"Big Carts, Big Calories"

"Big Carts, Big Calories"
Tuck
November 29, 2017

“There’s a certain logic to the stores’ low prices and bulk packaging: you can get more for your money, and make fewer trips to your regular grocery store. And the membership fee of $50 or $100 pays for itself in the money you save versus shopping at a traditional supermarket. The club store industry has been riding that calculation to great success.

Between 1992 and 2013, club stores and supercenters were the fastest growing retail category in the U.S., with sales rising from $40 billion to $420 billion, and the number of club stores exploding to more than 1,600.

There’s just one problem. The whole value proposition basically falls apart in practice. As Kusum Ailawadi, the Charles Jordan 1911 TU’12 Professor of Marketing, finds in a new research paper, people who shop at club stores are spending more on food and making more shopping trips than they would if they didn’t shop there, and they’re eating more too. “We are not saving time, we are not saving money,” Ailawadi says, “and we’re increasing our consumption of non-perishable and impulse foods.””