Founded in 1976 in San Diego, California by Sol Price, the warehouse club industry has evolved over the years to include just three primary operators, BJ’s, Costco and Sam's Club. The one concept that sets the $133.2 billion warehouse club industry apart from other retail channels is the fact that Customers Pay to Shop.

In return for that membership fee, the warehouse clubs provide members with a host of benefits:

• Low Prices - Gross margins are generally 8% to 14%.
• High Quality - The warehouse clubs choose to offer high-quality products at a value.
• One Stop Shopping - BJ’s, Costco and Sam's Club are confident that they can merchandise and sell any type of product in any category as long as it is packaged and merchandised correctly.
• Unique, Rotating Merchandise - BJ’s, Costco and Sam's Club constantly rotate big-ticket, high-end or unique merchandise into their club locations creating a “treasure hunt” atmosphere where members never know what to expect.
• Member Services - BJ’s, Costco and Sam's Club offer their members access to an assortment of business and consumer services such as payroll processing, mortgage origination, credit card processing and financial planning.
• Specialty Businesses – These businesses include one-hour photo finishing, optical shops, hearing aid centers, pharmacies, snack shops, gasoline stations, cellular phone sales, travel kiosks and bank branches.

The warehouse clubs are able to offer their members all the benefits, features and services listed above because of their unique buying, merchandising and operating philosophies:

• Limited Selection - The limited item selection, 4,000 to 7,500 items, allows the warehouse clubs to maximize efficiencies in product distribution, handling, stocking and merchandising.
• Low Prices - Buyers negotiate lower costs due to the volume that the clubs generate. The low prices help to increase sales, which increases inventory turnover and enables the buyers to further negotiate lower costs and further reduce the retail prices.
• National Brands - BJ’s, Costco and Sam's Club primarily stock brand-name products that do not require promotion through advertising or explanations by salespeople.
• Paid Membership - The paid membership program provides each warehouse club with a revenue source that in most years is equal to its net income.
• Wholesale Packaging - The clubs have found that larger packages work very well for consumers and studies have shown that consumers who purchase larger-sized packages are more likely to consume those products more quickly than if they had purchased smaller packages.
• Intelligent Loss of Sales - The warehouse clubs will only stock items that they can provide to their members with significant savings. If a manufacturer prices an item too high or requires that the item be sold at the manufacturer’s suggested retail price, a club will not stock the item.
• Rapid Inventory Turnover - Generally, the warehouse clubs are able to sell a product before they have to pay the manufacturer for it. This enables the warehouse clubs to finance their inventory from their working capital.
• Distribution - BJ’s, Costco and Sam's Club accomplish cost-efficient distribution through the use of cross-dock distribution centers which enables the warehouse clubs to reduce inventory, increase inventory turnover, reduce transportation costs, improve product quality and increase responsiveness to changing market conditions.