How Costco, warehouse clubs have transformed retail more than Amazon

WASHINGTON _ From the arrival of e-books and digital music in the 1990s to the recent explosion of online subscription services such as Stitch Fix or Birchbox, it's easy to see just how dramatically e-commerce has changed our shopping routines.

And yet, according to new research, there's another shopping trend that has had an even more transformative effect on the retail industry during the last two decades: The rise of Costco, Sam's Club and other warehouse clubs.

Ali Hortacsu and Chad Syverson of the University of Chicago studied how the structure of the retail sector has changed over the last 15 to 20 years, and, in a new National Bureau of Economic Research working paper, make the case that warehouse clubs have had a greater effect on the retail landscape than e-commerce.

The researchers compared the relative size and growth trajectories of warehouse clubs and e-commerce sites.

The four largest warehouse clubs accounted for 8 percent of retail sales in 2012, nearly 50 percent more than all e-commerce retail sales in that year.

And while the rise of online shopping has dominated the discussion of the retail landscape, Hortacsu and Syverson found it actually hasn't been the sector's biggest growth story over the last roughly two decades.

In studying Census Bureau data, they found that the portion of the retail industry that includes e-commerce has grown tenfold from $35 billion in sales in 1992 to $348 billion in 2013. (If you're wondering how the category was ringing up billions in sales as far back as 1992, it's because it includes formats such as catalog sales.)

Meanwhile, during that same time period, the warehouse clubs industry grew from $40 billion to $420 billion, a 10.5-fold increase. In other words, this category actually saw a faster growth rate.

The researchers also highlighted the long-term financial results of some of the biggest businesses in these categories to help make their point: Amazon, they found, saw an increase in U.S. sales of roughly $38 billion between 2000 and 2013. During that same time period, Costco, the nation's third-largest retailer overall, reported that U.S. sales grew $50 billion, while Sam's Club saw a $32 billion increase.

Warehouse clubs have also been part of a push toward locating stores in more populous areas.

In the early days of online shopping, there was much handwringing in the retail industry about whether this new shopping method would be a death blow to brick-and-mortar stores. The researchers believe their findings show that physical retailing isn't anywhere near fading into irrelevance.

Indeed, that notion seems consistent with other data about the industry. For example, the latest Commerce Department data show that e-commerce accounted for only 7.2 percent of total retail sales in the most recent quarter, meaning we are still doing the lion's share of our shopping in stores. Research from consultancy Deloitte has found that digital interactions influence 36 cents of every dollar spent in a retail store, a sign that Web browsing can often be a gateway, not a deterrent, to an in-store purchase.

One thing this recent study doesn't attempt to capture: How the rise of e-commerce has changed the strategic mindsets across the retail industry. While very few retailers are trying to emulate the warehouse club model, it's hard to think of one that's not making big investments in improving their online business. Wal-Mart, for example, has pledged to plow at least $1.2 billion into boosting its digital capabilities this year. Macy's re-organized its merchandising and marketing operations this year to better support its attempts at transforming into a nimble online retailer.

So while perhaps warehouse clubs may have so far had a greater impact than e-commerce so far, it's not hard to imagine a day when the influence of digital leaps out ahead.