BJ’s Wholesale to launch smaller club concept

Discussion
BJ’s typical big box layout - Photo: BJ’s
Mar 07, 2022

BJ’s Wholesale Club is piloting a smaller store, BJ’s Market, to serve as an innovation lab and potentially become an expansion vehicle.

The size of the location, to open in Warwick, RI, was not provided in the company’s press release covering the development. B.J.’s boxes range from 63,000 to 163,000 square feet.

Last week on BJ’s fourth-quarter conference call, Bob Eddy, president and CEO, said BJ’s Market “first and foremost” will work as a lab to test assortments, displays, product demonstrations and convenience features.

“One of the things we’re trying to do here in this company is install a culture of growth,” said Mr. Eddy. “And that means we need to up the innovation quotient in the business. And one of the ways to do that is to give people the freedom to do it. And having a place to do it, that’s a safe place, the way we can tinker and try new things is really what we’re after.”

Among other things, BJ’s will test fresh approaches to its labor structure and ways to speed traffic with its front-end model. “All sorts of different things that we’d like to try out, see what works, and then take what works and port it back to the mothership,” said Mr. Eddy.

Bill Werner, EVP, strategy and development, said BJ’s was particularly looking at whether smaller locations would boost omnichannel convenience. Online sales grew 22 percent last year to nearly eight percent of sales. About 80 percent of online sales were fulfilled by clubs through BOPIS, curbside and same-day delivery, up from about 45 percent in 2020.

“Think about the ability for a member to quickly get in and out to get everything they need for the lunch box while you’ll still be able to access all the other value that we offer through our full-size boxes,” said Mr. Werner.

Mr. Eddy added, “If it becomes a new growth vector for us, if it really works in its own right, that would be wonderful. It would be a real symmetric growth chance. Where if this thing doesn’t work, we lose a few million dollars in trying new things.”

DISCUSSION QUESTIONS: Does a smaller format store make sense for BJ’s Wholesale Club to support omnichannel selling or for other reasons? What should be the biggest factors in evaluating whether to roll out BJ’s Market as a standalone concept?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Sounds like a growth story on steroids."
"They are opening up one experimental unit of indeterminate size in a very specialized market, so I wouldn’t go off with a global site section project just yet."
"As Ken pointed out finding enough land to build a full-size BJ’s in the Northeast is not easy. The smaller format addresses that issue."

Join the Discussion!

12 Comments on "BJ’s Wholesale to launch smaller club concept"


Sort by:   newest | oldest | most voted
Ken Morris
BrainTrust

I think this is a great move for BJ’s. It not only allows them to test new
concepts but gives them an opportunity to open stores in urban locations in
their Northeast stronghold where it is tough to find the right real estate for
their big box locations. Another opportunity this could present is implementing
MFCs for their burgeoning online business. A hub and spoke MFC or CFC model
could be the key to urban success.

Also, positioning this new location as an innovation lab is brilliant. Even if
competitors try to do secret shopper runs to figure out what they’re doing, they
shouldn’t assume that what they see is what they’ll get if BJ’s rolls out these
stores at scale.

Bob Amster
BrainTrust

Smaller formats make sense as innovation/R&D laboratories. Given that the nature of BJ’s is a club full of stuff in larger packaging, the smaller store may not be a format for the long-term.

David Naumann
BrainTrust

Expanding with smaller format stores has been a common strategy for big box, department stores and grocers. It enables revenue growth by opening stores in markets that can’t support a full-sized store. The success of the BJ’s Market concept should be measured by evaluating the combined physical and online revenues by market area. When there is a physical store presence it typically spurs increased online purchases.

DeAnn Campbell
BrainTrust

A small format store is a great way for BJ’s to move closer into the communities they serve, but more importantly it’s a way to gain access to the very lucrative Dollar General customer base. Considering that Dollar General has expanded their product range into more food and home goods products, BJ’s is smart to move into smaller stores to protect their turf.

Dave Bruno
BrainTrust

What’s not to like about this strategy? Create a small format to ideate, innovate, test and decide — and if the smaller format itself becomes a vector for growth, expand. So meta.

Gary Sankary
BrainTrust

I have to rethink my thoughts about innovation at BJ’s. This is a great move.

Richard Hernandez
BrainTrust

I am in agreement with all so far – it is a great incubator to test new ideas and processes to implement them in existing locations.

Jeff Sward
BrainTrust

One of the keys to successful retail is efficiency — efficiency of space and inventory. Department stores need to think about smaller footprints, and the same logic holds true for BJ’s. Adding the innovation lab component and then adding the brick-and-mortar hub for e-commerce makes this a must do for BJ’s. Sounds like a growth story on steroids.

Steve Montgomery
BrainTrust

As Ken pointed out finding enough land to build a full-size BJ’s in the Northeast is not easy. The smaller format addresses that issue.

With the proper SKU rationalization BJ’s may be surprised at the sales it can achieve. The risk/reward equation says this is a good move.

Ananda Chakravarty
BrainTrust

For BJ’s, this move is a great step towards better omnichannel development, but even more focused on delivery. Smaller format stores can operate as MFCs and help guarantee lower delivery costs. Under the guise of smaller format clubs, BJ’s can expand their commerce business just as much as their club business. At this point they’re no longer evaluating whether to build these innovation labs, but how much to spend on it. A few million dollars isn’t going to break the bank as they’ve been having a great year. The last two years saw 187 percent growth in their e-commerce business. Great growth move by BJ’s.

Ryan Mathews
BrainTrust

Let’s take a breath here. They are opening up one experimental unit of indeterminate size in a very specialized market, so I wouldn’t go off with a global site section project just yet. Does it make sense to have an innovation store? Yes, everyone operating at scale should have at least one and probably several more. Could a smaller forma work? Maybe, depending on how small, the nature of the market, etc. And, finally, before we worry about a rollout, let’s wait and see how the first store works — once it opens that is.

Anil Patel
BrainTrust
I feel BJ’s is making a good move by establishing smaller format stores. By opening these stores, BJ’s will not only boost omnichannel initiatives in the B2B space but will also drive more footfall in their stores. Research says 96% of the population lives within 25 miles of Walmart stores. If BJ’s want to tap this type of customer, they would need to open stores in densely populated areas where most of their customers dwell. Customers would always prefer saving travel time and access only nearby stores. Secondly, implementing omnichannel initiatives like BOPIS and curbside pickup will help BJ’s customers save dollars spent on getting bulky items shipped. Thereby, motivating more customers to walk into stores and pick up their orders. For evaluating BJ’s standalone concept, the retailer would need to focus on two factors: They should ensure a seamless omnichannel experience. The shelves should have necessary products in abundant quantities. They need to focus on the assortment of products to drive higher quality of engagement and let customers discover unique/newer products every time they… Read more »
wpDiscuz
Braintrust
"Sounds like a growth story on steroids."
"They are opening up one experimental unit of indeterminate size in a very specialized market, so I wouldn’t go off with a global site section project just yet."
"As Ken pointed out finding enough land to build a full-size BJ’s in the Northeast is not easy. The smaller format addresses that issue."

Take Our Instant Poll

What’s the likelihood that BJ’s Market will prove successful enough to add additional locations?

View Results

Loading ... Loading ...