A BJ’s Wholesale Club is shown in Falls Church, Virginia, May 23, 2023.
Win Mcnamee | Getty Images
BJ’s Wholesale Club said Wednesday that it will open 4 clubs in the Southeast and one in the Midwest this 12 months, because it tries to expand and attract members in other parts of the country in a competitive membership warehouse market.
The brand new stores will open this fiscal 12 months in Maryville, Tennessee; Myrtle Beach, South Carolina; Palm Coast and West Palm Beach, Florida; and Carmel, Indiana. The corporate plans to open a dozen recent clubs this fiscal 12 months, including an already announced club in Louisville, Kentucky.
The smaller rival of Costco and Walmart-owned Sam’s Club is just the newest warehouse club to share its goals for expansion. Sam’s Club said in early 2023 that it might open greater than 30 stores in the U.S. over a five-year period. Earlier this month, Costco said on an earnings call that it expects to open 30 recent clubs globally in its fiscal 12 months, including two relocations. Twenty-two are planned for the U.S.
Their moves come as value-focused retailers, comparable to off-price chains, drive store growth in the U.S. The retailers which have announced probably the most recent locations to this point this calendar 12 months are Dollar General, Burlington and Aldi, based on Coresight Research, a retail advisory firm that tracks openings and closures.
Similarly, club stores resonate with budget shoppers because they emphasize getting more for less.
BY THE NUMBERS: Warehouse clubs
BJ’s
Clubs in the U.S.: 244
Membership fee: $55 per 12 months or $110 for higher tier
Costco
Clubs in the U.S.: 603, including Puerto Rico
Membership fee: $60 per 12 months or $120 for higher tier
Sam’s Club
Clubs in the U.S.: 599, including Puerto Rico
Membership fee: $50 or $110 for higher tier
Source: Company web sites and most up-to-date earnings releases
BJ’s has a smaller reach than its club rivals. A lot of the Marlborough, Massachusetts-based retailer’s clubs have been focused on the East Coast. Its expansion will bring it to 21 states compared with Costco, which had clubs in 46 states, Washington D.C., and Puerto Rico as of Sept. 3, the tip of its fiscal 12 months. Sam’s Club has locations in 44 states and in Puerto Rico.
Yet BJ’s has been in growth mode since 2016, when it stepped up efforts to interrupt into recent markets, said Bill Werner, the retailer’s executive vice chairman of strategy and development. It has opened 27 recent clubs and entered 4 recent states over the past five years: Tennessee, Alabama, Indiana and Michigan. It opened seven recent clubs last fiscal 12 months.
It plans to open 10 to 12 clubs every year going forward, Werner said.
Yet BJ’s will need to persuade customers to purchase a membership, which may very well be a challenge if it is the second or third club in a customer’s backyard.
Greg Melich, a retail analyst for Evercore ISI, said BJ’s can stand out with its emphasis on grocery. It has nearly double the variety of items of club competitors, including many more fridge staples like fruits, vegetables and deli meats. Together with carrying bulk sizes of laundry detergent and paper towels, it also sells smaller items like a gallon of milk or single loaf of bread that lend themselves to a weekly grocery run.
“Chances are you’ll give you the option to purchase a bit of cheese that is not two kilos,” Melich said.
He said BJ’s is best off specializing in stealing sales from regional and national supermarkets like Publix and Kroger.
“It might be a mistake for BJ’s to attempt to be Costco,” he said. “That is not the purpose. The purpose is there are a variety of people in a variety of markets who would really like to purchase things cheaper than they’d be at their local food market.”
BJ’s Werner said the corporate’s typical customer has a median household income of between $75,000 and $100,000. He added that in the brand new markets BJ’s has entered, it has been capable of attract members who already belong to a different club.
Earlier this month, BJ’s said it expects modest growth through the full 12 months. The retailer said it anticipates comparable club sales to extend 1% to 2% 12 months over 12 months, excluding gas sales. It said adjusted earnings per share will range from $3.75 to $4.00, with the lower end of that falling below the $3.96 that it reported for probably the most recent fiscal 12 months.
As of Tuesday’s close, BJ’s shares had climbed greater than 12% this 12 months. That has outperformed the S&P 500’s gains of greater than 9%.