BJ's Focuses on Assortment, New Members
BJ’s Wholesale Club has made a slew of changes this year that helped it turn the corner from reacting to the COVID-19 pandemic to managing it. Product assortment has been a large focus for the retailer as it expands into categories in high demand by its growing Millennial and Gen-Z member demographic.
While the pandemic has negatively impacted many areas of retail, BJ’s said that it has actually accelerated the pace at which it could make changes it was already planning like simplifying assortment.
“With assortment, strong underlying demand driven by increased food-at-home trends and consumer investment in their homes allowed us to considerably accelerate plans to change our product and services offerings,” BJ’s president and CEO Lee Delaney said during the retailer's second quarter (ended Aug. 1) earnings call. “We essentially revamped our assortment in real time, selling through old inventory at a rapid pace, simplifying and expanding into high-growth and high-demand categories where we did not previously compete.”
The retailer accelerated its food business reset in nearly 200 clubs to offer more healthy and organic options months ahead of its initial schedule, and added product from more than 32 new manufacturers across food as well as personal protective equipment, personal care and household categories.
The number of new members joining the warehouse club have increased, particularly among young, affluent, more digitally engaged shoppers. The retailer has also reported comparable store sales growth of 22% from both general merchandise and its services division in the second quarter, largely driven by strong sales in apparel, TV and other home-related categories.
“We knew changes here would be important to engage younger members and accomplishing it so quickly should aid our retention efforts with our new first year members,” Delaney said. “… We continue to expand our general merchandise assortment, delivering great prices on well-known and new brands including Sony, Puma, Lucky and [Hanesbrands’] Champion. We also reinvented the way we buy apparel to be more opportunistic and capitalize on market disruptions.”
In June, for example, BJ’s tied in to Pride Month by merchandising themed socks, fanny packs and hats from brands including fashion company Steve Madden. A dedicated, rainbow-colored pallet display stocked the apparel and accessories throughout the month. Other well-known apparel/accessory brands spotted at BJ’s in the last few months include Levi Strauss’ flagship brand (which also offers a line of clothing at Target stores) and Dockers garment brand, Adidas’ flagship brand and Reebok, and Authentic Brands Group’s Nautica and Aeropostale.
Most of the name-brand apparel is stocked on dedicated, branded pallet displays. The retailer also spotlights various individual belts from Levi’s, Dockers and Nautica on a belt hanger display, similar to the kind used at T.J. Maxx or department stores.
Now boasting more than 6 million paid members, BJ's said in August that it had earned more than 18 months worth of membership enrollments in the past six months, and if it continued on this path, it expects to earn three years worth of enrollments in just one year. “In this environment, we will look for additional opportunity to accelerate our transformation, remake our balance sheet and drive step change levels of profitable growth,” said Delaney. “We hope to look back on this turbulent period as our moment in time to radically improve our business.”
The retailer is also focused on incremental and targeted marketing, especially to engage new members. Delaney indicated that BJ's is "closely monitoring [new members'] behavior and utilizing a targeted, personalized approach" to keep them engaged in shopping while delivering "consistent and relevant" marketing across channels.
Channel rival Costco has also used assortment as a way to attract younger members, though that warehouse club has placed an emphasis on prestige beauty brands, especially online.
NOTE: For the full photo audit for this article, visit p2pi.org. Path to Purchase Institute members have access to more than 1,260 photos and 160 articles of marketing and merchandising activity at BJ's, along with a full Retailer Profile outlining the chain’s operations and strategies.