There is life in low-cost clubs yet

So it’s goodbye Cargo Club, “Cargo sell-off rocks warehouse clubs” (MW March 24) but not, in my view, the end of club warehousing.

I agree with Howard Jackson that the essence of clubs is low-cost operating companies which need to attract small businesses. However, as a long-time senior cash and carry executive, with direct involvement in UK clubs, I believe PriceCostco is diligently treading its own path to building a business in a new country. Its forbears in Price Club and Costco did this eight or nine years ago when they took the club format from the US to Canada. It knows the strength and timing of the effort needed to build business through convincing members of its value.

Of course, it is not the only foreign company to come here of late. Aldi, Netto and now Lidl are beavering away with their own plans to bring low-cost food to the UK and, like PriceCostco, are applying their Western World formula to the UK. In reverse, Sainsbury’s and Tesco are doing likewise overseas.

But back to clubs. I recently visited the Costco Bushey warehouse and was impressed by the quiet hum of a well-organised business. There was plenty of stock and customers (or rather members) about, and a sign of improving business was the level of fresh food stocks on display – including a choice of top-of-the-range Scottish beef for which Costco has achieved Aberdeen Angus accreditation.

It will be working very hard to attract members, without incurring massive marketing costs. It’s a slower process, but does enable the club to keep to the format of long-term low prices which, over the 20-year history of clubs, has proved irresistible in building loyalty.

So N&P got it wrong, as indeed did Iceland in France. Both companies recognised this and got out.

To its credit, N&P has just produced three marketing initiatives to keep faith with the independent retailer with whom it built its business more than 30 years ago. These are the high-margin promotions for the Happy Shopper brand, the launch of Manhattan Cola and its Premier retailer scheme.

Robin West

Supply Chain Consultants

Kettering

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