There’s a Costco to one side of Gwendolyn Hammer’s house and a Sam’s Club to the other. But when the 28-year-old needs 12-packs of paper towels, or 36 rolls of toilet paper, she heads online instead.
Once a month she uses her smartphone to place a bulk order on Boxed.com, a website founded five years ago as a millennial-friendly alternative to warehouse wholesalers. There is no membership fee, and most orders arrive within two days. Other times, she stocks up using Amazon Prime.
“I’ve never had a Costco membership, even though I knew shopping there would likely end up saving me money,” said Hammer, who lives in Utah Valley, Utah, and grew up shopping at Costco with her parents.
Warehouse clubs such as Costco, Sam’s Club and BJ’s Wholesale Club have for decades been an American staple: a place where families can stock up on bulk items, try free samples and spend the better part of a weekend morning meandering through their aisles.. But as more of Americans’ buying shifts online, some retail analysts say warehouse clubs may largely be left behind.
“Costco has been one of the least digitally forward companies out there,” said Sucharita Mulpuru, an analyst at the research firm Forrester.
Warehouse retailers, she added, have been among the slowest to shift their business online, offer home delivery or make other sweeping changes to compete with the likes of Amazon.com.
There are signs that the sector is falling behind: Warehouse clubs and supercenters cut an average of 2,500 jobs each month in 2017, reversing a longtime trend of steady growth, according to a Washington Post analysis of Labor Department data. Between 2009 and 2016, warehouse stores had added an average of 3,000 workers each month.
The sector received more bad news this month, when Walmart announced it would close 63 Sam’s Club stores, affecting an estimated 10,000 workers. In a tweet, the company said the closures would help “better align” its physical locations with its strategy. (Ten locations will reopen as e-commerce fulfillment centers.)
“Today’s adults are not spending a lot of time shopping like my parents’ generation did,” said Kim Whitler, a marketing professor at the University of Virginia’s Darden Business School. “Gen X, Gen Y, Gen Z, they’re all time-starved and want to order groceries while they’re riding a bus to work.”
Chieh Huang founded Boxed in 2013 with a simple idea: Deliver bulk goods to shoppers who don’t live near a wholesale club or have a car to get to one.
What he quickly found, though, was a different sort of demand.
“We actually found a bigger problem to solve, which is that folks didn’t have the time or patience to go,” even if they lived near a Costco or Sam’s Club, Huang said recently at the National Retail Federation’s annual conference in New York.
In other words, it wasn’t physical proximity or access to warehouse stores that were keeping customers away but rather a lack of willingness to shop for toilet paper and dish soap in person.
Huang’s company, which began as a mobile app and quickly added an online site, has grown rapidly to fill a niche among young shoppers. Today, the company has more than $100 million in annual sales, up from $8 million in 2014.
More than 60 percent of Boxed shoppers are ages 25 to 44, he said. At traditional wholesale clubs, the demographic skews the other way, with baby boomers and seniors making up the majority of members.
Huang added that he doesn’t think today’s 20- and 30-somethings will suddenly begin shopping at traditional wholesale clubs – even as they get married, have children and move to bigger homes.
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