By  on October 16, 2006

Warehouse clubs, not content to sell bulk toilet paper and giant bottles of ketchup, are trying to reinvent themselves as destinations both for wholesale bargains and luxury products. Their aim: attract affluent consumers who spend more with each visit.

In June, Sam's Club held a press event in a rented penthouse apartment in Manhattan to tout its luxury offerings for the holiday season. There were diamond necklaces in weights of 1 carat to 5 carats, priced from $2,700 to more than $8,000, and designer handbags, including a Prada style for $395.

"We've been recognized as a bulk seller and as catering to small businesses," Greg Spragg, executive vice president of merchandising for Sam's, told the crowd, adding that the retailer wants to become known for selling affordable luxury items.

Sam's and its rival Costco have much to overcome in terms of strengthening luxury offerings. First and foremost is the difficulty in buying designer apparel, handbags and accessories directly from manufacturers. At the summer press event, Dee Breazeale, vice president and divisional merchandise manager for the jewelry division of Sam's Club, said the Prada handbag on display was just one of many designer brands Sam's carries.

"There are always about 12 handbag styles available at Sam's," she said. "It's always a treasure hunt. You never know what you're going to find."

Designers have been aggressively bringing legal action against unauthorized retailers such as warehouse clubs and off-pricers, which will further limit the product flow. Fendi filed a complaint in June against Wal-Mart Stores, Sam's parent, in U.S. District Court, Southern District of New York, alleging that Sam's had been selling counterfeit handbags with the Fendi logo. A Wal-Mart spokesman said that the complaint was without merit and that the company would show the products were acquired properly.

One indication of the direction Sam's may be moving in is the recent hiring of Patty Warwick as senior vice president of apparel. Warwick, who was senior vice president and general merchandise manager of home at May Merchandising Corp., has extensive experience in private label development.

In her résumé, Warwick wrote: "Succeeded in developing and delivering the first private-label brands to May Company's home store." She also has ties to designers. As senior vice president and general merchandise manager of home, intimate apparel and hosiery at the Meier & Frank division of May, she "transformed the division to an upscale fashion-oriented business," according to the résumé.

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