The Price Is Right Warehouse Clubs Are A Hit With Consumers Out To Cash In On Bargains In Bulk

December 01, 1991|By Sue Campbell

Like most things about the Price Club, the urge to shop there is big. Judging from the number of cars in the lot, it strikes hard on a Saturday morning. People look at each other over the breakfast table with something akin to mania in their eyes and say: "Let's club."

It's not that the Price Club, or any other membership warehouse, has aesthetic appeal. From the outside they look like airplane hangars. Inside, there is a distinct lack of decorator flair. The floors are bald cement, the walls bare cinder blocks. Above, fluorescent lights buzz and glare. As you cruise the extra-wide aisles of goods, an occasional forklift rumbles by.

The source of the urge to shop is the goods. The miles of merchandise. Warehouses carry everything from washer-dryers and copy machines to jelly beans and toothpaste; from paper clips and desk lamps to beach chairs and jogging shorts. All items that can be packaged in bulk. Everything is big, Big, BIG.

And cheap. Wildly, incredibly cheap. On a recent trip to the Price Club in Glen Burnie, three dozen eggs cost $2.29. Two one-pound loaves of Old Tyme oat bran bread cost $2.29. Eighteen rolls of aptly named Marathon toilet paper sold for $6.59. And those are just the basics. Say you want Rayban Cats sunglasses: $27.99. A Westinghouse dryer: $259.99. A Price Club brand pinpoint Oxford cloth shirt: $14.99.

Of course, membership has its price: You pay $25 for the privilege of shopping most clubs.

The warehouse membership concept developed in the mid-1970s when pioneer Price Club opened its first location in San Diego. Sol Price recognized a niche market of small business owners, a group often frozen out of wholesale deals. By joining a club, mom-and-pop stores could buy larger-than-average volume and still receive deep discounts. In fact, that's the whole idea behind the clubs: to let the little guy in on big bargains. (At the "hypermarkets," like Leedmark in Glen Burnie, you don't pay a fee to join; but the discounts aren't so deep as at the membership clubs.)

Today, about 65 percent of all warehouse members nationwide are small-business owners or managers. The other 35 percent, members of the general public, are part of large groups like credit unions, non-profit organizations, neighborhood associations or government agencies. Licensed professionals are another category of users who can purchase membership.

In their infancy, most warehouse chains were located in the West. Today, they continue to spread throughout the East. Our region, with the booming Baltimore/Washington corridor, especially attracts them. Price Club already has stores in Glen Burnie and Beltsville, with plans to open a new location north and west of Baltimore. Pace has two Baltimore stores, one at Security Boulevard in Woodlawn and one on Eastern Avenue, plus sites in Capitol Heights, Landover and Laurel.

"The Baltimore market is one of our most successful major markets in the country," says Tom VanderArk, vice president of planning and development at Pace. "It's definitely a target for future development. We intend to place two or three additional locations in Baltimore and the surrounding communities."

Membership warehouses are the fastest-growing segment of the retail market, according to Retail Store News, a trade magazine. Sales have increased tenfold since 1984. Industry revenue from more than 600 clubs nationwide is estimated to reach $25 billion this year. Walter Loeb of Loeb Associates, a retail consulting firm in New York, predicts that the warehouse sales will double by the mid-1990s. The clubs are a strong market force, he says, and are here to stay. Slowly but surely they are changing the way we shop.

ALREADY THE WAREHOUSES have exerted an influence on other retailers and wholesalers. "We provide a whole new form of distribution," says Mr. VanderArk of Pace. "Our primary customer is a small-business person who shops at Pace for his internal business consumption, like office equipment and supplies and janitorial products. He also buys items like candy, pop and cigarettes for resale. And he makes personal purchases."

By taking care of three needs in one store, the small-business person saves time. And by serving himself -- and eliminating middlemen -- he can save money.

The warehouses' effects on the retailing industry benefit non-business consumers, too, according to Mr. Loeb. "They challenge all retailers because they sell items for so much less. They drive down the entire price structure. And because there are comparatively few items sold at the clubs -- about 4,000 -- those items have to prove themselves every day with the customer. It becomes very competitive and exciting because the customer can save so much money on goods she deems desirable. She can buy name-brand, quality goods and save."

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