Operations and Supply Chain Management Commons^™

Shopping Activity At Warehouse Club Stores And Its Competitive And Network-Density Implications, Stanley Frederick W.T. Lim, Elliot Rabinovich, Sungho Park, Minha Hwang

School of Business: Faculty Scholarship

Warehouse club (WC) retailers have typically expanded to new markets using stand‐alone stores, rather than pursuing dense store networks as other (non‐WC) retailers have in the past. While this strategy generates operating efficiencies, it also imposes high travel costs on households to shop, which calls into question WC stores’ resilience to spatial competition from stores operating other formats. We examine this phenomenon by using data on households’ shopping activity across markets served by Costco Wholesale stores. Specifically, we evaluate these stores’ resilience to spatial competition by estimating the share of households’ expenditures relative to travel costs to shop at the …