As the number three warehouse club chain, BJ's Wholesale Club is facing an uphill battle against Sam's Club and Costco, its two larger rivals. The same cannot be said of much of its supermarket store competition and that is where CEO Laura Sen is looking to grab market share.
"Of all BJ's competitors, supermarkets represent the greatest opportunity for taking market share, based on their operational inefficiencies and much higher retail prices," she was quoted by Reuters as she spoke to an Oppenheimer conference audience this week.
Ms. Sen said that a much larger number of products, more money spent on store interiors and advertising made it hard for supermarkets to compete with her company on price. She said consumers could expect to save between 30 to 35 percent shopping in BJ's compared to the typical supermarket. Ms. Sen also said that her company's prices were typically 20 percent lower than supercenters.
"In 2008, perishables sales outpaced all other categories, with a 12 percent comp increase," she said based on a Home Textiles Today report. "[That trend is] continuing into 2009, with a 12 percent comp increase in the first quarter."
BJ's has also deviated from some of the typical warehouse club scripts to differentiate in the market. The chain, which operates 182 clubs in 15 states, offers smaller size products in key categories in addition to or in place of the club packs sold in Sam's or Costco. It also accepts manufacturer coupons, food stamps and all major credit cards.
Discussion Questions: Are warehouse clubs a bigger competitive threat to supermarkets today than they have been in the past? Has BJ's carved out a sustainable niche in the market?