Warehouse Clubs & Superstores Industry Profile

The US warehouse club and superstore industry includes about a dozen companies with some 4,000 stores and combined annual revenue of about $390 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 more than 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 $330,000.

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. Warehouse clubs have grown rapidly: industry sales increased by 137 percent between 2001 and 2011, compared to 47 percent for all general merchandise stores.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products sold by warehouse clubs are groceries (35 percent of revenue); drug, health, and beauty aids (10 percent); TVs, DVDs, video cameras, and other electronics (5 percent); and prescriptions ...