A warehouse club (or wholesale club) is a

retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholes ...

store, usually selling a wide variety of

merchandise Merchandising is any practice which contributes to the sale of Product (business), products ("merch" colloquially) to a retail consumer. At a retail in-store level, merchandising refers to displaying products that are for sale in a creative w ...

, in which customers may buy large,

wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...

quantities of the store's products, which makes these clubs attractive to both bargain hunters and small business owners. The clubs are able to keep prices low due to the no-frills format of the stores. They are distinguished from traditional cash-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 from

warehouse store A warehouse store or warehouse supermarket is a food and grocery retailer that operates stores geared toward offering deeper discounted prices than a traditional supermarket. These stores offer a no-frills experience and warehouse shelving stock ...

s in that they usually charge annual membership fees, and require presentation of proof of membership at the warehouse entrance and again at the

point of sale The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice f ...

. Membership in a warehouse club superficially resembles that in a

consumers' cooperative A consumer cooperative is an business, enterprise owned by consumers and managed democracy, democratically and that aims at fulfilling the needs and aspirations of its members. Such cooperatives operate within the market economy independently of t ...

, but lacks key elements including

cooperative A cooperative (also known as co-operative, coöperative, co-op, or coop) is "an autonomy, autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned a ...

ownership and democratic member control. The use of members' prices without cooperative ownership is also sometimes used in bars and casinos.

History

In 1976, Sol Price (who in 1954 founded FedMart, an early US discount store) and his son Robert Price founded Price Club in

San Diego San Diego ( , ) is a city on the Pacific coast of Southern California, adjacent to the Mexico–United States border. With a population of over 1.4 million, it is the List of United States cities by population, eighth-most populous city in t ...

, 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. 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. 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 present resale certificates or professional licenses. Based on a customer's suggestion, Price Club subsequently allowed government employees to apply for memberships. This privilege was later extended to employees of utility companies and hospitals, followed by members of certain credit unions and savings deposit clubs. In 1982, the discount pioneer John Geisse founded The Wholesale Club of Indianapolis, which he sold to Sam's Club (a division of

Walmart Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores in the United States and 23 other ...

) in 1991. In 1983, James (Jim) Sinegal and Jeffrey H. Brotman opened the first

Costco Costco Wholesale Corporation is an American multinational corporation which operates a chain of membership-only big-box warehouse club retail stores. As of 2021, Costco is the third-largest retailer in the world, and as of August 2024, Cos ...

warehouse in Seattle. Sinegal had started in wholesale distribution by working for Sol Price at FedMart. In 1983, Kmart's Pace Membership Warehouse (later sold to Sam's Club) started operations. That same year, Sam Walton opened the first Sam's Club on April 7, in Midwest City, Oklahoma. In 1984, former The Wholesale Club executives founded BJ's Wholesale Club, owned by Zayre. As of 1988, Price Club was the leader of the warehouse club industry, with over 40 warehouses operating across the United States and Canada. Stephen F. Mandel, Jr., then a Goldman Sachs analyst, called the warehouse club "the greatest revolution in retailing in the last 10 years." By 1992, Sam's Club had surged past both Price Club and Costco to become the industry leader with 222 warehouse clubs. The four other major players were Pace (95 clubs), Costco (87 clubs), Price Club (80 clubs) and BJ's (31 clubs). Analysts were already seeing signs of

market saturation In economics, market saturation is a situation in which a Product (business), product has become Diffusion_(business), diffused (distributed) within a Market (economics), market; the actual level of saturation can depend on consumer purchasing p ...

along the

West Coast of the United States The West Coast of the United States, also known as the Pacific Coast and the Western Seaboard, is the coastline along which the Western United States meets the North Pacific Ocean. The term typically refers to the Contiguous United States, contig ...

