CPG industry expects highest growth in club channel

NEW YORK — Expect to see more consumer package goods on warehouse club shelves, as a new survey reveals this to be a high growth area for CPG companies.

According to new research from Deloitte, consumer products executives expect their highest growth to come from the warehouse club channel compared with any other retail sales channel over the next three years, including mass merchandise, grocery, and e-commerce.

Nine out of 10 (89%) of consumer package goods (CPG) executives Deloitte surveyed expect their company's sales through the warehouse club channel to increase during that time. This channel is outpacing grocery in CPG companies' focus, as less than half (49%) expect grocery sales to increase during that three-year period, while one in six (18%) expect sales in the grocery channel to decline.

Most CPG and retail executives surveyed expect warehouse clubs to increase the number of food, household goods, and personal care CPG SKUs (79%), expand their geographic presence (75%) and increase space allocated to health and wellness products (75%) in the next three years.

"Consumer products companies are responding to the increased sales and branding opportunities in the warehouse club channel, particularly in expanding segments traditionally dominated by grocery and mass merchandise channels," said Pat Conroy, vice chairman and consumer products leader, Deloitte LLP. "Club retailers have been remodeling existing stores, including allocating more space for food – particularly organic, healthy and fresh offerings – and personal care products. These retailers also continue to provide a variety of services and benefits to members – whether it is for personal consumption or for the member's business."

Industry executives claim that the reason for the increased availability of CPG products at warehouse clubs is due to the clubs' broader appeal and more frequent visits by consumers. Most of the CPG executive respondents believe that warehouse club members are making more trips (77%), spending more at club stores (78%), and are finding these stores more appealing than just three years ago (63%).