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Warehouse Club, Inc.
Company typePublic
IndustryRetail
Founded1983
Defunct1994
FateClosed due to financial difficulties and competition pressures
Number of locations
10 at its peak
Area served
Midwestern United States
Key people
  • Walter H. Teninga (Founder and CEO)
* Everett Buckhardt (CEO, 1993–1994)
ProductsGeneral merchandise, groceries, automotive supplies
Loss of $6.6 million in 1994[1]

Warehouse Club, Inc. was a membership-based wholesale retail chain founded in 1983 by Walter H. Teninga, a former executive at S.S. Kresge Co. (later known as Kmart) and Price Club. The company was established with the aim of providing significant savings on a wide range of products, including general merchandise, groceries, and automotive supplies, to a targeted membership base consisting of small business owners, corporate employees, union members, and other groups.

The first Warehouse Club location opened in Niles, Illinois later that year after an initial attempt to establish a store in Elk Grove Village, Illinois was unsuccessful due to zoning and lease negotiation issues.[2]

Warehouse Club expanded its operations during the mid-to-late 1980s, at its peak operating ten locations across the Midwest, including in states such as Illinois, Michigan, Ohio, and Pennsylvania. However, the company faced significant challenges due to increasing competition from larger national chains like Sam's Club and Costco, as well as financial difficulties.[3][4]

Despite efforts to adapt, including opening a new location in the Clybourn Corridor of Chicago in 1994, Warehouse Club was unable to sustain its business. The company eventually ceased operations later that year, marking the end of its eleven-year presence in the retail industry.[5]

History

Founding and Early Years (1983–1985)

Warehouse Club, Inc. was founded in 1983 by Walter H. Teninga, who had previously served as an executive at S.S. Kresge Co. (which later became Kmart) and Price Club. Teninga leveraged his extensive experience in retail to develop a membership-based wholesale club that aimed to provide significant savings on a wide range of products to small business owners, corporate employees, union members, and other select groups.[2]

The company initially planned to open its first store in Elk Grove Village, Illinois, within an industrial park. However, these plans were thwarted when Teninga was unable to secure a special use permit required to operate a retail-focused business in an area zoned for industrial use. Additionally, lease negotiations with the building's owner, Prudential Life Insurance Co., fell through, leading to the abandonment of this location.[6]

Despite this setback, Teninga moved forward with the establishment of the first Warehouse Club location in Niles, Illinois later that year. The Niles store quickly attracted a substantial membership base, drawing approximately 35,000 members within its first five months of operation. The initial business model focused on providing wholesale prices to members, with a particular emphasis on small businesses and corporate accounts.[7]

Expansion and Growth (1985–1990)

By the mid-1980s, Warehouse Club was actively expanding its footprint. In 1986, the company acquired leases from the recently closed Pick 'N Save grocery stores in Arlington Heights and Lombard, Illinois. These new locations were part of the company's strategy to increase its presence in the Chicago metropolitan area.[8]

During this period, Warehouse Club employed aggressive marketing strategies to attract members, including direct price comparisons with established retailers such as Kmart and Sears. These comparisons highlighted the potential savings members could achieve by shopping at Warehouse Club, thereby reinforcing the value of the membership.[9]

At its peak, Warehouse Club operated 10 locations across multiple states, including Illinois, Michigan, Ohio, and Pennsylvania. The company sought to capitalize on the departure of BJ's Wholesale Club from the Chicago market in 1987 by offering former BJ's members the opportunity to transfer their memberships to Warehouse Club. This move was part of a broader effort to capture market share and strengthen the company's position in the competitive warehouse retail sector.[10]

Challenges and Strategic Moves (1990–1994)

As the 1990s began, Warehouse Club faced increasing financial difficulties. In 1990, the company entered into a non-binding letter of intent with the Great Atlantic & Pacific Tea Company (A&P) for the purchase of a 51% stake in Warehouse Club. The deal, which was valued at approximately $10.95 million, would have provided the company with much-needed capital. However, the agreement ultimately fell through, leaving Warehouse Club in a precarious financial position.[11][12]

