Warehouse Clubs & Superstores Industry Profile

The US warehouse club and superstore industry includes about 20 companies with some 4,000 stores and combined annual revenue of about $360 billion. Major companies include Sam's Club (Wal-Mart); Costco Wholesale; BJ’s Wholesale Club; and Meijer. The industry is highly concentrated: the top four companies account for about 90 percent of revenue.

COMPETITIVE LANDSCAPE

Demographics and small business growth drive demand, and spending in warehouse clubs generally resists economic cycles. The profitability of individual companies depends on high volume sales, low-cost purchasing, and efficient distribution. Large chains dominate the market due to advantages in purchasing, distribution, and finance. The industry is capital-intensive: average annual revenue per employee is about $310,000.

Warehouse clubs have grown rapidly. Industry sales increased at an annual average rate of 20 percent between 1999 and 2009, compared to 5 percent for all general merchandise stores.

Warehouse clubs differ from superstores by requiring a membership to shop. Superstores typically offer a wide range of products, while warehouse clubs offer a limited selection. Both types of retailers sell products across many categories including food, and both compete with grocery stores, mass merchandisers, department stores, drugstores, specialty retailers, and wholesalers. Some retailers, such as Wal-Mart, operate warehouse and superstores as well as traditional discount stores.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products sold by warehouse clubs are groceries (35 percent of revenue); drug, health, and beauty aids (10 percent); children's apparel (8 percent); and toys, games, and ...