On a job last week, I had the pleasure of listening to a man who is an expert in marketing his company’s products SOLELY to the so-called Club Stores. That is, ** Sam’s Club, Cosco and B.J.'s Warehouse **.
He has done this for years and routinely uses data from the stores themselves as well as data he has compiled. He presented a fact that was so amazing to me, that I just had to share it. Here it is.
The three stores listed above make no profit at all from the sale of the goods sold in their stores. That’s right. Not a dime. The goods sold in their stores are marked up 10- 14 %, depending on that particular location- ONLY to cover Overhead costs of running that store. It is a wash.
The huge profits in those warehouse stores comes solely from the yearly Membership fees paid to join. Period. He had a slew of research proving this, I even went up afterwards as we were wrapping, and asked him more about it. He said it’s very simple. The business plan relies on a few bits of psychology.
We feel we’re in a market- different things each time. If we see something we crave, we know it may not be there the next time we visit. Each aisle is stocked with at least SOMETHING that is totally new each time, sometimes the aisles are reliable but the end-units or new freestanding displays change weekly.
Additionally, we will see a package of 3 that SEEMS to be a bargain, and buy up one or two even if in fact they are just a smidge below regular supermarket pricing per unit.
Despite the fact that apparently the overwhelming majority of people do NOT go to their Club weekly or even bi-weekly, they maintain their memberships year after year. The business plan for these stores is anathema to any normal store.
Raw cement floors. Steel pallet shelving. Open pallet marketing. Coarse overhead mercury vapor lights. You have to box your own stuff.
And yet, these three chains are wildly successful and continue to expand each year, posting profits as they do so.
All on the income generated solely from Membership Fees. Incredible. No, I cannot cite this because the man doesn’t exactly post his private research up on the Internet. He claims this is common knowledge within the industry.
I belong to B.J.'s. It’s closer than ** Sam’s Club**, and so we let our Sam’s Club membership lapse and joined B.J.'s. I see little difference between the two. I rarely shop there, I will admit.
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