retail

BJ's Is Confident About Its Value Positioning

BJ's

While people aren't yet storming warehouse clubs for higher-end purchases, the president and CEO of BJ's Wholesale Club says she has "zero worries" that the chain will lose its appeal among value shoppers as the economy recovers.

Addressing investors at the Cowen and Company 8th Annual Consumer Conference, Laura J. Sen did concede that she was wrong in her assessments about how quickly consumer spending would recover. "Consumers are still being very careful," she said in her remarks, which were webcast. "But once you're paying $2.29 for chicken, you're not going to go back to paying $2.99."

Outlining the company's strategy, Sen explained that BJ's positioning -- targeting more families than small businesses -- as well as its somewhat smaller size and willingness to accept all credit cards as well as coupons, continues to set it apart from its warehouse competitors, including Costco and Sam's Clubs, a division of Wal-Mart Stores.

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But while 90% of the Natick, Mass.-based chain's clubs operates within 10 miles of a warehouse competitor, "we estimate that our industry still has less than a 15% share of the food and drug market. Supermarkets represent the greatest opportunity for taking market share, primarily because of the savings we offer. On a like basket of items, BJ's is usually 30 to 35% cheaper than a supermarket, and 20% cheaper than a supercenter," she says.

Its costs continue to be much lower than supermarkets, which have additional expenses, including advertising. (Marketing is restricted to communications with existing members.)

While 75% of its sales are in food and consumable items -- with the meat department an especially big draw, offering savings of 30 to 45% -- "we have the fun and excitement of branded apparel and consumer electronics, which attract a higher demographic consumer."

She says the company has also intensified its pitch for new parents. "They are the ideal client for BJ's," she says, adding that they are especially brand and cost-conscious about diapers. "Once we win the loyalty of new parents, we want to keep them through the family life cycle."

Sen says private-label brands now account for 10% of sales.

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