Designing for club store, section by section

How you design your packaging for the club-store channel depends on where your product will be displayed: the front of the store, the middle, or the back.

Middle-of-the-store items are typically stacked on pallets from top to bottom.
Middle-of-the-store items are typically stacked on pallets from top to bottom.

The club-store channel presents a dramatic growth opportunity for brands, but it is also a very different environment than most other retail channels. To that end, there are some important characteristics that make packaging and point-of-purchase conventions different depending on the categories and sections of the store, and particularly so when comparing those categories and store sections to other retail channels. There are three distinct sections of the club store—the front, the middle, and the back—each of which requires different packaging strategies.

The warehouse club industry in the U.S. is currently comprised of three key players: Costco, Sam’s Club, and BJ’s Wholesale. The club-store business model essentially turns the traditional retail model on its head, focusing on a large store format with spartan décor, low prices, low margins (gross margins from 8% to 14%), minimal product assortment, and extremely high volumes.

Given the low prices and low margins associated with product sales, club-store retailers generally make most of their profits from membership fees. In exchange for these fees, members expect to pay very low prices and get high-quality products. And to that end, the buyers at each of the club stores have a laser-sharp focus on low prices and “value” to the consumer. Brands selling into the club stores (or aspiring to sell in) need to always be mindful of this dynamic. If a brand sells into the club channel, low prices, low margins, and very high sales volume are a given.

Front of store (higher-ticket items)

The journey through a club store has often been described as a “treasure hunt.” This is the case whether you are in Costco, Sam’s Club, or BJ’s. There are no store maps, aisle markers, or directional signs to be found. That is a very purposeful thing. Club-store operators want shoppers to find unexpected treasures, make unplanned purchases, and generally be delighted during their time on the club-store floor. This is very evident at the front of the store.

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