Wholesale Clubs: Business vs. Consumer Focus

Retail's wholesale club landscape is changing dramatically, but are you aware of how these shifts might affect your shopping strategy or business approach? Drawing from my extensive career in wholesale club retail, I share fascinating insights from a recent Warehouse Club Focus analysis that reveals surprising trends in how the major players are positioning themselves today.

When Sol and Robert Price created the wholesale club concept in the late 1970s, it was fundamentally a business-to-business model targeting restaurants, convenience stores, and small offices. Today's reality looks remarkably different. BJ's has reduced its business-friendly assortment from 24% to just 18% since 2005. More dramatically, Costco's traditional clubs have slashed their wholesale focus from 54% in the late 90s to a mere 16% today (though they maintain 32 separate business-centered locations nationwide).

The standout finding? Sam's Club has maintained a stronger commitment to its business-member roots, with 35% of food items and 18% of non-food merchandise still targeting wholesale customers. This strategic divergence carries significant implications for manufacturers and shoppers alike. Suppliers need tailored approaches when working with each chain rather than a one-size-fits-all strategy. Meanwhile, consumers should carefully consider their needs—business or personal—when deciding where to invest their membership dollars.

Whether you're a small business owner looking for true wholesale opportunities, a manufacturer seeking the best retail partners, or a savvy consumer maximizing value, understanding these shifting priorities helps you navigate the evolving wholesale club marketplace. The next time you're considering which membership card to pull out, remember that behind the similar warehouse aesthetics lie increasingly different business strategies and customer focuses.

Episode Transcript

Speaker 1 (00:03):
Well, hello everyone, I'm Scott Benedict.
One of the things I was readingwith interest recently is the
latest issue of Warehouse ClubFocus, which is one of the most
respected trade publicationsfocused on the wholesale club
industry.
I spent a good portion of mycareer involved in the wholesale
club business Nearly half ofall the years I've been in

(00:23):
retail and been involved in thewholesale club business nearly
half of all the years I've beenin retail and been involved in
that.
So I read that publication withinterest pretty regularly.
A recent issue of thatpublication was focused on
serving the business member.
For those of you who aren'tfamiliar with the wholesale club
business, the business memberFor those of you who aren't

(00:44):
familiar with the Wholesale Clubbusiness, the business member
was really the genesis of theWholesale Club model back in the
late 70s when Price Club andSol Price and Robert Price first
really dreamed up the conceptand focusing on small businesses
like restaurants andconvenience stores and doctor's

(01:04):
offices and things like that wasreally core to the business.
Well, this article was reallyfocused on analyzing the
assortment of all three of themajor US players in the
wholesale club industry BJ's,costco and Sam's Club and one of
the interesting elements ofthis article was the percentage

(01:27):
of each manufacturer's or eachretailer's assortment that is
really business-friendly items,business-friendly SKUs, was
interesting.
The analysis said that BJ's hasseen their wholesale or resale
item mix fall from 24% of thetotal in 2005 to just 18% today.

(01:53):
It said that Costco in theirtraditional clubs is down from
about 54% in the late 90s oftheir assortment was focused on
wholesale to just 16% focused onbusiness members today.
Now the caveat was that is thatCostco also operates some very

(02:14):
wholesale focused businesslocations and in those the mix
is very is very different intheir business centers, which
are 32 across the country, andthe Sands Club is one of the
three operators that thisarticle and the analysis said
has kind of bucked the trendswhere 35% of food items and 18%

(02:38):
of non-food items are stillaimed at the wholesale segment,
at that more business-focusedcustomer, and so it was really
interesting to see that, both asa long-term part of that
industry as well as spending afair part of my career at Sam's
Club, I watched that, or readthat, with interest and the

(03:00):
thing that occurred to me isthat if you are a manufacturer,
a product, a supplier, yourapproach to all three of the
Wholesale Club chains probablyshouldn't be identical if you've
got items and particularpresentation of products that is
either targeted to a wholesalemember or to a consumer member,

(03:23):
and so your strategy can't beidentical across all three.
And the thing that was really abig takeaway for me is that the
wholesale club model iscontinuing to evolve.
Business members clearly stillmatter, especially when it comes
to stability during economicdownturns, but I think that the
key takeaway is that theapproach that all three chains

(03:46):
take is not identical and it'sreally.
If you're a manufacturerproduct, it's worth stopping and
taking note of what the rightstrategy is to sell to all three
of those chains.
And if you're a consumerwanting to shop, there is your
aim more for business or foryour family's personal

(04:06):
consumption, and that reallyshould skew your perspective on
which of those.
If you have a choice if youlive in a part of country that
has all three or two of thethree about which way you want
to spend your membership dollar,and I thought that was kind of
interesting worth sharing.
So for Scott's Thoughts, iottbenedict, thanks for listening.