The Wholesale Club extends furniture, produce tests - includes related article

Discount Store News, Oct 30, 1989 by Arthur Markowitz

The Wholesale Club Extends Furniture, Produce Tests

INDIANAPOLIS - The Wholesale Club is extending its core food and office supplies and accessories businesses in a number of new directions.

The $402 million chain will probe two interrelated concepts next month in its Brook Park, Ohio, store: an expanded office supply assortment and a home and office furniture center.

This month, the membership warehouse rolled out a fresh produce test in four more stores, the Brook Park unit, the two Indianapolis stores and the club that just opened in Kalamazoo, Mich. Fresh produce was initially tested in August in the Carmel, Ind., store.

These three tests follow The Wholesale Club's recent chainwide inauguration of scanning for receiving and at the checkouts. The chain is among the first membership warehouses to scan, using this technology to more accurately track goods and provide faster service to shoppers.

The three tests, if successful, "will leverage our business," said James E. Berk, president and chief operating officer. "They are natural extensions of businesses we are in and are very good at."

John F. Geisse, founder, chairman and chief executive officer, said "the tests [involving office supplies and furniture] are not defensive reactions to office supply superstores. We would have tested these ideas in any case as we already sell this merchandise and the expanded space and assortment offers more opportunities for business."

Fresh produce leverages the chain's food merchandising that attracts businesses like restaurants, commissaries and convenience stores. "We're testing 15 to 20 sku's to determine what items and sizes we should carry. We'll consider rolling out the category chainwide when we feel we have the right mix," Berk explained.

The produce test includes the use of a special perishable cooler in front of the regular freezer/cooler. In about a dozen older warehouses, smaller freezer/coolers are being replaced with larger boxes with more doors that have greater storage capacity for dairy and frozen foods.

The office supply test in Brook Park merchandises an assortment that has been expanded from about 300 sku's of office supplies and electronics like copiers and fax machines to about 1,000 sku's. "We have always focused on this category as part of our core business and we are now taking a stronger position," Berk said.

The test includes using low steel fixtures, rather than traditional high warehouse steel racks, to display the expanded office supply and electronics mix. The department will also include a business service center that will provide faxing, high-speed printing, copying and other services.

Expanded Furniture Display

Shoppers standing amidst the low displays in the department will be able to look into the experimental Office and Home Supercenter with its expanded furniture presentation. The test is being conducted in an 18,000-square-foot wing on the side of the 100,000-square-foot club.

Geisse noted that the Office and Home Supercenter wasn't modeled on the two freestanding Price Club Furnishings stores opened this summer by San Diego-based Price Club. Those units are combined home furnishings and furniture stores that merchandise categories like domestics, clocks and mirrors that aren't part of The Wholesale Club's concept.

The Wholesale Club was finalizing the office and home furniture mix at presstime. Berk said he "wasn't ready to discuss the center" beyond noting "it will be an augmented furniture presentation as we have previously expanded the office furniture assortment. We will take successful items and extend that success - display not just one Colonial couch but also a traditional and a modern couch. We'll use that kind of approach."

Berk also declined to comment on the costs of the test. But he said that "from an inventory standpoint it's a sound decision as we already sell a lot of the items. The real estate cost is absolute minimal as the space was already there."

The chain won't open Office and Home Supercenters as freestanding stores.

He explained that if the concept is viable, it would be rolled out as a 20,000-square-foot department in locations where the chain can enlarge its building.

"The concept is designed for a 20,000-square-foot site. But the space can be used for anything. The center doesn't involve any prohibitive capital costs that would stop us from changing its mix. The center gives us the opportunity to be trend merchants and to explode categories as needed," he added.