I am afraid I must disagree. Our research (available here) shows that one of the primary errors business organizations make in this country is to think that because they are doing well, they are a strong company. This is one of the most common assumptions in the business world, and it couldn’t be further from the truth. What success actually means is that the organization fits its environment (overall economy, competitive environment, overall target market, and the regulatory environment) at the moment. In other words, the environment is “tolerating” or “supporting” the business organization, and if the business environment changes (which it does, and often suddenly and drastically), the organization is suddenly in trouble. BJ’s is not an INHERENTLY strong organization, it is a COMPARATIVELY strong one because its environment is currently supporting it. BJ’s has critical issues it is not solving, and some of these have been admitted to publicly. The takeover issue is really quite beside the point, in my view, because no matter who is “running” BJ’s, it will continue to have… Read more »

As eluded to in previous comments, what is BJ’s definitive business model? When it comes to differentiation, what is their strategic model in comparison to other successful retailers, let alone wholesale clubs? It’s fairly clear what the differences are between Costco and Sam’s Club. They are not only defined simply by a single visit to either one, but they are defined quite clearly by their customer. Certainly BJ’s may be #1 in the Northeast, but why? In other areas of retailing where there are two left standing, the points of differentiation are relatively clear. Examples of these are easily found in Target and Wal-Mart, Wal-Mart and Publix, etc. There is little left in a middle ground for anyone, no matter what sector of retailing. So, given time, when Wal-Mart further conquers the Northeast with more Sam’s and Costco presses further, will BJ’s have a successful point of differentiation to stand up to the two? If it is to equal Costco, it will be a difficult hill to climb and few if any stand a chance… Read more »

Retailers like BJ’s do well when they dominate their market or operate as a strong #2. However, when they have to compete head-to-head with Costco and Sam’s in a given market, they will lose. That day isn’t too far down the road.

To me, there doesn’t seem to be any urgent need to fix BJ’s. They have a solid balance sheet and cash flows. Just because they are not a huge company like Costco or Sam’s doesn’t mean they are in trouble. Perhaps they should continue to follow the course they have set. And certainly ignore what all the analysts are saying.

The warehouse-format is already close to saturation – if you add up the store counts of Sam’s, Costco, and BJ’s, the whole entire segment only has about another 20% of even *theoretical* growth potential (as far as new markets in the US are concerned – growth after that point would be proportionate to the growth of the US population). It is just a matter of time before one of the three grows by muscling out one of the other two.

In the shipwreck survivor scenario with 3 starving guys in a lifeboat, it’s generally the two big guys throwing the little guy overboard….

Even though they’re #3 nationally, BJ’s is #1 in New England. They’re a profitable, stable company doing $8 billion in 16 states. Their competitors aren’t making any major moves against them, so the profitability is likely to continue. Their stock may be a disappointment to some (it was $45 five years ago, and it’s $32 today), however. It would not be a surprise if the major shareholders want to sell the company to a private equity firm (like Linens N Things and Toys R Us). Or maybe some major investors just want new management to take a fresh look and shake things up. Given the growing number of private-capital buyouts lately, any director of a publicly-held retailer needs to ask if the shareholders would do better by selling the company.