Specialty Clubs Narrow Their Merchandising Focus
So, you’ve taken the warehouse plunge. You filled out an application, tied on your sneakers and shopped the hangar-sized outlets of Pace, Price Club or Costco. But you still can’t find what you want? Perhaps it’s time to narrow the field.
In the last of a three-part series on membership shopping, the Shopping column looks at specialty clubs, outfits such as HomeClub, All American SportsClub and Office Club, which are a variation on the burgeoning membership warehouses of Southern California.
Patterned after the successful San Diego-based Price Club chain of general-merchandise warehouses, specialty clubs are bare-bones warehouses that keep prices down through computerized inventories, automated replenishment of stock, price signs instead of individual pricing and low overhead.
Unlike the other Price Club copycats that have sprung up in the last few years, the HomeClub, All American SportsClub and Office Club are each unique because they carry the specific merchandise implied in their names.
Also unlike some of their general-merchandise cousins, the specialty clubs are open to the public. HomeClub, in Fountain Valley, Stanton and Fullerton; All American SportsClub in Fountain Valley, and the just-opened Office Club in Santa Ana all offer the option of buying at the posted price by paying a yearly fee or avoiding the membership fee and paying a percentage above the posted price.
For example, Office Club charges members $10 a year to buy at the posted price; non-members pay 10% above that. Likewise, the All American SportsClub charges individuals $8 a year to buy at the posted price; non-members pay 10% above that.
In Orange County, the specialty club lineup is in flux: Last week All American SportsClub filed for Chapter 11 bankruptcy protection. The Long Beach-based company said it hopes to file a reorganization plan within four months that will allow it to pay off creditors.
Office Club, a county newcomer, opened its first Southern California warehouse Wednesday in Santa Ana.
Office Club, based in Concord in Contra Costa County, is a 1-year-old operation that racked up more than $10 million in sales during its first year in business, according to president Mark Begelman. The company expects to open 10 new warehouses in 1988 (throughout the West and Northwest) and hopes to own 65 stores by 1992. Santa Ana is the firm’s only county location at present.
“We are the Price Club for office products,” Begelman said. “But we offer services.”
Delivery, which costs extra, credit-card purchasing and phone orders are available at Office Club by paying a $50 yearly fee. For $10 a year, individuals buy on a cash-and-carry basis. Begelman says posted prices are about 55% below list price at other companies offering office products.
A quick check of prices found Marks-A-Lot permanent markers, large size, at $4.29 a dozen; Premium small paper clips at $1.29 for a 10-pack; Scotch Magic Transparent Tape, 95 cents a roll; Anderson Deco Series Management Desk, $249.95; Smith-Corona Electronic Typewriter, $219.95.
A relative old-timer in the specialty-warehouse field is HomeClub, founded by Robert J. McNulty and George Handgis in 1983. In five years, the company has grown to 36 U.S. warehouses, with 24 in California, including the three in Orange County. Zayre Corp. bought the then 15-warehouse company in 1985.
In 1986, McNulty left HomeClub to start All American SportsClub. He has been replaced at HomeClub by current chief executive Herb Zarkin.
“We have an everyday low-price strategy,” Zarkin said of HomeClub. “We do not have sales. We try to buy our merchandise at the best price and put it on the shelf at the lowest possible cost. We try to be efficient in everything we do, so if you compared us with other places like Builders Emporium, K mart, Sears or Target, day in and day out our prices are lower than their sales prices.”
Builders Emporium did not deny Zarkin’s remarks. “We are a service-oriented retailer, as opposed to a warehouse,” said Ann Julsen, a spokesperson at Wickes Companies Inc., the parent firm. “We are constantly evaluating our prices to make sure we are offering the most value to our customers.”
Zarkin said the typical HomeClub customer is either a do-it-yourselfer or a building contractor. The warehouse, like its general-merchandise counterparts, is a vast building of cement floors and industrial shelving. Mirrors, doors, windows, plants and wallpaper are stacked near auto supplies, paint and building tools in a cavernous warehouse. “Watch out for forklifts” signs hang from the ceiling.
A quick check on prices found folding lawn chairs for $13.83, brass swing-arm lamps for $12.76, a Weber Genesis II gas grill with storage cart for $389.96, and assorted annual flowers in 4-inch pots for 57 cents each.
HomeClub charges individuals (anyone can join) $15 yearly to shop at posted prices, which are 5% below those charged non-members. To become a group member, candidates must meet qualifications and pay a $10 yearly membership fee.
Perhaps the fanciest warehouse of all is the All American SportsClub. With neon signs, clean white floors and stylish mesh racks, the sporting goods club looks more like a discount store than a warehouse. The SportsClub charges individuals $8 a year to buy at the posted prices (anyone can buy this membership) or $5 a year if you are a senior citizen or a member of a certain group (see chart). Non-members pay 10% above posted prices.
A check on prices found the Lifecycle 9000 stationary bicycle at $1,990.65 for members and $2,211.83 for non-members; Wilson lightweight nylon golf bags at $24.93 for members and $27.70 for non-members; Adidas Fitness Workout II sneakers at $39.29 for members and $43.66 for non-members; and Coleman American Heritage tent (13 feet by 10 feet) at $224.13 for members and $249.03 for non-members.
Some analysts fear the club field--both general merchandise and specialty--has become so crowded that some firms are sure to be edged out.
“Price Club is far and away the leader in profitability and will continue to be a leader,” said Sarah Stack, a retail analyst with Bateman Eichler Hill Richards Inc. of Los Angeles. “There will be a consolidation in that business, and some of the competition will fall away.”
The next revolution in retailing will be hypermarkets, Stack said--gigantic discount stores that carry everything from catsup to cameras: food, toiletries, appliances, clothes, hair-salon services, car supplies, plants and furniture, all under one roof.
