The warehouse club channel is now big business with Costco, Sam’s Club and BJ’s Wholesale Club collectively earning an estimated $114 billion in U.S. revenues during the 2009 calendar year. Despite the significant market potential that warehouse clubs present, this retail channel remains a paradox for many consumer packaged goods (CPG) companies. On the one hand it is a large, attractive and promising channel. On the other hand, it has several unique characteristics that make it challenging for CPG companies to succeed. L.E.K. Consulting’s report focuses on market leader Costco to illustrate the unique dynamics with this retail channel.

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