Inflation-weary Americans are increasingly flocking to members-only warehouse clubs like Costco, Sam’s Club, and BJ’s Wholesale, despite long lines, crowded car parks, and a stripped-back in-store experience, the Financial Times has reported.
These bulk retailers are gaining market share as consumers seek low prices on large quantities of trusted goods, even if it means navigating towering aisles of merchandise and paying upfront membership fees.
With US consumer prices up 26% since 2019 and new tariffs threatening further increases, warehouse clubs have proven resilient.
Shoppers may spend more initially, but many, like Staten Island residents Denise and Ray Carrasquillo, believe they save in the long run by buying in bulk.
“Even though you are paying out of hand a little bit more, when you break everything down your savings is much higher,” Denise told the Financial Times.
Sam’s Club, owned by Walmart, reported 6.7% same-store sales growth in Q1, outpacing Walmart’s core retail performance.
Costco, with over $254 billion in annual revenue, and BJ’s, at $20.5 billion, also posted strong comparable sales growth, eclipsing that of traditional supermarkets like Kroger and Albertsons, and far outperforming chains like Target and Macy’s, where sales are declining.
All three clubs are rapidly expanding. Costco plans 15 new US locations this year; BJ’s aims for 25 to 30 over the next two; and Sam’s Club, having closed 63 stores in 2018, now targets 15 openings annually.
Membership remains central to their success, generating high renewal rates, around 90%, and providing a key profit engine, especially for Sam’s Club, where up to 90% of earnings come from member fees.
While the shopping experience is less convenient, stores are fewer and farther between, and customers may queue to exit or navigate sparse staffing, consumers are tolerating the friction.
In fact, they spend 13% more time inside warehouse clubs than in regular supermarkets, according to Advan Research.
To ease the process, clubs are investing in tech. Sam’s Club now lets shoppers scan and pay via smartphone, and uses computer vision to confirm cart contents at the exit, reducing wait times by 23%.
Costco is also testing similar initiatives, while all three continue expanding e-commerce and same-day delivery services, increasingly encroaching on Amazon’s territory.
By leveraging private-label brands like Costco’s Kirkland Signature and Sam’s Club’s Member’s Mark, the clubs also pressure major suppliers such as Procter & Gamble and Nestlé to keep pricing competitive.
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