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Club strategy

By MARK ALBRIGHT

© St. Petersburg Times,
published June 4, 2001


Warehouse clubs, once known for looking and selling cheap, have changed dramatically in recent years.

All three big chains have:

  • Applied their low mark-up formula to new categories such as prescription drugs, liquor and eyeglasses.
  • Picked new services that bring customers back more often, such as gas stations and photo-processing services. The average customer now shops a club every four to six weeks, compared with six to eight weeks a decade ago.
  • Ventured into fresh perishable goods, such as baked goods, flowers and prepared meals.
  • Bundled several smaller-size items to appeal to those who don't want jumbo size. Comet cleanser comes in four-packs of 25-ounce cans.
  • Offered full-service snack bars instead of just hot dog and Coke stands. Everybody sells rotisserie chicken.
  • Expanded services to include roadside assistance, auto brokering and long-distance phone service. Offered cut-rate deals on banking, insurance, credit cards and travel booking. Services account for about 10 percent of club revenues.
  • Built store-label goods to 15 percent of sales.

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