Sam's Northeast Rollout Underway
Sam's Northeast expansion also extends the reach of its parent Wal-Mart into a brand new region, paving the way for the firm to follow with Wal-Mart stores. Up to now, Sam's has opened clubs only in areas that house Wal-Marts.The top two chains in sales and stores are Sam's and Price Club, but they only share Virginia as a common state. The Price Club's four stores are in Richmond and the Tidewater area, while Sam's has one unit in Roanake.As awareness of the industry has grown among businessmen and consumers, membership warehouses have found that the resulting higher traffic and sales means that stores can be closer to each other and still be viable. This trend should cause more direct competition in the Northeast, a situation similar to that in Southern California.The Northeast is BJ's home market, with 16 of its 22 stores there. Sam's is going into five of BJ's markets. Price Club and PACE each have three units in the region, the Warehouse Club two and Makro and Net Cost Club one each.While Sam's has locked up the sites for its 18 stores, the four other membership warehouses are pursuing locations.BJ's is in Albany, Rochester, Syracuse, Wilmington and Portsmouth.Much of the warehouse clubs' expansion in the Northeast will likely see chains either taking locations adjacent to strip centers or shopping malls or even developing their sites into shopping centers. The Price Club is turning a number of its stores, including the one in North Haven, Conn., into shopping centers.BENTONVILLE, Ark. -- Sam's Wholesale Club plans to invade the Northeast with at least 18 stores during the next 30 months, an expansion move that has enormous implications for the membership warehouse field and its parent company, Wal-Mart.PACE is set to open its first store in the Northeast in Philadelphia. This is a natural expansion from the Baltimore/Washington area where it already has three units, with more due. The Price Club also has three stores in the Baltimore/Washington area.But the membership warehouses could face problems obtaining locations because the low rental, large undeveloped industrial sites favored by wholesale clubs are scarce in most metro areas in the Northeast and community opposition to large shopping centers is growing. Any slowdown in the Northeast's economy could help membership warehouses expand by making sites available at low, even, distress prices.Price Club plans to open a store this summer in Babylon, N.Y., as part of its expansion that will be focused primarily on the Western states and along the Eastern Seaboard. BJ's plans to unveil three or four stores in the Northeast, reportedly including units in Milford, Conn.; Edison, N.J.; and Allentown, Pa.Sam's is moving into the Northeast for the same reason other membership warehouses are expanding in the area: the 10-state region is a densely populated area with an average income higher than that of the country as a whole. It also has a strong, diversified economy that has weathered business swings better than other regions of the nation. Sam's first two stores are set to open this fall in Atlantic City and Delran Township, N.J.Once Sam's opens its Northeast stores, the West Coast and Rocky Mountain regions will be the only areas of the country where Wal-Mart doesn't operate either discount stores, membership warehouses or hypermarkets.Currently, the Northeast is understored with warehouse clubs. The region has only 26 wholesale clubs in eight states--less than the three dozen doing business just in Los Angeles alone. The industry's looming expansion, however, could result in the 10-state region getting about 50 new membership warehouses, including the Sam's, by the end of 1991.Makro, with one store in Langhorne, Pa., (and two in Baltimore/Washington) plans to expand to about 10 units in the Northeast by the end of next year, with an opening in Hartford, Conn., set for this year and in Deptford and Cherry Hill, N.J., in 1990.Sam's move into the Northeast follows that of Price Club, which has targeted the region as a prime growth area. The Price Club learned about marketing in the area from stores in North Haven, Conn.; Edison, N.J.; and Nesconset, N.Y.; and is now acquiring sites for more units.Sam's thrust in the Northeast focuses the spotlight on the extensive expansion planned by that chain and at least four other membership clubs--BJ's Wholesale Club, the Price Club, Makro and PACE--for the region, while also highlighting the growing competition among wholesale clubs throughout the nation.A number of the Sam's will follow the chain's new prototype, which includes such service departments as a scratch bakery, fresh produce, optical section and business service center in units that range in size up to 135,000 square feet. The Sam's in Delran Township, for example, will be 128,000 square feet.
BJ's is in Albany, Rochester, Syracuse, Wilmington and Portsmouth.
Author: Arthur Markowitz
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