Warehouse Club, Inc.

Warehouse Club, Inc.
Logo
Type	Public
Traded as	NASDAQ: WCLB (1986–1994)
Industry	Retail
Founded	1983
Defunct	1996
Fate	Closed due to financial difficulties and competitive pressures
Headquarters	Niles, Illinois, United States; Skokie, Illinois, United States
Locations	15 over its lifetime
Area served	Midwestern United States
Key people	Walter H. Teninga (Founder and CEO) Sid Doolittle (Co-Founder, 1983–1985) Everett Buckhardt (CEO, 1993–1994) Jack McBride (Chief Financial Officer) William C. Kahrs (Vice President of Operations) James T. McKitrick (CEO, 1986–1987) James V. Walsh (CFO, later President and COO) Sherwin Deutchman (President and COO, resigned 1991) Steven J. Zabel (CFO, resigned 1996)
Products	General merchandise, groceries, automotive supplies
Revenue	$134 million (1993)
Operating income	-$4.5 million (1993)
Net income	Loss of $6.6 million in 1994
Assets	$82 million (1993)
Number of employees	500 (1993)

Warehouse Club, Inc. was a membership-based wholesale retail chain founded in 1983 by Walter H. Teninga, a former executive at S.S. Kresge Co. (later known as Kmart), and Sid Doolittle. The company aimed to provide significant savings on a wide range of products, including general merchandise, groceries, and automotive supplies, primarily targeting small business owners, corporate employees, union members, and credit union members.

Over the course of its operation, Warehouse Club owned and operated 15 locations across the Midwestern United States. However, the company struggled to compete with larger national chains such as Sam's Club and Costco. Despite efforts to expand and adapt, including the opening of a key location in Chicago's Clybourn Corridor in 1994, Warehouse Club ultimately ceased operations in 1996 due to financial difficulties and competitive pressures. Although its time in the retail industry was brief, Warehouse Club played a role in the broader acceptance and evolution of the membership-based wholesale model.

History

Founding and Early Years (1983–1985)

Warehouse Club, Inc. was founded in 1983 by Walter H. Teninga, who had previously served as an executive at S.S. Kresge Co. and briefly at Price Club. Teninga left Price Club after a short tenure when its founder, Sol Price, declined to expand into the Midwest. Motivated by this experience, Teninga pursued his vision of a membership-based wholesale retail chain, leading to the creation of Warehouse Club, Inc. He co-founded the company with Sid Doolittle, a former Montgomery Ward executive who played a key role in shaping the company's initial strategy.

Doolittle's innovative ideas in the warehouse retail model gained attention from prominent figures in the industry. Notably, Sam Walton, the founder of Walmart and Sam's Club, visited one of Doolittle's early warehouse clubs to gain insights into the business model. This encounter influenced Walton's vision for Sam's Club, highlighting Doolittle's impact on modern retail.

The company initially planned to open its first store in Elk Grove Village, Illinois, but zoning issues and failed lease negotiations led to the abandonment of this location. Despite this setback, Teninga established the first Warehouse Club location in Niles, Illinois later that year. The store quickly attracted approximately 35,000 members within its first five months, focusing on providing wholesale prices to small businesses and corporate accounts.

Investors and Initial Growth

Warehouse Club was initially funded through private investments and a public offering in 1986, trading on NASDAQ under the ticker symbol "WCLB." Key early investors included A. Alfred Taubman, Max M. Fisher, and George F. Valassis, who acquired a 41% stake in 1987. These investments facilitated expansion across the Midwest.

Expansion and Growth (1985–1990)

By the mid-1980s, Warehouse Club expanded its footprint, focusing on the Chicago metropolitan area and entering new markets. In 1986, the company acquired leases from the closed Pick 'N Save grocery stores in Arlington Heights, Illinois and Lombard, Illinois, solidifying its presence in the greater Chicago area.

Simultaneously, Warehouse Club entered markets in Michigan, Ohio, and Pennsylvania, aiming to capture a larger share of the warehouse retail sector. The company employed aggressive marketing strategies, including direct price comparisons with retailers like Kmart and Sears, to attract members.

