Warehouse clubs seen as prime retail growth sector


ShoppingGrocery, mass merchandise and online outlets are key selling points for consumer goods manufacturers, but the area in which they expect to see the bulk of their sales increase over the next three years will be the warehouse club sector.

According to Deloitte, 89% of consumer package goods executives see warehouse clubs as the primary growth area. Only 49% say the same about grocery stores, and 18% actually expect grocery store sales to decrease over the same period.

79% believe the clubs will expand the number of products carried, 75% believe they will expand their geographic presence and 75% believe they will increase the amount of health and wellness product they carry.

“Consumer products companies are responding to the increased sales and branding opportunities in the warehouse club channel, particularly in expanding segments traditionally dominated by grocery and mass merchandise channels,” said Pat Conroy , vice chairman and consumer products leader, Deloitte LLP.  “Club retailers have been remodeling existing stores, including allocating more space for food – particularly organic, healthy and fresh offerings – and personal care products. These retailers also continue to provide a variety of services and benefits to members – whether it is for personal consumption or for the member’s business.”

Deloitte found that consumers are paying more frequent visits to the clubs, are spending more, and also are finding the stores themselves to be more appealing. It also found that the customers are more affluent than average – in fact, 71% of those with household incomes greater than $100K use them.

“Unlike past recessions where consumers eventually returned to their previous shopping habits, this recession left a scar, not a bruise, and consumers remain hesitant to break from their cost-conscious routines,” continued Conroy. “Economic uncertainty and consumers’ focus on value has made club stores a more important channel for many consumers, including those who are at the higher end of the income scale and represent a more lucrative target customer for retail and consumer products brands.”

RBR-TVBR observation: There are two ways to play this as an advertising sales proposition. The obvious one first: For your warehouse club clients, get them to strike while the iron is hot.

For everybody else, the message is that they better figure out the ways in which they are better than a warehouse club and get on the air and explain their advantages to local consumers in an effort to forestall their business moving to the clubs.