BJ’s Wholesale, Costco and Sam’s rival will open clubs in the Southeast

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 the competitive membership warehouse market.

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 company plans to open greater than a dozen latest clubs this fiscal 12 months, including the already announced club in Louisville, Kentucky.

A smaller rival Costco AND Walmartowned by Sam’s Club is the latest warehouse club to share its expansion goals. In early 2023, Sam’s Club announced that it might open over 30 stores in the US inside five years. Earlier this month, Costco said in an earnings call that it expects to open 30 latest clubs worldwide in the financial 12 months, including two relocations. Twenty-two are planned for the US

Their moves come as value-oriented retailers equivalent to discount chain stores are driving U.S. store growth According to Coresight Research, a retail consulting firm, the retailers which have announced the most latest locations this calendar 12 months are Dollar General, Burlington and Aldi track opening and closing.

Similarly, club stores appeal to budget shoppers because they emphasize buying more for less.

BJ’s has a smaller footprint than its club rivals. Most retailer clubs based in Marlborough, Massachusetts are targeting the East Coast. The expansion will cover 21 states in comparison with Costco, which had clubs in 46 states, Washington, D.C. and Puerto Rico as of Sept. 3, the end of the fiscal 12 months. Sam’s Club has locations in 44 states and Puerto Rico.

But BJ’s has been in a growth phase since 2016, when it stepped up efforts to enter latest markets, said Bill Werner, the retailer’s executive vice chairman of strategy and development. Over the past five years, it has opened 27 latest clubs and entered 4 latest states: Tennessee, Alabama, Indiana and Michigan. It opened seven latest clubs last financial 12 months.

Werner said he plans to open 10 to 12 clubs a 12 months.

However, BJ’s will must persuade customers to purchase a membership, which generally is a challenge if it’s the second or third club in the customer’s backyard.

Greg Melich, retail analyst at Evercore ISI, said BJ’s may stand out resulting from its emphasis on groceries. It incorporates almost twice as many products as club players, including many more fridge staples equivalent to fruit, vegetables and meats. In addition to carrying large quantities of laundry detergent and paper towels, it also sells smaller items, equivalent to a gallon of milk or a single loaf of bread, which might be suitable for weekly grocery shopping.

“You might be able to buy a piece of cheese that weighs no more than two pounds,” Melich said.

He said BJ’s could be higher off specializing in stealing sales from regional and national supermarkets like Publix and Kroger.

“It would be a mistake for BJ’s to try to be Costco,” he said. “That’s not the point. The idea is that in many markets there are a lot of people who would like to buy things cheaper than at their local grocery store.”

BJ’s Werner said the company’s typical customer has a median household income of $75,000 to $100,000. He added that in the latest markets BJ’s has entered, it has managed to draw members who already belong to a different club.

Earlier this month, BJ’s said it expects moderate growth throughout the 12 months. The retailer said it expects comparable club sales to grow 1% to 2% year-over-year, excluding gas sales. It said adjusted earnings per share would range from $3.75 to $4.00, with the lower end falling below the $3.96 reported for the last fiscal 12 months.

As of Tuesday’s close, BJ’s stock is up greater than 12% this 12 months. This outpaced the S&P 500 Index’s gains of greater than 9%.