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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Brits Cool Toward Warehouse Clubs One Shopping Club Abandons Unresponsive English Market

Associated Press

The English may be warming to discount retailing, but they aren’t quite ready to save a few pounds by stocking up regularly in a Spartan American-style shopping club.

About a year after warehouses stacked with bargains came to Britain, one big player, Nurdin & Peacock PLC, said earlier this month that it will sell its money-losing Cargo Club stores to the big British grocer Sainsbury PLC. Sainsbury will convert two into regular stores, possibly selling a third site.

The shopping warehouses arrived with great fanfare as Britain was digging its way out of the longest recession since World War II. Cashpinched Britons were becoming more used to seeking out bargains, so they were initially drawn to the big stores offering mass quantities of food, household products and home furnishings.

Although the three Cargo Club stores opened by Nurdin & Peacock attracted a greater-than-expected number of members who paid the minimum $40 a year for the privilege of buying such goods as electronics for up to 50 percent off and food for up to 15 percent off, they weren’t spending enough.

Many Cargo Club customers bought memberships only to get a good deal on a television set or some other major purchase, then failed to come back every week to do their grocery shopping, according to Erica Miller, who follows the industry for the London brokerage Barclays de Zoete Wedd.

“I think it just takes time for people to get used to a new form of shopping,” Nurdin & Peacock’s commercial director, Alex Rentoul, said in a telephone interview. “I think this idea may well work within the U.K.”

Analysts have their doubts, based on Cargo Club’s experience. But they say the U.S. chain Costco appears to be doing better in Britain. Costco executives couldn’t be reached for comment.

The Nurdin & Peacock executive, Rentoul, said his company had never expected to turn a profit at Cargo Club in the first few years. But results were falling below expectations and new environmental rules would have forced the company to invest millions more than it wanted to in opening more store sites.