The company sought to capitalize on the departure of BJ's Wholesale Club from the Chicago market in 1987 by offering former BJ's members the opportunity to transfer their memberships.

Aggressive Expansion and Financial Challenges (1986–1990)

The late 1980s saw intensified competition from major players like Costco, Price Club, and Sam's Club. These competitors leveraged economies of scale to offer lower prices, challenging smaller firms like Warehouse Club.

Despite increasing sales, Warehouse Club struggled with profitability due to high operating costs. In the third quarter of 1986, the company reported a loss of $891,000, even as sales rose. By the fourth quarter, losses had escalated to $1.26 million.

In January 1987, investor George F. Valassis acquired a 41% stake, aiming to inject capital and influence strategic direction. However, financial woes continued due to persistent competitive pressures.

Operational Adjustments and Market Conditions (1987–1991)

To mitigate losses, Warehouse Club began closing underperforming stores. In April 1987, two Chicago-area warehouses were shut down as part of a consolidation strategy. In September 1990, two more unprofitable stores were closed, resulting in a $1.8 million charge but expected to improve cash flow.

In June 1990, the company entered into a sale-leaseback transaction involving six operating units, expected to generate $2.5 million after debt repayment. However, the deal faced delays due to financing difficulties.

Leadership changes continued as the company sought stability. In March 1991, Sherwin Deutchman resigned as President and COO, succeeded by James V. Walsh.

Continued Financial Struggles and Strategic Shifts (1991–1995)

Financial difficulties persisted into the early 1990s. For the fiscal year ending September 30, 1990, the company reported a net loss of $4 million on sales of $265.2 million.

In November 1990, A&P proposed acquiring a 51% stake, but the agreement was terminated in December 1990, representing a missed opportunity for financial recovery.

In October 1991, Warehouse Club initiated an $8.5 million rights offering to raise capital for restructuring efforts.

In December 1994, the company became the first wholesale club to accept Visa, Mastercard, and Discover cards across all locations, aiming to enhance customer convenience.

Despite these initiatives, financial recovery remained elusive. In February 1995, Warehouse Club filed for Chapter 11 bankruptcy protection.

Decline and Closure (1994–1996)

By late 1994, Warehouse Club faced insurmountable financial challenges. The company filed for Chapter 11 bankruptcy on February 2, 1995, and announced plans to close four unprofitable stores.

In August 1995, Warehouse Club announced it would liquidate its remaining assets. The liquidation included the closure of the Dayton, Ohio store, with a going-out-of-business sale managed by Gordon Brothers.

In September 1996, Steven J. Zabel resigned, marking another significant loss in leadership. Ultimately, the company ceased operations by mid-1996.

Business Model

Membership Structure

Warehouse Club operated on a membership-based model targeting small business owners, corporate employees, union members, and credit union members. By focusing on these groups, the company aimed to create a loyal customer base incentivized to make regular purchases.

Product Offerings

The company offered a wide range of products, including general merchandise, groceries, automotive supplies, electronics, and home goods. Warehouse Club emphasized bulk purchasing and streamlined supply chains to offer products at prices lower than traditional retailers.

Over the years, the company made merchandising adjustments, such as experimenting with store layout changes by placing seasonal items and apparel at the front to increase visibility and drive impulse purchases.

Marketing and Advertising

Marketing efforts included direct mail campaigns, newspaper advertisements, and in-store promotions. The company used direct price comparisons with established retailers to highlight potential savings.

Warehouse Club focused on creating a sense of exclusivity by limiting memberships to specific groups, fostering a sense of belonging among customers.

Locations

Warehouse Club, Inc. operated multiple locations across Illinois, Michigan, Ohio, Indiana, and Pennsylvania.

