BJs Wholesale Club Reinforces Position with Strong Business Model 

December 18, 2022  by HFBusiness Staff in Business Strategy, Industry   

Its relentless efforts to boost the membership base, simplify assortments, enhance digital capabilities and accelerate club openings have been contributing to sales. The company has been working to bolster omnichannel operations and ramp up delivery services.

BJ's Wholesale Club’s focus on simplifying assortments, boosting marketing and merchandising capabilities, expanding into high-demand categories and building its own-brand portfolio bodes well. Own brands penetration increased to 24% of merchandise sales in the third quarter of fiscal 2022.

These endeavors have contributed to growth in membership signups and renewals, resulting in higher membership fee income and decent comparable club sales growth.

While the membership fee income jumped 8.7% year over year, the member count increased 6% in the third quarter, buoyed by healthy renewal rates and membership acquisition. Markedly, total comparable club sales jumped 9.7% in the third quarter of fiscal 2022. Excluding the impact of gasoline sales, comparable club sales rose 5.3%, driven by traffic and basket growth.

BJ's Wholesale Club has been directing resources toward expanding digital capabilities to better engage with members and provide them with a convenient way to shop, including same-day delivery, curbside pick-up and buy-online, pickup in-club.

It has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and BJ’s mobile app. These enable members to buy, review products and digitally add coupons to their membership cards.

Further, BJ's Wholesale Club’s ExpressPay allows members to scan items as they shop and pay for their purchases in the BJ’s mobile app. The company also teamed up with DoorDash to provide on-demand grocery delivery from its stores.

Management believes that digitally engaged members have higher average baskets and make more trips per year than members who shop in-club only. Digitally enabled sales rose 43% in the third quarter. Clubs fulfill approximately 80% of digitally enabled sales.

We believe that BJ's Wholesale Club’s growth strategies, better price management, decent membership trends and digitization should keep supporting comparable sales trends.

Management now envisions fiscal 2022 comparable club sales, excluding the impact of gasoline sales, to increase between 5% and 5.5%, up from the prior view of 4-5% growth. It foresees comparable club sales, excluding the impact of gasoline sales, in the band of 4%-5% for the fourth quarter.