BJ's comes together to compete
November 5, 2001-- Home Textiles Today,
New York — Though it's the smallest of the top three wholesale clubs, BJ's Wholesale Clubs "has been the fastest growing," said Frank Forward, executive vp and cfo, adding 60 percent square footage to its total since 1994.
With 122 locations up and down the Northeast corridor, BJ's plans to increase its market reach and brand recognition, striving "to become the most visible and best known wholesale club in its markets."
Because 90 percent of its locations have competing wholesale clubs nearby, BJ's ups its market presence by grouping several locations in one area, Forward said, for stronger recognition. In addition, this strategy allows the stores to share marketing, management and logistics.
"Clustering leads to market leadership," Forward said. In BJ's current markets, it holds sizable pieces of the market share. For example, BJ's has a 49 percent share of wholesale club sales for markets in operates in within the Northeast, he said, and 32 percent in the Mid-Atlantic states. BJ's locations in southeast Florida have a 38 percent market share, while in Ohio it's 44 percent.
BJ's store base will expand 10 percent annually, and Forward said it planned to have 175 locations by the end of 2004 and 200 by the end of 2005. New markets in 2002 include the opening of five or six clubs in Atlanta.
BJ's also tries to differentiate itself from Sam's Club and Costco with a "slightly broader merchandise assortment," Forward said, carrying 6,000 skus instead of its competitors' 4,000 SKUs.
It also offers expanded product categories in some areas, as well as additional categories that are not typically sold in a wholesale club.
In an effort to become more customer friendly, BJ's offers customers smaller package sizes for convenience, as well as aisle markers and express registers. In addition, BJ's is the only wholesale club to allow payment by Visa or Mastercard chainwide, Forward said, as well as being the only club to accept manufacturers' coupons.
The average BJ's location is 111,000 square feet, which is 20 percent less than an average Costco, and 10 percent less than the average Sam's Club.
More than 80 percent of its customers also renew with BJ's, which has a $40 annual membership fee — specifically, 84 percent of general consumers, called Inner Circle members, renew, as do 88 percent of its business members.
One of BJ's recent initiatives has been its private label program. Launched in January 1999, it has already been a "success," said Laura Sen, executive vp, merchandise. The program now contains 185 items, making up 3.3 percent of company sales.
By this January, the program will grow to 250 items, she said, and a 5 percent sales penetration. By January 2005, BJ's hopes to reach 10 percent sales penetration.
The philosophy behind the program, Sen said, was to offer mass-purchased, premium items in general merchandise, grocery and health and beauty aids, but which are priced 20 percent below comparable brands. The program strives to develop signature product in categories without a brand leader, she added, under two labels, one each for the general consumer and the business member. For general consumers, the Berkley & Jensen line, which includes down comforters and flannel sheets, looks to offer "department store quality using the same vendors the department stores use."
Sen later told HTT that the down and flannel products, imported from Portugal, are in their second year, though no other domestics are "currently on board. "We want to grow the program first."
Related Content By Author
Industry Related Content
H&TTtv Talks Outdoor Rugs