Warehouse club membership up among all income levels

By MARK ALBRIGHT
Published July 18, 2005

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More than half of American households are card-carrying members of a warehouse club such as Sam's, Costco or B.J.'s Wholesale Club.

That's 55 percent of all households, up dramatically from 19 percent in 1999.

But it's a mistake to think only middle- to upper-income families flock to the clubs to pick over the fine wines and latest bargain-priced yuppie toys.

Retail Forward estimates that 29 percent of all down-market households (those with annual income of less than $22,500, equal to the federal poverty level for a family of five) are paying warehouse club fees for the chance to buy an abbreviated selection of food in jumbo sizes and general merchandise that ranges from caskets to tires.

"Warehouse club membership, which was already sizable, continues to grow in all income categories, but it's particularly interesting the clubs have become so popular among families most likely to need to save money buying their food in bulk," said Mandy Putnam, a vice president of the Columbus, Ohio, retail consulting firm. "Down-market spending has been off a bit because of high energy prices."

Nonetheless, the average down-market club shopper spends only $19 a trip less than the up-market one, who drops $148. The difference: Higher-income members (household income of more than $75,000 a year) hit the clubs more frequently than less affluent ones.

Sam's Club has more members than rival Costco in both down-market households (20 to 8 percent) and up-market (38 to 33 percent). But Costco, the nation's fourth-largest retailer with revenue of $44.7-billion in 2004, was bigger than Sam's with $37.1-billion and is growing faster. B.J.'s, a much smaller chain now scouting for its first Tampa Bay area location, can count cards held by 11 percent of up-market shoppers and 7 percent of down-market ones.