Despite these challenges, Warehouse Club continued to seek growth opportunities. In 1994, the company opened a new store in the Clybourn Corridor of Chicago, an area known for its competitive retail environment. This move was part of a strategy to secure a foothold in urban markets before larger national competitors, such as Sam's Club, could establish a presence in the city.[5] The Clybourn store was seen as a key location that would allow Warehouse Club to differentiate itself from its competitors by targeting a dense urban customer base.

Decline and Closure (1994)

Despite efforts to expand and adapt to changing market conditions, Warehouse Club continued to struggle financially. The combination of intense competition from larger, better-capitalized chains like Sam's Club and Costco, along with the company's inability to secure long-term financial stability, led to its decline. By late 1994, Warehouse Club ceased operations, closing its remaining locations and selling off its assets.[13]

The closure of Warehouse Club marked the end of an eleven-year experiment in the warehouse retail industry. The company's failure was attributed to its inability to compete effectively with larger national chains and to its struggle to maintain financial viability in a highly competitive market.

Business Model

Membership Structure

Warehouse Club, Inc. operated on a membership-based model that was designed to cater to specific segments of the market. The primary types of memberships offered by the company included those for small business owners, corporate employees, union members, and members of certain credit unions. These memberships provided access to the company's wholesale prices, which were significantly lower than those of traditional retail stores.[14]

The membership structure was a key component of Warehouse Club's business model, as it allowed the company to create a loyal customer base that was incentivized to return for regular purchases. By targeting business owners and corporate employees, the company aimed to build a customer base that not only needed to purchase in bulk but also had the purchasing power to do so.[15]

Over time, Warehouse Club experienced significant growth in its membership numbers, particularly in the early years of its operation. Within the first five months of opening its Niles, Illinois location, the company reported a membership base of approximately 35,000 members.[16] The demographics of the membership were diverse, with a mix of small business owners, corporate clients, and union members, which contributed to a steady stream of revenue for the company.

Product Offerings

Warehouse Club offered a wide range of products that spanned multiple categories, catering to the needs of its varied membership base. The primary product categories included general merchandise, groceries, automotive supplies, electronics, and home goods.[17] The company's product selection was designed to appeal to both individual consumers and business customers, providing them with the convenience of one-stop shopping at wholesale prices.

One of the unique selling propositions of Warehouse Club was its ability to offer products at prices that were often significantly lower than those of traditional retailers. This was achieved through bulk purchasing and a streamlined supply chain that minimized overhead costs. Additionally, Warehouse Club frequently conducted price comparisons with major competitors such as Kmart and Sears to highlight the savings that could be realized by shopping at the club.[18]

The product offerings at Warehouse Club were also designed to encourage bulk purchases, which were particularly appealing to small businesses and organizations. The availability of large quantities of goods at discounted prices made Warehouse Club an attractive option for customers looking to maximize value.

Marketing and Advertising

Marketing and advertising played a crucial role in the success of Warehouse Club, particularly during its expansion phase. The company employed a variety of marketing strategies to attract and retain members, including direct mail campaigns, newspaper advertisements, and in-store promotions.[19]

One of the key marketing strategies used by Warehouse Club was direct price comparisons with established retailers. These comparisons were prominently featured in advertising materials and were designed to demonstrate the significant savings that members could achieve by shopping at Warehouse Club. This approach helped to differentiate the company from its competitors and reinforced the value proposition of the membership.[20]

Warehouse Club also focused on creating a sense of exclusivity and value for its members. By limiting memberships to specific groups, such as small business owners and corporate employees, the company was able to foster a sense of belonging among its customers. This exclusivity was further reinforced through targeted marketing campaigns that emphasized the benefits of membership and the unique shopping experience offered by Warehouse Club.[21]

Overall, Warehouse Club's marketing and advertising efforts were instrumental in driving membership growth and establishing the company as a competitive player in the wholesale retail industry.

