Wealthy Drawn To Warehouse Clubs

By Alan Wolf -- TWICE, 7/25/2005

Columbus, Ohio — The popularity of warehouse clubs rises as income increases, and shoppers within the highest income bracket tend to favor Costco, a new survey shows.

According to ShopperScape, a monthly survey of 4,000 primary household shoppers by consultancy and market research firm Retail Forward, 56 percent of mid-market and fully 82 percent of upmarket consumers belong to at least one warehouse club, compared to only about 30 percent of down-market shoppers.

The phenomenon can be explained by the greater willingness of higher income shoppers to fork over membership fees to take advantage of low prices, Retail Forward suggests.

Wal-Mart's Sam's Club was the most popular club operator in general, likely due to its larger store base, although more upmarket shoppers were likely to prefer Costco, the consultancy said.

And while warehouse club membership skews heavily toward the well-heeled, lower income consumers spend more per shopping trip ($129) than midmarket shoppers ($120), and nearly as much as upmarket customers ($148).

However, nearly one quarter of all shoppers queried said they are spending less at warehouse clubs this year than last, compared to 19 percent who said they are spending more.

Separately, the ShopperScape survey showed that spending intentions overall will continue to rally this month from the soft patch retailers experienced in late spring. “The near-term spending environment should remain favorable as the pluses — primarily job gains and home buying — continue to outweigh the minuses, particularly gas prices,” said Retail Forward's economist Steve Spiwak.

However, a separate report, Deloitte Research's Leading Index of Consumer Spending, suggests that the rising tax burden and continued slowdown in home price growth will put pressure on consumer spending during the important back-to-school retail sales season.