Locations That Opened

Warehouse Club Locations

Location	Address	Opened	Closed	Notes
Illinois
Arlington Heights, Illinois	1700 East Rand Road	May 22, 1986	April 3, 1987	Acquired from Pick 'N Save. Subleased to American Wholesale Club.
Bridgeview, Illinois	9140 South Harlem Avenue	October 30, 1986	March 5, 1995	Menards bought the property in 1995.
Chicago, Illinois (Clybourn Corridor)	Clybourn Avenue and Halsted Street	March 26, 1994	March 5, 1995	Shared building with Montgomery Ward. Featured traditional retail layout.
Lombard, Illinois	515 West Roosevelt Road	May 22, 1986	April 3, 1987	Acquired from Pick 'N Save. Subleased to American Wholesale Club.
Niles, Illinois	7420 North Lehigh Avenue	July 4, 1983	September 1995	First Warehouse Club location.
Indiana
Hammond, Indiana	2434 Interstate Plaza	1985	Late 1993	Part of Interstate Plaza shopping center.
Michigan
Allen Park, Michigan	4000 Enterprise Drive	November 1985	September 1995	Part of Michigan expansion.
Hazel Park, Michigan	1727 E. Eight Mile	Unknown	Circa 1990	Demolished in 2009 for new shopping center.
Redford Township, Michigan	24400 Plymouth Road	November 1985	September 1995	Part of Michigan expansion.
Ohio
Akron, Ohio	3210 South Arlington Road	Unknown	March 5, 1995
Columbus, Ohio	4252 Groves Rd.	1985	March 5, 1995	Implemented prototype layout changes in 1993.
Columbus, Ohio	3770 Indianola Ave.	1985	September 10, 1990	Converted into storage facility in 1991.
Dayton, Ohio	835 Edwin C. Moses Boulevard	1985	September 1995	Featured an automotive center.
Pennsylvania
Bridgeville, Pennsylvania	Chartiers Valley Shopping Center, 1025 Washington Pike	1986	September 1995	Tested one-hour photo service in 1993.
North Versailles, Pennsylvania	Pittsburgh Plaza East Shopping Center, 1701 Lincoln Highway	1985	September 10, 1990	Converted into Warehouse Flea Mart, later a Destinta Theatres megaplex.

Proposed Locations That Never Opened

Proposed Warehouse Club Locations (Never Opened)

Location	Address	Notes
Illinois
Chicago, Illinois (South Loop)	509 W. Roosevelt Road	Intended to open by spring 1991 but never materialized.
Cicero, Illinois	Unknown	One of three proposed Chicago-area locations.
Elk Grove Village, Illinois	1950 Pratt Blvd.	Original proposed location; never opened due to zoning and leasing issues.
Evanston, Illinois	Unknown	One of three proposed Chicago-area locations.
Michigan
Roseville, Michigan	Unknown	Originally constructed for Home Depot; left unoccupied when plans changed.

Corporate Structure

Management and Leadership

Warehouse Club, Inc. was founded by Walter H. Teninga, who served as the company's first CEO. Sid Doolittle co-founded the company but left in 1985.

Teninga's management style led to high turnover among top executives. In July 1986, James McKitrick was appointed President and CEO but resigned in January 1987.

In July 1991, Teninga resigned as Chairman and CEO, succeeded by James V. Walsh. By the early 1990s, Everett Buckhardt had taken over as CEO.

Headquarters

The company's headquarters were initially in Niles, Illinois, later relocating to Skokie, Illinois, and then back to Niles due to financial difficulties.

Financial Overview

Warehouse Club's financial performance varied significantly. Early growth was followed by deterioration in the late 1980s due to competition. The failed acquisition deal with A&P in 1990 exacerbated financial woes.

Competition

Key Competitors

Warehouse Club, Inc. operated in a highly competitive market dominated by major warehouse retail chains such as Sam's Club, Costco, and Price Club.

• Sam's Club: A division of Walmart, offering competitive pricing and a wide product range.
• Costco: Known for high-quality products at low prices.
• Price Club: The original warehouse club concept founded by Sol Price.

Market Dynamics

The warehouse retail sector was characterized by intense competition and aggressive pricing strategies. Larger chains leveraged economies of scale, making it difficult for smaller players like Warehouse Club to compete.

Legacy and Impact

Impact on Retail Industry

Warehouse Club played a role in the evolution of the membership-based retail warehouse model in the United States. Its early efforts contributed to the broader acceptance and expansion of this retail format.

Aftermath of Closure

After closing, many former locations were repurposed or taken over by competitors. The company's pioneering efforts left an imprint on the industry, particularly in the Midwest.