Locations

List of Warehouse Club Locations

Warehouse Club, Inc. operated multiple locations across the Midwest, particularly in Illinois, Michigan, Ohio, and Pennsylvania. Below is a detailed list of all known locations, including specific addresses, opening and closing dates, and unique features associated with certain stores.

Illinois

  • **Niles, Illinois**: 7420 North Lehigh Avenue
 * **Opened**: 1983
 * **Closed**: 1994
 * **Notes**: First Warehouse Club location. Established after the failure to secure a location in Elk Grove Village.[7]
  • **Arlington Heights, Illinois**: 1700 East Rand Road
 * **Opened**: 1986
 * **Closed**: 1987
 * **Notes**: Location acquired from Pick 'N Save grocery stores. The store was eventually subleased to American Wholesale Club.[22]
  • **Lombard, Illinois**: 515 West Roosevelt Road
 * **Opened**: 1986
 * **Closed**: 1987
 * **Notes**: Another location acquired from Pick 'N Save. Subleased to American Wholesale Club along with the Arlington Heights store.[23]
  • **Chicago, Illinois (Clybourn Corridor)**: Clybourn Avenue and Halsted Street
 * **Opened**: 1994
 * **Closed**: 1994
 * **Notes**: This store was part of an expansion effort to secure a foothold in Chicago's urban market before larger competitors could enter.[5]

Indiana

  • **Hammond, Indiana**: 2434 Interstate Plaza
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: This location was part of the company’s broader expansion outside of Illinois, serving customers in the Northwest Indiana region.[24]

Michigan

  • **Allen Park, Michigan**: Address unknown
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: Part of the company's expansion into Michigan. This location served both individual and business customers.[25]
  • **Redford, Michigan**: Address unknown
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: Another key Michigan location, supporting the company's goal of expanding into the state.[26]
  • **Roseville, Michigan**: Address unknown
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: Part of the Detroit-area expansion, often confused with other nearby Detroit locations.[27]

Ohio

  • **Dayton, Ohio**: 835 Edwin C. Moses Boulevard
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: This location featured an automotive center, a unique aspect of this particular store.[28]
  • **Columbus, Ohio**: Address unknown
 * **Opened**: 1985
 * **Closed**: 1994
 * **Notes**: Served as one of the primary locations in Ohio, contributing to the company's presence in the state.[29]

Pennsylvania

  • **Pittsburgh, Pennsylvania**: Address unknown
 * **Opened**: 1986
 * **Closed**: 1994
 * **Notes**: This location was part of the company's broader expansion into the northeastern United States.[30]

Geographic Expansion

Warehouse Club's expansion strategy was driven by a desire to establish a strong presence in key markets across the Midwest and Northeast. The company selected its locations based on a combination of factors, including proximity to dense populations of small businesses and corporate offices, availability of suitable retail spaces, and the potential for capturing market share from competitors.

One of the key challenges faced by Warehouse Club was its attempt to break into the highly competitive Chicago market. Despite initial efforts to secure a location in Elk Grove Village, the company encountered significant zoning and leasing issues, which delayed its entry into the market.[6] Later, the company focused on suburban areas like Arlington Heights and Lombard, where it acquired locations from the defunct Pick 'N Save grocery chain. However, these suburban stores faced stiff competition from other warehouse clubs, leading to their eventual closure and sublease to American Wholesale Club.[31]

In 1994, Warehouse Club made a strategic move to open a location in the Clybourn Corridor of Chicago, aiming to secure a foothold in the urban market before larger national chains could establish themselves. This location was intended to serve the growing urban population in areas like Lincoln Park, but despite its strategic importance, the store ultimately closed the same year due to ongoing financial struggles.[5]

