Feb. 16, 2000 - Fresh is in - and the trend hasn't gone unnoticed by warehouse clubs. As if bargain prices on electronics, cleaning products and a host of other oversized goodies and foods weren't enough to keep shoppers coming back for more, mega-retailers have upped the ante by going fresh. Produce, meat, baked goods and prepackaged meals all are on the menu.
"We have made sizeable investments in expanding and remodeling our stores so that we can offer fresh food," says Elda Scott, a spokewoman for Sam's Club, a division of Wal-Mart Stores, Inc.
Salmon, chili peppers, kiwi, mangos, berries and other seasonal fruits, meat and baked goods are big sellers for Sam's Club, and have been for the last couple of years.
"Warehouse clubs started off by selling pack-size, large quantities of high-end goods at prices equal to or better than other retailers," says Glenn Llopis, president of Power Insights, a management-consulting firm specializing in the food and beverage industry. "They didn't have to worry about inventory because storage was the store."
While the discounts on bulk items have attracted hard-core bargain hunters, warehouse clubs are now looking to grab an even bigger chunk of the food shopping dollar by broadening their product offerings.
"Perishables have emerged as the front-running product because they divert consumers from supermarkets and restaurants. Fresh is the way to go," Llopis says. Some warehouse clubs have even gone downright chichi, offering sushi, veggie platters and fresh juices.
"The clubs have connected with foreign importers who bring in exotic products, like different colored peppers, a variety of mushrooms and all sorts of tomatoes," adds Llopis. In fact, he estimates that Costco Wholesale Corp. is the single largest importer of salmon in the nation.
"We were the first of the clubs to introduce fresh foods a decade ago. We continually evolve - to the deli, to prepared entrees. We will keep adding new products," says Jim Sinegal, president and CEO of Issaquah,Wash.-based Costco. That's not surprising, given reported estimates that Costco's sales of perishables and produce grew by more than 25 percent last year.
What's fueling this trend? Customer demand and the quest for convenience. Why shop two stores, consumers reason, if you can get away with just going to one and get the freshest produce available in the process?
According to Michael Clayman, publisher of the Warehouse Club Focus newsletter, warehouse retailers also have the cleanest and most efficient distribution system for produce.
"Items go from the manufacturers directly to the club," he explains. "The product goes in and out in the same day."
But how can super clubs afford to beat the supermarkets with fresher produce at lower prices? Clayman says it's all about speed and volume.
"In some cases," he says, "the clubs sell the product before they actually have to pay for it, which gives them more cash to work with."
One downside for shoppers, though, is that the produce available in warehouse clubs is whatever is in season. But then again, says Clayman, "The experience becomes a treasure hunt; shoppers never know what they are going to see."
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