Warehouse clubs becoming more popular with wealthy shoppers

July 11, 2014

While warehouse clubs might be perceived to be the domain of those looking to stretch a tight budget, new research from Mintel reveals that it is not just those of lower incomes having to "make do." High income consumers think their products are on a par with leading brands. Indeed, 38 percent believe store brand or private label brands at warehouse clubs are comparable to name brand items in terms of quality — a number that increases to 44 percent of households earning $150,000-plus. That's the highest percentage of all income groups surveyed, compared to 27 percent of those earning less than $25,000, 36 percent of those earning $50,000 to $74,900 and 41 percent of those with incomes between $100,000 and $149,900.

Furthermore, 40 percent of warehouse club users say warehouse clubs carry quality products — with 46 percent of households with an income of $150,000-plus reporting as much. The number drops to 32 percent for those earning less than $25K, 41 percent of those earning $50,000–$74,900, and 42 percent of those with household incomes of $100,000 to $149,900.

"Shoppers in this group may be more likely to shop across a wider variety of retail stores, and therefore more aware of the price differential among retailers," said Ali Lipson, category manager, retail, apparel, technology and automotive at Mintel. "They are also more likely to be able to afford the shopping trip compared to those with lower incomes. Product messaging and signage that highlights the quality of warehouse club products is sure to resonate with this demographic."

This market also might be immune to threat of online shopping, as more than six in 10 (63 percent) Americans have shopped (in-store) at a warehouse club in the last six months, but only a quarter (25 percent) have done so online.

"One deterrent to online shopping in this channel could be that stores offer bulk-sized packages so the cost of shipping large items could prove prohibitive," Lipson said. "Additionally, part of the appeal of warehouse club shopping is the 'treasure hunt' aspect, or discovering unique items throughout the store. Currently, the warehouse clubs' online model is unable to replicate this experience."

More than one-third (36 percent) of warehouse club shoppers agree that they like finding unique items when shopping at warehouse clubs. This number increases significantly for women 55 and older, with 45 percent of that demographic reporting as much. The least likely bargain hunters at 30 percent are women age 18–34.