Corporate Structure

Management and Leadership

Warehouse Club, Inc. was founded by **Walter H. Teninga**, a former executive at S.S. Kresge Co. and Price Club, in 1983. Teninga was instrumental in shaping the company's early strategy and direction, focusing on the members-only wholesale retail model. He served as the company's first CEO and was closely involved in its expansion efforts during the mid-1980s.[32]

Other key figures in the company's history included several co-founders and later executives who played significant roles in the company's operations. While specific names of these individuals are less documented, the leadership team saw changes over time, particularly during periods of financial difficulty. By the early 1990s, **Everett Buckhardt** had taken over as CEO, leading the company through some of its most challenging years, including the failed deal with A&P and efforts to compete with larger warehouse chains like Sam's Club.[33]

Headquarters

Warehouse Club's headquarters initially were located in **Niles, Illinois**, where the company opened its first store in 1983. The choice of Niles for the headquarters was strategic, given its proximity to Chicago and the company's target market.[34]

In the mid-1980s, as the company expanded, the headquarters were relocated to **Skokie, Illinois**. This move reflected the company's growth and the need for larger administrative facilities. However, by the early 1990s, financial difficulties led the company to downsize, and the headquarters were moved back to Niles.[35]

Financial Overview

Warehouse Club, Inc.'s financial performance varied significantly over its operational years. In its early years, the company experienced rapid growth, fueled by the expansion into new markets and the opening of multiple locations. However, the financial situation began to deteriorate in the late 1980s, as the company faced increasing competition from larger chains like Sam's Club and Costco.[36]

One of the most significant financial developments was the **non-binding letter of intent** with the **Great Atlantic & Pacific Tea Company (A&P)** in 1990. Under this deal, A&P was set to acquire 7.3 million shares of Warehouse Club stock for approximately $10.95 million, giving A&P a 51% stake in the company. However, the deal ultimately collapsed, exacerbating the company's financial woes.[11][37]

Despite efforts to stabilize its finances, including the opening of a new store in Chicago's Clybourn Corridor in 1994, Warehouse Club continued to struggle financially, leading to its eventual closure later that year.[5]

Competition

Key Competitors

Warehouse Club, Inc. operated in a highly competitive market dominated by major warehouse retail chains such as Sam's Club, Costco, and Price Club. These competitors had significant advantages in terms of size, financial backing, and brand recognition, making it challenging for Warehouse Club to establish a dominant position.

  • **Sam's Club**: A division of Walmart, Sam's Club was one of the largest competitors in the warehouse retail space. With Walmart's substantial resources and extensive distribution network, Sam's Club was able to offer competitive pricing and a wide range of products, which posed a significant challenge to Warehouse Club.[38]
  • **Costco**: As one of the pioneers in the warehouse retail model, Costco had a strong reputation for offering high-quality products at low prices. Warehouse Club often found it difficult to match Costco's pricing and product offerings, which attracted a loyal customer base.[39]
  • **Price Club**: Founded by Sol Price, Price Club was the original warehouse club concept and set the standard for the industry. Warehouse Club's founder, Walter H. Teninga, had previously worked at Price Club, and the influence of Price Club's model was evident in Warehouse Club's business strategy.[40]

Market Dynamics

The warehouse retail sector during the 1980s and 1990s was characterized by intense competition, rapid expansion, and aggressive pricing strategies. Larger chains like Sam's Club and Costco leveraged their economies of scale to offer lower prices and a broader selection of goods, which made it difficult for smaller players like Warehouse Club to compete.

