TOLEDO, Ohio -- For landscape contractor Terry Hubbard, joining the Costco Wholesale Club was less about buying bulk trays of muffins for morning snacks than cutting costs at his business. It seems like it's going to be a savings, said the owner of Acu-Turf Toledo, who plans to buy office supplies at the national chain, which is to open its first metro Toledo, Ohio.
At the retailing giant, businesses like Hubbard's are in a minoritybut a treasured one, said The Toledo Blade. They are part of a shift in the supply chain serving small business. Convenience [image-nocss] stores, restaurants, janitorial services and other firms once depended heavily on wholesalers and specialized distributors for their supplies as well as for merchandise to re-sell to customers. But increasingly, they are shopping at the same places as other consumers.
They are watching advertising circulars for hot sales on name-brand soda, and buying up bottles of aspirin at the corner dollar store and hot dogs in bulk at Gordon Food Service Marketplace stores. The shopping sprees include warehouse clubs like Costco and rival Sam's Club, retailing experts said.
The majority of my convenience store customers are shopping everywhere, Matt Kinnee, manager of the Toledo branch of Detroit-based United Wholesale Grocery Co., told the newspaper. They're cherry-picking.
Costco, the nation's fifth-largest retailer, with annual sales of $64 billion, works hard to recruit businesses. It's a large part of what we do, Mark Facemire, assistant general manager of the Toledo store, told the Blade. It's how we got started.
The firm sells meat to restaurants and office supplies to service firms, he said. He would not say how many of the firm's expected 10,000 to 15,000 Toledo members will be businesses. But the numbers likely will be consistent with those of other cities.
Costco said in a federal securities filing late last year that businesses represented 23% of primary memberships as of September 3. That is down from 24% in 2005. But it is still nearly a quarter of Costco's main category of memberships. In all, the chain counts nearly 48 million card holders.
For wholesalers, every bulk package of toilet paper purchased at a warehouse store represents lost sales, said the report. But firms like United Wholesale Grocery are fighting back, it added.
Wholesale clubs often sell products in bulk packages unsuitable for the shelves of small c-stores, Kinnee said. In contrast, he sometimes divides cases of canned goods in half to meet customers' needs. Do they beat me on price on some candy items? Sure, he said. But lots of my customers say they don't like shopping at Sam's Clubs because of how long it takes them to get in and out. I can have them out in four or five minutes.
He said he expects Costco to hurt sales, but he is unsure of how much. Unlike Costco, United Wholesale does not sell to individuals and families. Customers must hold vendor's licenses.
Competition is not limited to wholesale clubs and places like Gordon Foods, the report said. Rivals include a similar cash-and-carry wholesaler, A.H. Jamra Co., and a growing number of wholesalers that offer delivery services.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.