Visited our local Warehouse store yesterday to take advantage of their cheap milk - all sold out BUT tiny chiller so couldn't have had a lot to start with. I see stock availability as their big issue - it's all very well to have discounted milk, cheese, weetbix etc but if shoppers turn up to purchase these items and they aren't available will they return? As Percy rightly pointed out, it's often easier to just go to the supermarket and get everything in one place (assuming they also aren't out of stock) especially if visiting the Warehouse means you have to go out of your way for a special that may or may not be in stock.
Having said that, I do hope their foray into grocery items is a winner for them.