Bargains By The Forklift

Are you in the market for a 50-pound bucket of laundry detergent? What about some 3-pound cans of tuna or a hunk of cheddar cheese about the size of a cinder block? Perhaps you'd just like to pick up a new TV, a fax machine, a set of radial tires, patio furniture, a few pairs of underwear, and 2,500 sheets of computer paper? You can find all this and more at the 400 or so warehouse club stores, with names such as Sam's, Price Club, Costco, PACE, and B. J.'s Wholesale Club, springing up across North America faster than you can say forklift.

These vast, members-only discount chains have such bargains, in fact, that they are growing faster than any other sector of the retail business. About 500 of them will be open for business in the U. S. and Canada by the end of the year. The warehouse stores--and they are, in fact, huge warehouses--sell just about everything, typicallyin industrial-size quantities. Most items are name-brand products, not seconds. Butoften it's hit or miss. Ifyou need an air conditioner, for example, the store may carry two models--or none at all.

BULK SHOPPING. To get in the door, you have to show a card that proves you've paid your dues: usually $25 a year. For active members, the fee is negligible in light of the incredible bargains they can find. Goods are marked up 8% to 10% vs. the typical 20% to 30% markup in a regular discount store or 35% to 50% in a department store. At Costco, a $600 Ralph Lauren suitsells for $269.99, and two 32-ounce bottles of Scope mouthwash, regularly $9.78, go for $6.99.

Many customers here aren't your typical shopping-cart set. About one-third are business owners, using the warehouse membership to buy goods in bulk for their restaurants, gas stations, grocery stores, or small offices. They account for more than 60% of sales. Most stores set aside exclusive hours for them to shop.

Individuals used to be able to get a membership at no cost, but they had to pay a 5% surcharge on the posted prices. In some places, especially the Midwest, that's still true. But most of the warehouses are switching to all paid memberships and eliminating the surcharge.

Still, most chains won't accept just anybody: You have to prove you belong to a certain credit union or work for the government or an approved school, hospital, or company. A few chains are doing away with these restrictions, but others find them useful: Customers affiliated with such organizations are wage earners and less likely to write bad checks. With the proper credentials, you can sign up, pay your fee at the door, and start shopping.

NO DELIVERIES. Don't confuse warehouse stores with a trip to the local mall: There's little sales assistance, no decor, no deliveries, no frills. Nobody will help you load bulky purchases into your car. Goods are stacked up high, and you may have to dodge forklifts. At the cashier, one person shouts out a number for each item while the other punches the register. Only cash and checks are accepted.

If you have a choice of warehouses, you won't find much difference. Prices and merchandise are much the same--though one store may have an edge over another in a particular type of merchandise. Innovations, such as fresh bakery items, optical departments, pharmacies, film processing, and car prices, prenegotiated with nearby dealers, are quickly copied by other warehouses.

With 3,500 items per store, warehouses don't have large selections in each merchandise category. You still need supermarkets and office-supply stores for special needs. And the clothing selection will never put department stores out of business. But the warehouse formula works. For those who think they're going just to stock up on toilet paper and soap, watch out. You may come home with a capuccino maker and a six-foot houseplant.

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