Warehouse Clubs Still Going Strong in a Waning Economy

Although a waning economy has affected most retailers, warehouse clubs have enjoyed an increase in overall profitability. As consumers are realizing a rising unemployment rate and slowing economy, they continue to look for ways to save money. The rising cost of food and gas along with the fear of a waning job market, has put consumers in a state of alert. Warehouse clubs such as COSTCO, BJ’s, and Sam’s Club offer consumers the opportunity to purchase items in bulk effectively reducing expenditures on food and gas. Purchasing in bulk allows fewer trips to the stores. Warehouse clubs also offer durable goods at discounted prices, which offer consumers an alternative to shopping at the typical full cost retail outlet.

Part of the reason warehouse clubs like COSTCO AND BJ’s is doing so well has to do with the fact that they sell the top ten percent of what interest consumers rather than taking a shotgun approach and keeping stock that consumers may not purchase. As of last quarter, while COSTCO has seen a 12% increase in same store sales and BJ’s has seen a 12% increase, Kohl’s has seen a reduction in profits of 4.1%. Warehouse clubs have focused their efforts on consumer goods such as household staples like groceries that consumers are spending their fund because of reduced or no disposable income.

Does this mean that every purchase from a warehouse club is the best deal? That depends on the items and how you feel about investing in a club membership. The general belief is that if one has a membership then you are getting a better deal. What matters to you the consumer is that you continue to do price comparisons to ensure that you really are getting the biggest bang for your buck.

Sources
businessweek.com: warehouse clubs find the sweet spot
moneymorning: warehouse-clubs-profit-as-economy-wanes