Good Times for BJ’s Wholesale Club

Discussion
Nov 18, 2008

By George Anderson

BJ’s is number three
in the warehouse club race but the chain is finding some momentum in today’s
tough economy because of changes it has made in recent years to focus more
on individual consumer needs.

Ken Naumes,
a former Costco shopper who joined BJ’s, explained his switch to The
Boston Globe
. "We can get everything we need for lower prices
and it’s more convenient. Some of it is bulk, but it’s smaller bulk than
at Costco."

BJ’s
saw sales increase 11.6 percent in October and the 177-chain, which was
struggling just two years ago, is looking to increase the pace of new club
openings.

In
2006, BJ’s brought Herb Zarkin out of retirement to lead the chain. The
company began making changes, including closing its pharmacy business,
reducing store hours, cutting prices on staples such as milk, reducing
SKUs to focus on top sellers and bringing in higher quality fresh foods.
It also used its gas stations as a draw when prices at the pump were making
it tougher on consumers to make ends meet.

Discussion Questions:
What is your view on the key factors behind BJ’s success? Specifically,
how
important has the company’s focus on individual consumers been to its
turnaround over the past two years?

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7 Comments on "Good Times for BJ’s Wholesale Club"


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Brian Anderson
Guest
13 years 6 months ago

While the company has made great strides in its efforts to improve general merchandise sales and customer traffic, I’m not sure if individual customer service has been a strategy. Herb Zarkin has assembled a talented management team with deep wholesale club experience and a track record of success in two areas where they want to focus: merchandising and membership.

W. Frank Dell II, CMC
Guest
13 years 6 months ago

The question for the Club format has always been, is the target market consumers or small business? Originally, small business was one third of the membership providing two thirds of the sales. Today it appears that Costco and BJ’s are targeting the consumer while Sam’s is targeting small business. During this economic downturn, consumers are shopping alternative formats to reduce cost, thus helping Costco and BJ’s. Small businesses are having a difficult time, with many going out of business. This may explain Sam’s membership decline. Until the economy returns to growth, expect the consumer to drive the club format.

Phil Rubin
Guest
Phil Rubin
13 years 6 months ago

The issue is focusing on consumers rather than businesses and it sure appears to be working. The category is large enough that all three majors can win if they carve out their appropriate (brand) space.

Play where you can win and focus on serving customers and executing in the front and in the back!

Gene Detroyer
Guest
13 years 6 months ago
BJ’s obviously took a sliver of an opportunity and drove a truck through it. Though warehouse clubs should all gain from these recent economic times, BJ’s determined some time ago that their target was the individual consumer and targeted their activities and their operations to the consumer. Warehouse stores have, from inception targeted small businesses. Their message to the consumer was “Hey consumer, we have this great store for small businesses, if you join our club and buy like a small business you can come and shop here and save a lot of money.” As more individual consumers became a greater part of their business, they made some adjustments to the growing clientele, but kept the basic orientation of the operation. BJ’s looked at its competition and said, “Is there a way for us to differentiate ourselves?” The answer was to cater to a different segment of the customer base and draw that customer away from its two rivals. Marketing is all about positioning and BJ’s has positioned themselves perfectly for the economic downturn as… Read more »
David Livingston
Guest
13 years 6 months ago

I doubt B.J.’s has done much to focus on customers’ individual needs. Just their basic business model is working. The customer interviewed summed it up pretty well when he said he got want he needed at lower prices. That formula seems to be in fashion these days.

Ted Hurlbut
Guest
Ted Hurlbut
13 years 6 months ago

BJ’s finds its positioning within the warehouse club segment to be perfectly aligned with the economic realities. Focusing on the individual consumer, reducing bulk quantities, filling out its apparel assortments…these things have provided their customers with outstanding value, and value is certainly the retail driver right now.

John Crossman
Guest
John Crossman
13 years 5 months ago

I get requests for BJ’s to be in our projects from our consumers often. I just wish they were doing more deals.

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