Skagen

Are Warehouse Stores Too Dependant On Membership Fee Income?

The obvious – and missing – conclusion is that the membership fee is not standalone revenue. Its merely an up front payment on your your annual shopping commitment when you join and it in fact induces customers to shop more and take advantage of their sunk costs. Which is why these things are called “Wholesale....Clubs”.

You might something if you pointed out that retail margins are pretty low if $50 per customer can make up 75% of annual profit. But breaking out the annual membership “fee” as supposedly independent revenue is a pointless exercise.

You could also view the 75% as an indicator that these companies have customers who are extremely commmited.