Wholesale Club Environment

The guiding principle of the warehouse club industry is to offer paid members low prices on a limited selection of nationally branded and private label merchandise within a wide range of product categories.  How they put this philosophy into practice, however, is different among the three primary club operators: Costco, BJ's, and Sam’s Club.

High-End Merchandise - One of the key components of the club philosophy is the quality of the merchandise that it stocks.  The clubs believe that it is easy and wrong to offer low prices on low-quality merchandise.  The clubs, instead, choose to offer high-quality products.  The trick, from their point of view, is to be able to stock and sell those high-quality products at lower prices than can be found elsewhere.  This creates the value proposition that convinces members to continue to pay to shop.  Additionally, high-quality merchandise has higher average retail prices, which help to increase the club average transaction, which makes front-end operations more efficient.