Warehouse clubs are picking their battles and finding their niches.
According to the WWD Where America Shops survey, 56 percent of respondents said they belong to a club and 50 percent said they have bought apparel or accessories there — indicating there is still a lot of potential for new customers. Not surprisingly, casualwear is the leading category with 71 percent saying they bought this type of clothing at a club, followed by activewear, purchased by 44 percent.
The $40 billion Sam's Club, a division of Wal-Mart, does put a strong focus on fresh produce, bakery goods, organics, wine, fine jewelry with an emphasis on engagements, graduations, Mother's Day and other occasions; business, health and travel services and office supplies for the small business owner, as well as electronics and smaller home furnishings such as tables, lamps and clocks, according to spokeswoman Susan Koehler.
She also said Sams' is tailoring its merchandise more to regional preferences, and focusing on the needs of individual communities, so you might not find precisely the same wine selection from region to region, for example.
At Sam's Club, "food shopping has always been the big driver," said Isaac Lagnado, president of the Tactical.org consulting firm.
With apparel, he said Sam's strength lies in active, the kids commodity business and basics.
High-profile apparel and handbag brands and some luxury labels and tailored goods, such as Nautica, Lacoste, Polo, Hugo Boss and Prada, have been popping up in the assortment.
Still, when it comes to fashion's top tier, it's still largely a treasure hunt, meaning one can never know what to expect. Sam's mission is more about targeting misses' customers, buying opportunistically and providing deals on well-known brands rather than comprehensively covering what's current in fashion.
"I think Sam's has to undergo a cultural change before it can be consistently successful in fashion goods. It requires being very nimble, staying on top of trends and changing the resource mix" to reflect the latest looks, Lagnado said.
The $57 billion Costco, on the other hand, has gained a reputation for a steady presentation of high-profile, high-quality brands.There is also a strong private label business, self-service gasoline stations and value pricing, as opposed to the high-low scenario or dirt-cheap-price image of other clubs.
Costco is known for selling caviar and gourmet foods, fine wines, upscale handbags, gold jewelry, top household appliances such as Dyson vacuum cleaners and personal care products, and has become more visible with brands such as Coach, Tommy Hilfiger, Polo Ralph Lauren, Tag Heuer, Perry Ellis, Cartier watches and Starbucks — usually bought on the gray market.
"From an apparel point of view, even from hardlines, Costco seems to have higher-profile brands than Sam's, and that has given them unbelievable credibility when it comes to their private brand," said one retail consultant. "Costco is doing more and more of their own product development under the Kirkland label."
There's Kirkland juice, cookies, coffee, tires, housewares, luggage, appliances, clothing and detergent, and Costco will work with the big brands — the Fruit of the Looms and the Proctor & Gambles of the world — to get the same product that's shipped to department stores but sold at Costco under the Kirkland label.
"Costco's private label is a major point of difference, but so are the brands they carry and Sam's is very sensitive about that," the consultant said. "At Sam's, the experience is different. It's more about basics, commodities and price," though still strong values, he added. "Think of it almost like the difference between Target and Wal-Mart."
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