A recent academic study makes an interesting claim: Warehouse clubs, like Sam’s Club or Costco, have had a stronger influence on changing retailing than has the other big game changer of our modern era, e-commerce.
T
he research involved analyses of the structure of the retail sector over two decades. The authors, from the University of Chicago, noted the sizes and growth rates displayed by both e-commerce sellers and warehouse clubs. As they show, the four biggest warehouse retailers accounted for approximately 8 percent of 2012 retail sales. That’s nearly twice as much as e-commerce represented.
In terms of the growth of the two retail forms, these authors also reveal that e-commerce grew from $35 billion to $348 billion in sales between 1992 and 2013. That sounds impressive, yet warehouse club sales in the same period increased from $40 billion to $420 billion. Both the numbers and the rates thus are higher for the clubs.
Drawing some conclusions from these findings, the researchers argue that reports of the death of brick-and-mortar stores appear to have been greatly exaggerated. In-store purchases continue to be a robust sector, and the specific format of warehouse clubs continues to expand. In particular, their recent growth has tapped into demand in more heavily populated areas, as the clubs move from distant suburbs into more city centers.
What the authors do not discuss, however, is the broader impact that e-commerce continues to have. For example, nearly every retailer in the world is looking to establish or expand its online or mobile presence. The same cannot be said of warehouse clubs.
Discussion Questions:
- Which retail format has the fastest growth: warehouse clubs or Internet retailers?
- Do you expect this differential growth rate to continue?
Source: Sarah Halzack, Washington Post, September 2, 2015