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A chronology of membership warehouse clubs

By MARK ALBRIGHT

© St. Petersburg Times,
published June 4, 2001


1954: Sol Price opens Fed-Mart in San Diego, a new type of discount store/membership club with a $2-a-year membership for the privilege of buying there. Membership is restricted to government employees. The radical pricing formula challenges fair trade laws that forbade deep discounting. Price sells control of the 45-store operation in 1975, then is fired in a dispute with German owners who eventually close the chain.

1976: Price raises $800,000 to open Price Club in San Diego. The membership fee is $25 a year. Only small-business owners can join. The chain falters until Price allows members from "affinity groups" such as credit unions, utility workers and retiree groups to join.

1983: As the eighth Price Club opens, imitators pop up: Pace Membership Warehouse Club in Denver; Costco Wholesale in Seattle; and two others elsewhere. They all used the same formula: Get the profits from the membership fee; keep prices low by cutting expenses and stock a small selection of high-demand items to drive volume.

1984: Wal-Mart Stores Inc. opens Sam's Club; BJ's Warehouse Club Inc. sets up shop in Boston; and former executives from Target, the discount store chain, create still another entry, the Wholesale Club. Warehouse club chains now total 10.

1990: Costco pulls out of the Tampa Bay area market, ceding territory to Pace, which was then owned by Kmart Corp.

1991: The number of warehouse club chains competing nationally shrinks to three when Kmart sells Pace to Wal-Mart and Price Club merges with Costco. The survivors: Costco, Sam's Club and BJ's Warehouse.

1992: Supermarkets, awakened by new competition, begin carrying bigger sizes. The clubs' incursion is rebuffed. Clubs begin adding services and departments to increase shopper frequency.

1999: BJ's and Costco begin expansion anew by attacking monopoly club markets in Atlanta, Philadelphia and Detroit. About 41.1-million people pay to be warehouse club members.

2000: Costco returns to the Tampa Bay area with a store in Brandon and plans for four or five stores.

2001: BJ's Warehouse is poised to open four stores in Orlando and two in Sarasota. Analysts are conflicted about whether the economic slowdown will help or hurt club growth, saying the consolidation of 1991 was triggered by too many players, not the recession.

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