First Buyer's Club unit debuts in South. California

First Buyer's Club Unit Debuts in South. Calif.

LOS ANGELES--Southern California's membership warehouse-friendly consumers drew yet another player into the market as Denver-based Buyer's Club opened its first store in San Bernardino last month.

The membership club also announced plans to open a second Southern California location in Pomona later this year. Both sites are in the San Gabriel Valley, east of Los Angeles, which could easily be dubbed "warehouse valley."

Situated in this valley corridor are such membership warehousers as PACE, Price Club, Price Savers and Costco. Specialty warehouse retailers such as HomeClub and All American SportsClub are also firmly entrenched in the area. While there is an ample population base here--which is increasing by ongoing new housing growth--this particular area will eventually reach its membership warehouse limits.

According to retail analyst Sarah Stack, with Bateman Eichler, Hill Richards, "I don't think we've reached the complete saturation point yet in Southern California," but a shakeout is inevitable.

Stack said the San Gabriel Valley's attraction has been its dense population and availability of potential sites with good freeway access. She said most warehouse clubs will only go into an area that has at least a 100,000 population base over a three mile to five mile radius, which in this case, is easily exceeded.

Buyer's club offers to area residents and businesses yet another membership warehouse club choice, but company president and chief executive officer Ken Bagus said his membership warehouse is different from its competitors. "We look different and we market differently than everyone else," said Bagus.

Buyer's Club does offer a large, 16,000-cubic-foot freezer/deli area--exceeding the norm at its competitors--and it does use floor-to-ceiling steel racks in all three sections of the warehouse. However, Buyer's Club still closely resembles the standard industry layout and product selection.

Buyer's Club offers both group and business memberships, but according to Bagus the company's emphasis is on its wholesale members.

With the slated opening of the Pomona warehouse later this year, Buyer's Club will have five warehouses--including three in the Denver area. Bagus said the San Bernardino warehouse's sales are already doubling the sales figures at any one Denver warehouse, primarily because of the poor Colorado economy and the greater population in Southern California.

The company intends to double its number of units by the end of 1988, bringing it to a total of 10 warehouses--with much of the new growth centered in the California area, Bagus said. Earlier plans for the company, which opened its first warehouse in 1984, called for 21 warehouses by year-end. However, Bagus said the company's growth plans were stalled because it wanted to make sure operations were running properly, "we are a little behind [schedule], but all the better for it."

Buyer's Club was spun off from Rockford, Ill.-based discounter Union Hall last year, and is now a private company, separate from the two-store discounter. But Union Hall is a major shareholder and Bagus is chairman, president and ceo for both companies.

Although Bagus did not disclose sales and earning figures, he claimed Buyer's Club is profitable.

PHOTO : Buyer's Club, San Bernardino, Calif.: The chain plans to double size by end of 1988, focusing on Southern California.

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