Discount warehouse clubs, which cater to middle-income Americans under pressure to save money, posted strong sales figures for August even as other some retailers and less wealthy consumers continue to struggle.
BJ’s Wholesale Club, which is being taken private by two buy-out groups in a $2.8bn deal, posted an 11 per cent jump in August sales from a year ago, while Costco, the sector leader by revenue, posted a 6 per cent rise in US sales.
The strong performance of discount warehouse clubs in recent months is a sign that middle-income Americans continue to search for ways to economise on groceries as they face persistent economic worries over jobs, debts, house prices and inflation.
Overall, retail sales from 25 companies that report monthly figures were up 5.5 per cent from last August, but the companies represent only 20-30 per cent of total sales and do not distinguish the impact of higher ticket prices from changes in sales volumes.
For consumers, last month was marked by extreme stock market volatility – which tends to unnerve people with investment portfolios – and bookended by the US debt ceiling impasse at the start and Hurricane Irene on the east coast at the end.
The discount warehouse clubs let fee-paying members pay low prices to bulk-buy products – such as 2kg jars of mayonnaise and 36-packs of toilet roll – which they stack on towering shelves in their industrial-style outlets.
John Long, retail strategist at Kurt Salmon, a consulting firm, said: “Consumers are looking at higher food, fuel and apparel prices and these warehouse clubs offer them an opportunity to stock up on staples that they may use for three or four months. That’s a way of protecting yourself against inflation.”
Costco announced late on Wednesday that Jim Sinegal, its chief executive and co-founder, would step down at the end of this year to be replaced by Craig Jelinek, currently chief operating officer.
“He’s leaving the company in tip-top shape,” said Daniela Nedialkova, analyst at Atlantic Equities, who said Costco’s success was built on offering a limited range of select products and negotiating hard with suppliers to secure the lowest possible prices.
Costco’s August net sales at its US and international businesses combined were $6.9bn.
The second-biggest warehouse chain is Walmart’s Sam’s Club, which last month reported a 9.5 per cent rise in sales to $13.6bn in the three months to July 31, even as Walmart-branded stores reported a ninth consecutive decline in quarterly like-for-like sales.
Sales at BJ’s Wholesale last month hit $901m. The company’s acquisition by two buy-out groups, Leonard Green and CVC Capital Partners, is expected to close by the end of this year.
Rather than warehouse clubs, Mr Long said that low-income Americans continued to shop at dollar stores such as Dollar General and Family Dollar, because they were deterred by the clubs’ membership fees.
“People who are living pay cheque to pay cheque have to assess whether they feel they’re getting a return on that subscription,” he said.
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