BJ’s Wholesale, Costco and Sam’s rival, will open clubs in Southeast

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BJ’s Wholesale, Costco and Sam’s rival, will open clubs in Southeast



A BJ’s Wholesale Club is shown in Falls Church, Virginia on May 23, 2023.

Win Mcnamee | Getty Images

BJ’s Wholesale Club said Wednesday it will open four clubs in the Southeast and one in the Midwest this year as it seeks to expand in a competitive membership warehouse market and attract members in other parts of the country.

The new stores will open in Maryville, Tennessee this fiscal year. Myrtle Beach, South Carolina; Palm Coast and West Palm Beach, Florida; and Carmel, Indiana. The company plans to open a dozen new clubs this fiscal year, including a previously announced club in Louisville, Kentucky.

The smaller rival of Costco And WalmartThe company-owned Sam’s Club is just the latest warehouse club to share its expansion goals. Sam’s Club announced in early 2023 that it would open more than 30 stores in the United States over five years. Earlier this month, Costco said in an earnings call that it expects to open 30 new clubs worldwide in the financial year, including two relocations. 22 are planned for the USA

Your movements come as Value-oriented retailers such as off-price chains are driving store growth in the US. Dollar General, Burlington and Aldi are tracking openings and closings, according to Coresight Research, a retail consulting firm that has announced the most new locations so far this calendar year.

Club stores are also popular with price-conscious shoppers because they value getting more for less money.

BY THE NUMBERS: Warehouse clubs

BJs

Clubs in the USA: 244

Membership fee: $55 per year or $110 for the higher level

Costco

Clubs in the US: 603, including Puerto Rico

Membership fee: $60 per year or $120 for the higher level

Sam’s club

Clubs in the US: 599, including Puerto Rico

Membership fee: $50 or $110 for higher level

Source: Company websites and recent earnings releases

BJ’s has a smaller reach than its club competitors. Most retail clubs based in Marlborough, Massachusetts are concentrated on the East Coast. The expansion will bring the company to 21 states, compared to Costco, which had clubs in 46 states, Washington DC and Puerto Rico as of September 3, the end of its fiscal year. Sam’s Club has locations in 44 states and Puerto Rico.

Still, BJ’s has been in growth mode since 2016 as the company increased its efforts to enter new markets, said Bill Werner, the retailer’s executive vice president of strategy and development. In the last five years, 27 new clubs have opened and entered four new states: Tennessee, Alabama, Indiana and Michigan. Seven new clubs were opened in the last financial year.

The plan is to open 10 to 12 clubs every year in the future, said Werner.

Still, BJ’s must convince customers to purchase a membership, which could be a challenge if it’s the second or third club in a customer’s backyard.

Greg Melich, retail analyst at Evercore ISI, said BJ’s can stand out because of its emphasis on groceries. There are almost twice as many items as the club’s competitors, including many more fridge staples such as fruit, vegetables and sausages. In addition to large quantities of laundry detergent and paper towels, it also sells smaller items like a gallon of milk or a single loaf of bread, suitable for your weekly shopping trip.

“Maybe you can buy a piece of cheese that weighs less than two pounds,” Melich said.

He said BJ’s would be better off focusing on stealing sales from regional and national supermarkets like Publix and Kroger.

“It would be a mistake for BJ’s to try to be Costco,” he said. “That is not the point. The point is, there are a lot of people in a lot of markets who would like to buy things cheaper than they would at their local grocery store.”

BJ’s Werner said the company’s typical customer has an average household income between $75,000 and $100,000. He added that in the new markets it has entered, BJ’s has been able to attract members who already belong to another club.

Earlier this month, BJ’s said it expects moderate growth for the full year. The retailer said it expects comparable club sales to increase 1% to 2% year-over-year, excluding gas sales. Adjusted earnings per share will be between $3.75 and $4.00, with the lower end lower than the $3.96 reported for the last fiscal year.

As of Tuesday’s close, BJ’s shares were up more than 12% this year. That outpaced the S&P 500’s gains of more than 9%.



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2024-03-27 12:00:01

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