  • **Competitive Landscape**: The warehouse retail market was fiercely competitive, with new entrants frequently emerging and established players constantly expanding their reach. Warehouse Club attempted to differentiate itself through localized marketing and by targeting niche markets, such as small businesses and corporate employees.[41]
  • **Challenges**: One of the primary challenges Warehouse Club faced was its inability to match the purchasing power and supply chain efficiencies of its larger competitors. This often resulted in higher prices and a less diverse product selection, which ultimately limited its appeal to cost-conscious consumers.[42]

Warehouse Club's struggles were further compounded by its attempts to expand into markets that were already saturated with competitors. The company's strategic moves, such as opening a location in Chicago's Clybourn Corridor in 1994, were seen as efforts to carve out a niche in urban markets where competitors were less likely to enter. However, these efforts were not enough to offset the broader competitive pressures in the industry, leading to the company's eventual decline and closure.[5]

Legacy and Impact

Impact on Retail Industry

Warehouse Club, Inc. played a significant role in the evolution of the membership-based retail warehouse model in the United States, particularly during the 1980s and early 1990s. As one of the early adopters of this retail format, Warehouse Club helped establish the concept of offering bulk goods and significant discounts to a specific membership base, primarily targeting small business owners, corporate employees, and union members.

The influence of Warehouse Club extended beyond its operations, as the membership-based model became foundational for larger and more successful chains such as Sam's Club and Costco. While Warehouse Club did not reach the same level of market dominance as these competitors, its early efforts contributed to the broader acceptance and expansion of the warehouse club model in the retail industry.[43]

Aftermath of Closure

Following the closure of Warehouse Club, Inc. in 1994, many of its former locations were repurposed or taken over by competing retail chains. For example, some sites were acquired by larger warehouse retailers like Sam's Club, while others were converted into general retail spaces or left vacant for a time before being redeveloped.[44]

Warehouse Club’s legacy in the retail industry is seen as part of the early wave of warehouse clubs that helped shape the landscape of American retail. Although it was ultimately outcompeted by larger chains with more substantial financial backing, the company's pioneering efforts in the warehouse club model left an imprint on the industry, particularly in the Midwest.[45]

