Warehouse Club Packaging
An effective club package will not only answer potential member questions, explain benefits and features and help sell an item but also address club distribution and merchandising strategies. The following are some packaging concepts that can increase your product’s chances of success.
Five Feet, Five Seconds
As a warehouse club supplier, when it comes to your product’s package, design and message, your goal is simple: within approximately five feet of your item and within approximately five seconds of seeing your SKU, a member, who does not have your product on his shopping list, should be “drawn” to your item in some way.
Product Visibility – A club package design that clearly shows a member what is being purchased can tip the balance between a member walking past an item or stopping and looking.
Pallet Billboard – A unique packaging approach is to merge the product package and display case into a single unit to leverage the marketing space that a full pallet of product provides.
A large food vendor said, “Think about packaging as a pallet billboard instead of at the item level. Buyers are looking to simplify the messaging to make it easier for members to understand.”
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.
Warehouse club items must be able to safely, efficiently and securely move through the supply chain. Once they arrive at the club location, those pallets should be display ready. The goal is to reduce the number of times a club employee “touches” a pallet not just during shipment but also while in that club location.
Durability – In Club – Suppliers can’t just consider how their pallet display holds up as a single pre-shipped unit. The display case or PDQ needs to structurally perform in the club location until all the product is sold. This may mean club employees hand stack the display case in a different way than what was intended by the engineers. One of the goals for any club supplier is to create “zero maintenance” for club merchandisers.
Larger Packages – One strategy that club buyers constantly follow is to evaluate the package size of the products they purchase to determine what items could be sold in larger quantities. Transitioning an item into a larger package size benefits the clubs in five ways. The first advantage results in a better member value as a lower unit cost can be achieved. The next four benefits positively influence club operations: the club’s average transaction is increased, studies show that consumers who purchase larger packages consume those items at a faster rate resulting in quicker repeat sales, higher gross margin dollars are generated and distribution efficiency is improved with more product being shipped.
Half Pallets – A typical BJ’s (108,000 square feet) is approximately 26,000 to 38,000 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 5,418 items compared to a typical Costco at 3,241 products and a typical Sam’s Club at 4,568 SKUs.
To be able to fit the extra 850 to 2,200 products in a smaller footprint, BJ’s utilizes pallets that are approximately one-half the height of a traditional 52-inch high pallet. These shorter pallets enable BJ’s to merchandise two SKUs in the same space a single SKU is stocked and still allow members to physically retrieve the product in the steel.
Pallet Facing – Typically, in the aisles, Costco merchandises product facing the 48-inch (long) side of the pallet while BJ’s and Sam’s merchandise product facing the 40-inch (short) side of the pallet. This strategy difference enables BJ’s and Sam’s, who stock more items than Costco, to merchandise three SKUs in a merchandising bay compared to Costco which merchandises two items in a merchandising bay.
Club vendors should make sure their pallet is engineered so it can be effectively seen and merchandised from both the 40-inch side and the 48-inch side. Club vendors have no control how their pallet and product display is merchandised at the club location. Ensuring it is effectively seen and promoted from at least three sides and preferably four sides is an important factor in a club item’s success.