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z et I fa pt of 14 Members pay only the wholesale price plus 5%. small business and pay a yearly member- ship fee of about S25 and S 10 each for up to five extra membership cards —ostensi- bly for employees, but the rules are flexi- blc: family members and friends arc often designated by the business owner. These cards, which must be renewed every year, entitle the bearer to shop at the outlet. There is usually no membership fee for nonbusiness customers, known as group members: instead, they pay the wholesale price plus 5%. In addition. most stores al- low members to bring along a guest; such -isitors must pay in cash. Large families and people who have no quarrel with solid middle -of -the -line merchandise stand to benefit most from membership. As long as you don't insist on specific models and brands, and you I;ave room at home to stash a few weeks' worth of supplies, you pan save on a wide selection of retail items. You don't have to buy in bulk. you can pick up one item at a time, but the store may stock only the ja mbo, economy packages on some food items. Says Arlene Kiel, manager of hu- man resources for Chicago's Field Mu- seum, who is a member of the Warehouse Club: "1 buy a lot of staples there, and it's a good place to stock tip for parties." Comparison shopping To find out whether a warehouse is really your kind of place, you should browse through one nearby. You can't buy anything unless you're accompanied by a member, but even if you drop in alone you can note some prices ;and com- pare them to those in your local stores. The idea of selling merchandise at Jeep discount to a limited clientele, such as trade union members, is not new. Mil - ions of New Yorkers may st ill be haunted ry the "Noy. Jerry, what's the story?" efrain of an early 1970s television com- rercial for 1GE Enterprises in the New 'ork area. The pitch pledged "slightly hove wholesale" prices on major appli- nces and furniture to anyone who could rove membership in a municipal or ade union. At its height, JGE claimed inual sales of nearly $50 million. But legations that 1GE victimized some 300 rstorners through delayed delivery and Ise claims generated enough adverse iblicity to scuttle the outfit. It went out business in 1976, Vestiges of this appeal to a hardhat 6 MONFY No-nonsense decor includes' metal racks and concrete floors. market still remain in today's warehouse Clubs. But now bankers and bakers stand cart to cart in checkout lines. The Price Club, which pioneered ttxlay's stream- lined warehouse club nine years ago. boasts a solidly middle-class clientele of about 1.4 million members. With annual sales of more than $1 billion, the Price Club is the largest warehouse retailer. But competition is moving in swiftly. COstCo, flbased in Seattle, and Sam's Wholesale Club (a division of Wal-Mart Co.) in Bentonville, Ark., both less than three years old, plan to double their dozen out- lets each by year-end. Volume is the key to success for the warehouse outlet because its gross profit margins are so thin: from 8% to I I% compared with 50% or more for depart- ment stores and between 20% and 35% for discounters. The clubs also slash I op- erating costs. They employ small staffs and, for the most part, advertise only when they open a new branch. Word of mouth does the rest. The no-nonsense de- cor adopted by most clubs is inexpensive to build and requires little maintenance. Standard issue features towering banks of unadorned metal inventory racks on con- crete floors. Most merchandise remains in the supplier' cartons; only one sample of each item is displayed. No soft, indi- rect lighting here. Bright, blue -white lights aloft eradicate all shadows. Shop- pers can line up at a score of checkout counters when they're ready to pay, but most warehouse stores have only one exit. Some stores post employers ;,I the exit to check the merchandise in file shopping cart against the receipt, thereby reducing loss from thel't. Exclusivity also holds down costs. Be- cause they know exactly how rnany num- bers they have, warehouse managers can predict daily customer volume more ac- curately and staff up accordingly. For ex- ample, only a skeleton crew is needed during the one or two hours each day when only business customers are adink- 150 M0Nt_Y If tr A 1! "We can't afford to chase even one bounced check." fed. And, of course, a customer who has to fill out a membership form listing name, address, affiliation, phone number and Social Security number is less likely to write a bad check —and will be easy to find if he does. Says Robert Voss, vice president of Sam's Wholesale Club: "Op - crating at these margins, we can't afford to chase even one bounced check." Then too, their customers make other concessions to these outlets. After arriv- ing at a warehouse club's giant parking lot, you may have to jog a mini -marathon past long rows of cars to reach the ware- house entrance. Inside, you commandeer a wide -body shopping cart (or perhaps it six -wheel dolly) and wend your way through carton canyons of goods. Some stores festoon the rafters with banners identifying departments, such as the clothing area or the fire section. Others challenge you to learn the layout yourself. You load the goods into your cart, but (lie staff will help you, for example, to put that 2 1 -cubic-foot refrigerator on a dolly. Then you trundle up to one of the score or so checkout lanes and pay with cash or check. Credit cards arc not accepted. The standard returns policy at w:,, house clubs permits you to bring back d fective goods within seven days for a full refund. All manufacturer's warranties are honored, but some appliances must he re- turned to a separate service center. Price -to -round-trip ratio Warehouse clubs are not for everyone. They're likely to hold little appeal for buyers who cherish advice, general sales ;hatter or ornate displays. And in soma :itics, a long drive to the outlet may be a Jeterrent. Says Peter Eggers, vier presi- icnt of Woden Woods, a custom-wood- VOI .ing firm in Denver: "I know there rc samte good deals at these warehouses. rut it's not s%orth it to me to drive ;a 40- nile round uip and spend half ;a day hopping. My time is worth file higher tarkups I pay shopping locally." The growing popularity of the ware- ouse cluh among Imanagers and mail elks :rhkc. however, Icstilies to the suc- :ss of the low cnsl. no -frills nxttif. Says rseph Lllis.;m nulusrry analyst at fhc in- ,'slment harking firm of Goldman Sachs New York ('fly: -I Ills is an exciting end in retailing, and I think everyone in merira will Icel it soon." 1S. i2 Ma)NI )