Club retailers like Sam’s Club, Costco, and BJ’s, are continuing to expand; in doing so, they have taken food dollars from traditional supermarkets, according to “Club Stores: Prepare for a New Era of Expansion,” a report by CFRA Research analyst Arun Sundaram, reports Winsight Grocery Business.
Strong sales, customer gains, new locations, and a business model advantage elicited by the paid membership structure and “one-stop shop” experience have helped position major club chains against their competitors. Sundaram shared that they have a better outlook than conventional grocers.
“Club stores have experienced significant growth in same-store sales over the past few years, driven by robust membership growth, strong traffic, and overall higher prices,” Sundaram said in his report. “Although traditional grocery stores may outperform club stores in 2023 as consumers cut back on discretionary spending and prioritize food and staples, we believe that warehouse clubs will continue to experience stronger growth over the long term. This is because the membership model at warehouse clubs fosters strong customer loyalty, which is challenging for traditional grocers to replicate when competing with numerous other traditional grocers in the same area.”
Sam’s Club, Costco, and BJ’s have continued to expand their membership options, service offerings, and brick-and-mortar storefronts.
The inflationary period has also helped drive customers to club stores, as the bulk-size purchase model helps drive down costs. Additionally, structural advantages, like limited SKUs and the full-pallet display format help to lower operating costs, which Sundaram said has been useful in a tight labor market. Full Story
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Image: Costco