
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, May 28, 1990                   TAG: 9005280112
SECTION: VIRGINIA                    PAGE: B-6   EDITION: HOLIDAY 
SOURCE: Associated Press
DATELINE: NORFOLK                                LENGTH: Medium

WAREHOUSE STORES STAKING OUT CUSTOMERS

With no windows, no carpets and little if any customer service, warehouse stores rely on the bottom line - price - to bring customers in and it's working as the concept expands in Hampton Roads.

Sol Price developed his first Price Club in San Diego in 1976 offering goods at basement prices in a no-frills environment. Membership is required to shop.

Since then, imitators have sprung up and the industry's biggest operators have seen annual sales gains of 20 to 40 percent. By the end of next year, two warehouse stores will be elbowing their way into the Hampton Roads market where the Price Club already has stores.

"These companies are buying opportunistically or in such bulk they are getting very good deals," said Linda R. Morris, a retail analyst with Providence National Bank in Philadelphia. "Their overhead is lower than other formats, so they can pass on much of the savings to the consumer."

The Price Club has stores in Hampton and Norfolk where members can buy items including tires, frozen hamburgers and answering machines.

Food 4 Less, a warehouse grocery store, opened in May in Virginia Beach. No membership is required. Cadillacs vie for space with Chevettes in the store's parking lot. Inside, signs tell customers "Smile, you're saving money."

Reactions on the amount of savings vary.

"I saw a lot of lower prices," said Cindy Sykes of Virginia Beach. "I was impressed."

Other stores are coming in the next two years. A Sam's Warehouse Club will open in Chesapeake and BJ's Wholesale Club plans to open a store in Virginia Beach.

"It's a very disciplined concept. As cheap as we sell groceries, we can't make mistakes," said John S. Runyan, a senior vice president for retail concepts for Fleming Cos. based in Oklahoma City. Fleming Cos. franchises Food 4 Less stores.

Kenneth M. Gassman Jr., a retail analyst for Wheat, First Securities in Richmond, was skeptical about the number of warehouse operations the region could handle.

"Typically, the first entrant does well," Glassman said. "The second does OK. After that, the profitablity falls off fairly significantly."

by CNB