Club Store Packaging
Club store packaging is an important part of a successful warehouse club item. A club store package will answer item questions, explain product benefits and help sell an item. A club store package will also address club distribution and merchandising strategies. The following provides a few key club store packaging concepts.
Five Feet, Five Seconds – When it comes to your products’ club store packaging design, your goal is to attract attention. Within approximately five feet of your item and within approximately five seconds of seeing your SKU, a member should be “drawn” to your item.
Product Visibility – A club store package design should clearly show a member what is being purchased. See Topps top selling candy item variety box at Sam’s Club on the left.
Larger Packages – Club buyers evaluate the package size of their products to determine items that can be sold in larger quantities.
Transitioning an item into a larger size benefits the clubs in five ways. First, create a better value. Second, increased average transaction. Third, consumers who purchase larger packages consume those items at a faster rate. Fourth, there are higher gross margin dollars. Lastly, improved distribution efficiency.
Pallet Skirts, Wraps and Butterfly Shroud – There are many club items whose volume does not require a full pallet display. As a result, the vendor creates a half pallet display that sits on empty pallets. Corrugated wrap promoting the item or vendor surrounds the pallet.
Therefore, a member perceives a full pallet of merchandise is stocked. This creates the assumption in the member’s mind that the item is popular and successful. The pallet’s SKU count is lowered. The club and vendor benefit, concurrently. This reduces inventory risk and maximizes turnover.
Bonus Items – One of the easiest ways for warehouse club buyers to build value into club store packaging is to include bonus items for free or at least not at the full cost of those additional products. The Splenda SKU from Sam’s Club on the right is a good example.
These bonus items can include batteries for an electronic device, an item associated with a product that is typically sold separately, a coupon for additional products or services outside the club channel, a travel size item that is associated with the club SKU or any additional product that can add value or encourage a member to purchase.
Pallet Facing – Typically, in the aisles, Costco merchandises product facing the 48-inch (long) side of the pallet. BJ’s and Sam’s merchandise product facing the 40-inch (short) side of the pallet. This difference enables BJ’s and Sam’s to merchandise three SKUs in a merchandising bay compared to two items at Costco .
Club vendors should make sure their pallet and their club store packaging is engineered to be merchandised from both sides of the pallet. Ensuring it is effectively seen and promoted from all four sides is an important factor in a club item’s success.
Vouchers – These types of products do not include inventory on the sales floor. The actual gift card, product or coupon is stored in the locked cages near the front-end register.
The club stocks a full pallet of display cards to maximize product visibility to generate sales. Members take the display card to the register and pay for the merchandise. The item is then retrieved by a club employee. For vendors, standard retail packaging can be used for these items.
The gift card and out-of-the-box services have included: restaurants, sporting events, airlines, hotels, airport parking, extended warranty protection, rounds of golf and movies. The non-saleable pallet SKUs are typically high value products like watches, jewelry, tablets, cameras and new release video games.
Organic – Consumers view organic merchandise as higher quality than non-organic products. As the clubs stock more organic products, a key benefit is that members will increasingly associate the club channel with higher quality products. See picture below of Nature’s Path organic instant oatmeal from Sam’s Club.
Additionally, organic items also offer: higher price points, the savings differential compared to non-club retailers is larger than normal and organic items add to the club treasure hunt philosophy.
BJ’s Half Pallets – A typical BJ’s (114,000 square feet) is approximately 20,000 to 32,000 square feet smaller than a typical Sam’s Club (134,000 square feet) or Costco (146,000 square feet).
However, a typical BJ’s stocks 5,800 items compared to a typical Costco which stocks 3,600 products and a typical Sam’s Club which stocks 4,900 SKUs.
To be able to fit the extra 900 to 2,200 products in a smaller footprint, BJ’s utilizes pallets that are approximately one-half to two-thirds the height of a traditional 52-inch high pallet. BJ’s merchandises two SKUs in the same space a single SKU is stocked with these shorter pallets.
Co-Branding – Developing private label brands is important for BJ’s, Costco and Sam’s Club. One strategy the clubs follow to increase trust in their private label is to co-brand with existing brand name products.
The private label name/logo along with the consumer brand is included on the club store packaging. Therefore, the members’ associate the quality of the brand to that private label item.
For co-branding suppliers, deeper business relationships can be formed with the club operator. Also, co-branded items are more likely to be stocked for a longer period of time.