Why Warehouse Clubs are Cool

These are heady days for America’s major warehouse clubs, BJ’s, Costco and Sam’s Club. All three are thriving in today’s turbulent times, CNBCreports, opening new locations as more and younger U.S. consumers sign up for memberships.

A confluence of factors has combined to make the membership-only clubs, with their hangar-like environments and buy-in-bulk merchandising, popular with shoppers. First and foremost, all three have broadened their merchandise and bulked up digital options, particularly since the Covid pandemic, Marshal Cohen, a chief industry advisor for Circana told CNBC.

Along with lower-priced private label versions of items like olive oil and paper towels, clubs carry children’s clothing and back-to-school supplies, sell giftable items like jewelry and offer lower-priced health and wellness items like hearing aids, contact lenses and vitamins. That’s given shoppers more reasons to return to their stores and websites between stock-ups.

“They’re curating not only the brands better but creating a better sense of adventure for the shopper,” Cohen said.

High inflation also helped bring the club channel “more and more into focus,” said Bobby Griffin, a consumer analyst at equity research firm Raymond James. While the clubs have long been known as a place to buy cheaper gas or bulk packs of household staples for less, the companies have also continued to “up the ante,” Griffin says. Merchandise has gotten sharper, private label offerings have become stronger and the shopping experience has gotten more enjoyable as the retailers have spruced up stores and added more technology, he said.

In addition, clubs have benefitted by providing an element of surprise, catching shoppers’ attention with items that tap into a desire for dupes or go viral on social media — such as Costco’s gold bars, which racked up more than $100 million in sales in a single quarter.

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