, the first region in which warehouse clubs were developed. In 1993, Costco and Price Club agreed to merge operations, after Price declined an offer from Sam Walton and

to merge Price Club with Sam's Club. Costco's business model and size were similar to those of Price Club, which made the merger more natural for both companies. 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 $16billion in annual sales. PriceCostco was initially led by executives from both companies, but in 1994, the Price brothers left the company to form Price Enterprises, a warehouse club chain in Central America and the Caribbean unrelated to the current Costco. In 1997, Costco changed its name to Costco Wholesale Corporation, and all remaining Price Club locations were rebranded , the three largest warehouse club chains operating in the United States are BJs, Costco, and Sam's Club. 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 of

, claims a membership base of 47 million persons and 602 stores across the United States (as of June 2019).

Examples

* BJ's Wholesale Club, operates in the U.S. only * City Club, operates in Mexico *

, operates in the U.S., Canada, Mexico, the UK, Iceland, Australia, New Zealand, Sweden, Spain, France, South Korea, Mainland China, Japan and Taiwan * Makro, operates in

South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. Its Provinces of South Africa, nine provinces are bounded to the south by of coastline that stretches along the Atlantic O ...

* Metro AG (branded as Makro in some countries), headquartered in Germany, majority control in different regions by multiple third parties, Metro AG has 674 wholesale stores in 24 countries; business customers only. * PriceSmart, operates in Central America and Caribbean; previously operated in Asia-Pacific region * Sam's Club, operates in the U.S., Mexico, China and Brazil * Selgros, operates in Germany, Poland, Romania and Russia * Wholesale Club, operates in Canada

Defunct

* American Wholesale Club (1986–1989) * Buyers Club, a

Denver Denver ( ) is a List of municipalities in Colorado#Consolidated city and county, consolidated city and county, the List of capitals in the United States, capital and List of municipalities in Colorado, most populous city of the U.S. state of ...

-based independently owned chain * Club Wholesale, turned into

office supplies Office supplies are consumables and equipment regularly used in offices by businesses and other organizations, required to sustain office operations. For example, office supplies may be used by individuals engaged in written communications, rec ...

stores, then folded * Fedco, bankruptcy in 1999 (most stores were bought by

Target Stores Target Corporation is an American retail corporation that operates a retail chain, chain of discount department stores and hypermarkets, headquartered in Minneapolis, Minnesota. It is the seventh-largest retailer in the United States, and a co ...

) * GEM & GEX Membership Department Stores (required membership like a warehouse club) * Gemco, 1959–1986, owned by Lucky Stores * HomeClub, a home improvement warehouse, later became

HomeBase Homebase was a British Home improvement center, home improvement and garden centre retailer that operated across the United Kingdom and Ireland. It was founded by British supermarket chain Sainsbury's and Belgian retailer GIB Group, GB-Inno ...

and then folded in 2000 * Max-Club, owned by SuperValu (United States) * PACE Membership Warehouse, owned by Kmart, merged with Sam's Club * Price Club, merged with Costco in 1993 * Price Savers Wholesale Club, merged with PACE Warehouse Club, then merged with Sam's Club * Sam's Club, in Canada 2003–2009 * SourceClub, owned by Meijer, from 1992 to 1994. Only had seven locations, all in

Michigan Michigan ( ) is a peninsular U.S. state, state in the Great Lakes region, Great Lakes region of the Upper Midwest, Upper Midwestern United States. It shares water and land boundaries with Minnesota to the northwest, Wisconsin to the west, ...

, but helped loosen restrictions on who can become members industry-wide. * Super Saver, merged with Sam's Club (Southeast US) * The Wholesale Club, merged with Sam's Club * Titan Warehouse Club Inc., an early warehouse concept in Canada based in

Calgary Calgary () is a major city in the Canadian province of Alberta. As of 2021, the city proper had a population of 1,306,784 and a metropolitan population of 1,481,806 making it the third-largest city and fifth-largest metropolitan area in C ...

with locations in Toronto/Kitchener/Stoney Creek areas in the 1985–1994 * Warehouse Club, was a

public company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...

References

External links

* {{Retail Retail formats Warehouses *

History

Examples

Defunct

See also

References

External links