk-sized packaged goods, Chicago, May 2017
Some shoppers think warehouse clubs can’t meet their shopping needs
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
Figure 46: Reasons for not shopping the channel, by openness to shopping the channel, March 2017
SHOPPING BEHAVIORS 
Women browse aisles while men take more of a direct route
Figure 47: General shopping behaviors, by age and gender, March 2017
Figure 48: Costco Kirkland brand vs Nestle name brand product comparison, Chicago, May 2017
Food courts offer a nice treat
Figure 49: Store sections shopped, by gender and age, March 2017
Figure 50: Sam’s Club food court, Chicago area, May 2017
Mobile app usage remains low
Figure 51: Other services used, by gender and age, March 2017
DESIRED IMPROVEMENTS
Biggest source of sales is also the biggest opportunity area for improvement
Figure 52: Desired improvements related to product selection, March 2017
The lines are too long
Figure 53: Desired improvements related to shopping efficiency, March 2017
Figure 54: Costco in-store layout, Chicago, May 2017
Figure 55: Sam’s Club In-store signage, Chicago area, May 2017
TURF analysis further explores areas of opportunity to maximize reach
Figure 56: TURF Analysis – Desired improvements, March 2017
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Abbreviations and terms
Abbreviations
APPENDIX – THE MARKET 
Figure 57: Net sales at US warehouse club stores, at inflation-adjusted prices, 2012-22
Figure 58: Household income distribution, 2005-15
APPENDIX – KEY PLAYERS 
Category information
Figure 59: Net sales at US warehouse club stores, at current prices, by segment, 2012-16
Costco information
Product category descriptions
Figure 60: Costco store count, fiscal year 2011-16
Sam’s Club information
Product category descriptions
Figure 61: Sam’s Club store count, fiscal year 2011-16
APPENDIX – THE CONSUMER 
Membership information
Costco
Figure 62: Costco membership types, 2017
Sam’s Club
Figure 63: Sam’s Club membership types, 2017
BJ’s
Figure 64: BJ’s membership types, 2017
Additional information
Figure 65: Items purchased at warehouse clubs, August 2016
Figure 66: Membership type repertoire, any primary membership,* March 2017