2010 Version

From the warehouse club operator perspective, the concept of paid membership is critical to their success. The paid membership program provides each club with a revenue source that in most years is equal to or above net income. Without membership revenues, the clubs would not make much money. When deciding to join or renew a membership at BJ’s, Costco or Sam’s Club, members require one simple benefit. In return for the membership fee, a warehouse club member expects to save more money shopping at the club than the actual cost of that membership. Without that savings, members would not join and the warehouse club business model would not exist.

When thinking about where potential members can shop for a wide variety of food and non-food items under one roof, grocery stores, supercenters and warehouse clubs are most likely the top three choices. Comparing a basket of items found at each of these three retail formats provides an objective example of how much money a club member can save by shopping at BJ’s, Costco or Sam’s Club instead of a grocery store or supercenter.

The purpose of the item basket analysis is to understand and track how well the clubs adhere to their low price message, not just against each other but against other retail outlets. This study analyzes the retail prices at the clubs, a grocery store and a supercenter where all five operators compete in the same market for the same customer. This white paper contains four sections including: methodology and objective, pricing comparison method, chart layout and results.