Warehouse Clubs Compete for In-Store and Online Tire Sales

Bob Ulrich
Posted on May 3, 2018
Since the first of the year, the store count at Sam's Club has decreased by 63 outlets.
Since the first of the year, the store count at Sam's Club has decreased by 63 outlets.

Warehouse clubs account for 9% of the replacement consumer tire market in the U.S., according to the 2018 Modern Tire Dealer Facts Issue. In 2017, that represented 21.5 million tires.

Their growth hasn’t been as spectacular as, say, the auto dealership channel, but it has been steady, in part because overall store count has risen steadily. That may change this year.

In 2007, there were 1,147 Sam’s Club, Costco Wholesale and BJ’s Wholesale Club outlets in the U.S. Last year, there were 1,399 – a 22% increase over that 10-year span -- broken out as follows:

Wholesale club                Stores/2007     Stores/2017

Sam’s Club                         586                   660

Costco Wholesale Corp.    385                   518

BJ’s Wholesale Club Inc.   176                   221

This year, however, parent company Wal-Mart Stores Inc. has already closed 63 Sam’s Club outlets. If there are no other changes, that would be enough to drop warehouse club market share to 8.5%, the distribution channel’s first decrease since I can remember.

Up to 12 of the stores will be converted to eCommerce facilities, which will no doubt inventory tires. The need to “better fulfill online orders” was cited by USA Today and other news sources as the main reason for the changeover.

In a Sam’s Club press release, CEO and President John Furner would only say “Transforming our business means managing our real estate portfolio, and Walmart needs a strong fleet of Sam’s Clubs that are fit for the future.”

Warehouse clubs are not quick to advertise, preferring to pass those savings along to its members in the form of low prices. Both BJ’s Wholesale Club and Costco Wholesale have been advertising of late, at least in Northeast Ohio.

Full-page BJ’s advertisements in local shoppers have been promoting a membership drive geared around tire sales. “Fill up for 1-cent a gallon (up to 30 gallons) when you buy a set of 4 Michelin tires,” trumpeted the membership offer. It’s interesting that BJ’s feels Michelin tires and virtually free gas will increase its membership.

Costco ads are digitally oriented. One April email I received offered “$70 off instantly on any set of 4 Michelin tires” to members (I am not a member), plus 1 cent installation per tire ($59.96 in additional savings, according to the ad). The $70 savings was offered both online and in-store.

Maybe warehouse clubs are upping their game in the replacement tire market, especially when it comes to online sales.

Related Topics: Costco, MTD Facts Issue, Sam's Club, Walmart, warehouse clubs

Bob Ulrich Editor
Comments ( 1 )
  • dennis

     | about 12 months ago

    good ideas as for as the promo goes. However, they have poor employee help. Never the same guy or gal twice, cannot answer their phone (unless it is the personal cell phone) are detached and would never work in my place. It is only price driven

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