The Warehouse is pulling out of the liquor business after three years of operation and will begin phasing out its six alcohol outlets after Christmas.
Chief executive Ian Morrice said the decision follows a refusal by the Liquor Licensing Authority to let it operate an unsupervised liquor section within its Albany store.
He said it is not fair that the Warehouse has to have a stand-alone liquor area, unlike supermarkets, and the higher operating costs that imposes makes it difficult to make a profit from alcohol sales.
Mr Morrice said it will cost less than $1 million to exit the liquor business.
The Warehouse abandoned its fresh grocery units earlier this year.