 | This articleneeds additional citations forverification. Please helpimprove this article byadding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Warehouse club" – news ·newspapers ·books ·scholar ·JSTOR(June 2019) (Learn how and when to remove this message) |
Awarehouse club (orwholesale club) is aretail store, usually selling a wide variety ofmerchandise, in which customers may purchase large,wholesale quantities of products, which makes these clubs attractive to both ordinary consumers and small business owners. The clubs are able to keep prices low due to theno-frills format of the stores. They are distinguished from traditionalcash-and-carry wholesale businesses in that their warehouses are substantially larger in size, and they do not cater purely to businesses but also allow some or all types of consumers to obtain memberships. They are also distinguished fromwarehouse stores in that they usually charge annual membership fees, and require presentation of proof of membership to both enter the warehouse and complete a purchase.
Membership in a warehouse club superficially resembles that in aconsumers' cooperative, but lackskey elements includingcooperative ownership and democratic member control. The use of members' prices without cooperative ownership is also sometimes used in bars and casinos.
In 1976,Sol Price (who in 1954 foundedFedMart, an early US discount store) and his son Robert Price foundedPrice Club inSan Diego, as their first warehouse club. In a 1988 article,The New York Times Magazine credited Price Club as the "pioneer" of the warehouse club retail format.[1] After his departure from FedMart, Sol Price noticed that small businesses in San Diego either ordered directly from four or five large wholesalers or they bought locally from relatively small cash-and-carry wholesalers.[1] Therefore, Price Club was originally positioned as a much larger, volume-oriented version of the cash-and-carry wholesale format, meaning that prospective members were required to presentresale certificates orprofessional licenses.[1] Based on a customer's suggestion, Price Club subsequently allowed government employees to apply for memberships.[1] This privilege was later extended to employees of utility companies and hospitals, followed by members of certain credit unions and savings deposit clubs.[1]
In 1982, the discount pioneerJohn Geisse founded The Wholesale Club of Indianapolis, which he sold toSam's Club (a division ofWalmart) in 1991.[2]
In 1983,James (Jim) Sinegal andJeffrey H. Brotman opened the firstCostco warehouse in Seattle.[3][4] Sinegal had started in wholesale distribution by working for Sol Price atFedMart.[5]
In 1983,Kmart's Pace Membership Warehouse (later sold toSam's Club) started operations. That same year,Sam Walton opened the first Sam's Club on April 7, inMidwest City, Oklahoma.[6]
In 1984, former The Wholesale Club executives foundedBJ's Wholesale Club, owned byZayre.
As of 1988, Price Club was the leader of the warehouse club industry, with over 40 warehouses operating across the United States and Canada.[1]Stephen F. Mandel, Jr., then a Goldman Sachs analyst, called the warehouse club "the greatest revolution in retailing in the last 10 years."[1]
By 1992, Sam's Club had surged past both Price Club and Costco to become the industry leader with 222 warehouse clubs.[7] The four other major players were Pace (95 clubs), Costco (87 clubs), Price Club (80 clubs) and BJ's (31 clubs).[7] Analysts were already seeing signs ofmarket saturation along theWest Coast of the United States, the first region in which warehouse clubs were developed.[7]
In 1993, Costco and Price Club agreed to merge operations, after Price declined an offer fromSam Walton andWalmart to merge Price Club withSam's Club.[8] Costco's business model and size were similar to those of Price Club, which made the merger more natural for both companies.[9] The combined company took the name PriceCostco, and memberships became universal, meaning that a Price Club member could use their membership to shop at Costco and vice versa. PriceCostco boasted 206 locations generating $16 billion in annual sales.[4] PriceCostco was initially led by executives from both companies, but in 1994, the Price brothers left the company to formPrice Enterprises,[9][10] a warehouse club chain in Central America and the Caribbean unrelated to the current Costco.[11]
In 1997, Costco changed its name to Costco Wholesale Corporation, and all remaining Price Club locations were rebrandedas Costco.[4][9]
As of 2009[update], the three largest warehouse club chains operating in the United States are BJs, Costco, and Sam's Club.[12] BJ's Wholesale Club is one of the smaller competitors, with stores located primarily in the Eastern United States. Costco and Sam's Club are the largest chains. Costco has locations in seven other nations and regions including Australia, Canada, Japan, Korea, Mexico, Taiwan, and the United Kingdom. Sam's Club, a division ofWalmart, claims a membership base of 47 million persons and 602 stores across the United States (as of June 2019).[13]
Media related toWarehouse clubs at Wikimedia Commons
