Costco hits Cargo Club with store
Wednesday 15 February 1995
The announcement places renewed pressure on Cargo Club, the rival format run by Nurdin & Peacock, the beleaguered cash and carry retailer whose shares plunged after a profits warning last month. N&P's Cargo Clubs have been slow to catch on. The company has since abandoned its expansion plans to conduct a review of the trading concept.
Industry experts believe that Costco is performing better because it has adopted the US style of warehouse trading where a limited range of goods are sold at near to cost prices and profits are derived from the membership fees. Cargo Club has tinkered with the format, offering more choice, which weakens cash flow.
"It is a format that cannot be weakened successfully," one analyst said. "Adding a bit more retail to it just hasn't worked."
Cargo Club's problems have been exacerbated by the abrupt departure of David Poole, N&P's chief executive, last autumn.
Cargo Club faces a big hurdle next month when the membership cards at its first store in Croydon come up for renewal.
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