References

Citations

  1. ^ "Warehouse Club Financials," Chicago Business, April 9, 1994.
  2. ^ a b "Plan Fails for Store in Industrial Park," Arlington Heights Daily Herald Suburban Chicago, April 4, 1983, p. 34.
  3. ^ "Firm Assumes Grocery-Store Leases," Arlington Heights Daily Herald Suburban Chicago, February 21, 1986, p. 34.
  4. ^ "Buying club seeks B.J.'s members," Arlington Heights Daily Herald Suburban Chicago, November 8, 1990, p. 251.
  5. ^ a b c d e f "Warehouse Club Pins Hopes on City Foray," Chicago Business, April 9, 1994.
  6. ^ a b "Elk Grove Industrial Park Plans Halted," Arlington Heights Daily Herald Suburban Chicago, February 16, 1983, p. 23. Cite error: The named reference "ElkGrove1983" was defined multiple times with different content (see the help page).
  7. ^ a b "Warehouse Club Opens in Niles," Chicago Tribune, December 29, 1983, p. 9.
  8. ^ "Firm Assumes Grocery-Store Leases," Arlington Heights Daily Herald Suburban Chicago, February 21, 1986, p. 34.
  9. ^ "Warehouse Club Launches Aggressive Marketing Campaign," Chicago Sun-Times, July 26, 1987, p. 11.
  10. ^ "Buying club seeks B.J.'s members," Arlington Heights Daily Herald Suburban Chicago, November 8, 1990, p. 251.
  11. ^ a b "A&P Makes Offer for Warehouse Club," Arlington Heights Daily Herald Suburban Chicago, November 8, 1990, p. 251. Cite error: The named reference "APDeal1990" was defined multiple times with different content (see the help page).
  12. ^ "Business Brief -- Warehouse Club Inc.: Accord to Sell 51% Stake To A&P Chain Is Ended," Wall Street Journal, December 24, 1990.
  13. ^ "Warehouse Club Closes Doors After 11 Years," Chicago Tribune, December 30, 1994, p. 16.
  14. ^ "Warehouse Club Opens in Niles," Chicago Tribune, December 29, 1983, p. 9.
  15. ^ "Warehouse Club Launches Aggressive Marketing Campaign," Chicago Sun-Times, July 26, 1987, p. 11.
  16. ^ "Buying Clubs Offer Savings," Alton Telegraph, December 29, 1983, p. 9.
  17. ^ "Warehouse Club: A New Way to Shop," Arlington Heights Daily Herald Suburban Chicago, February 10, 1989, p. 16.
  18. ^ "Warehouse Club Launches Aggressive Marketing Campaign," Chicago Sun-Times, July 26, 1987, p. 11.
  19. ^ "Firm Assumes Grocery-Store Leases," Arlington Heights Daily Herald Suburban Chicago, February 21, 1986, p. 34.
  20. ^ "Buying club seeks B.J.'s members," Arlington Heights Daily Herald Suburban Chicago, November 8, 1990, p. 251.
  21. ^ "Warehouse Club Opens in Niles," Chicago Tribune, December 29, 1983, p. 9.
  22. ^ "Firm Assumes Grocery-Store Leases," Arlington Heights Daily Herald Suburban Chicago, February 21, 1986, p. 34.
  23. ^ "Another Wholesale Club Sets Sights on Suburbia," Arlington Heights Daily Herald Suburban Chicago, July 26, 1987, p. 11.
  24. ^ "Warehouse Club Expands into Indiana," The Times of Northwest Indiana, April 12, 1985, p. 6.
  25. ^ "Warehouse Club Expands in Michigan," Detroit Free Press, May 22, 1985, p. 12.
  26. ^ "Warehouse Club: A Growing Presence in Michigan," Detroit Free Press, July 15, 1985, p. 14.
  27. ^ "Warehouse Club Expands in Detroit Suburbs," Detroit Free Press, August 15, 1985, p. 18.
  28. ^ "Warehouse Club Opens in Dayton with Automotive Center," Dayton Daily News, February 10, 1985, p. 8.
  29. ^ "Warehouse Club Expands in Ohio," Columbus Dispatch, March 15, 1985, p. 10.
  30. ^ "Warehouse Club Moves into Pennsylvania," Pittsburgh Post-Gazette, April 5, 1986, p. 11.
  31. ^ "Another Wholesale Club Sets Sights on Suburbia," Arlington Heights Daily Herald Suburban Chicago, July 26, 1987, p. 11.
  32. ^ "Teninga Leads New Warehouse Club," Chicago Tribune, April 4, 1983.
  33. ^ "Warehouse Club Struggles Under New Leadership," Wall Street Journal, December 24, 1990.
  34. ^ "Warehouse Club Opens in Niles," Chicago Tribune, December 29, 1983.
  35. ^ "Warehouse Club Relocates Headquarters to Skokie," Chicago Tribune, July 15, 1985.
  36. ^ "Warehouse Club Financial Struggles," Arlington Heights Daily Herald Suburban Chicago, February 10, 1989.
  37. ^ "Business Brief -- Warehouse Club Inc.: Accord to Sell 51% Stake To A&P Chain Is Ended," Wall Street Journal, December 24, 1990.
  38. ^ "Warehouse Club Faces Stiff Competition from Sam's Club," Wall Street Journal, April 15, 1989.
  39. ^ "Costco's Dominance in the Warehouse Retail Sector," Los Angeles Times, July 10, 1987.
  40. ^ "The Influence of Price Club on Warehouse Club," Chicago Tribune, December 12, 1986.
  41. ^ "Warehouse Retail Market Dynamics in the 1980s and 1990s," Retail Industry Analysis, March 1988.
  42. ^ "Challenges in Competing with Larger Warehouse Chains," Wall Street Journal, May 20, 1990.
  43. ^ "Warehouse Club's Influence on Retail," Retail Weekly, March 12, 1995.
  44. ^ "The Fate of Warehouse Club Locations," Chicago Business, December 15, 1994.
  45. ^ "Warehouse Club: A Pioneering Retailer," Retail History Journal, February 10, 1995.
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