Analysis of BJ’s Wholesale Club

Abstract

I would like to analyze BJ’s wholesale club. BJ’s Wholesale Club is a member’s only warehouse store, just like Costco or Sam’s club. This company started in 1984. They operate mainly in the east coast of the United States and Ohio. Fortunately, I have one store in my neighborhood. That gave me the opportunity to familiarize myself with BJ’s. I would discuss marketing strategy and implementation and I will explore an area that needs improvement.

Keywords: value proposition, BJ’s Whole Sale club

 

 

BJ’s Wholesale club is based out in Massachusetts. They have 214 stores, in the east coast of US and Ohio (Troy, 2017). BJ’s Wholesale is membership-only warehouse club. To get the 1-year membership you need to pay $45 and you can include someone from your household with your membership. In the store, you will get TV and other electronics, furniture and any other grocery item you can think of. They offer travel services too along with auto parts. And my favorite is if you have BJ’s membership, you get a discount from Auto insurance. BJ’s main competition is Sam’s Club and Costco. Especially after Costco broke the tie-up with Amex and started accepting any credit card, Costco is giving harder competition. Consumers outside of east coast the default winner is Costco with 510 locations spread all over the US and Puerto Rico (Gana, 2017). BJ’s has 2 brands – “Wellesley Farm” and “Berkley Jensen” and these 2 brands consist of 10% of their total sales (Troy, 2017).

I signed up because I got a promotional offer with my credit card. I paid only $25 for the yearly membership and I got a $20 store gift card, just for using a certain brand of Credit Card. So essentially I signed up for only $5. And their promotions did not stop there. They have in store rack of coupons. Even if you do not carry the coupon book they send you every month, you can still grab some coupons in store, and yes, they send you a coupon book every month. You can combine these coupons with any other coupon you get for the brand you want to purchase. They flood the customers with promotional materials. Nonmembers receive promotional offer to join the club. Being a warehouse, they target pretty much everyone, every age group, people from every income group and race, whoever wants to get bargains and discounts. The marketing strategy is very simple, they try to get new members using promotions and they offer coupons to boost sales. They use Direct mails, a partnership with brands like American express or e-commerce site such as Groupon to find members.

Now that we have talked about the “promotion” let us talk about the “price” which is important too. BJ’s claim that on average customers save 25% on their purchases (PR Newswire, 2017). BJ’s offers great savings when you compare with the supermarkets and   Walmart.  BJ’s has a gas station too and it offers gasoline for a discount price to the members. So, the membership gets you discount grocery and gasoline for your vehicle. So the target segment includes anyone with vehicles too, because of the discount they offer on gasoline and diesel. When we talk an about target segment, BJ’s target segment is wide, small businesses buy stocks from them and individual consumers with membership are in target segment too. Mainly who have a big family or like to purchase in bulk.

Now that we got the idea of “Price” and “Promotion”, let us discuss the “place”. This is a part of their implementation strategy. BJ’s stores are is situated near an exit on buy highway in the state of Massachusetts.  The benefit of the locations is interesting. We live near Boston, and when people return from work they can quickly take the exit, do their shopping and take the route back to the home in suburbs. I think the stores are very strategically placed to capture suburban customers. And again these suburban customers are part of a target segment.

Now let us work on the value proposition. Bj’s offer cheaper price and plenty of coupons to make it worthwhile to find good deals on what you need. You will get organic produce, electronics, books, kitchen and home appliances and cheap gas and much more. To quote Chris Baldwin, the CEO of BJ’s “We sell groceries at 25 percent less than grocery stores on average in our markets and we validate that every week”. Their value proposition is their discounted price that helps you save around 25% on grocery or anything else you might buy. According to Chris Baldwin, the CEO due the value proposition such as the discount on gasoline, BJ’s has a loyal customer base with 85.5% renewing membership (Troy, 2017).

But when it comes to marketing strategy BJ’s wholesale is pretty old school, they send direct mails and some television ads. They are active on YouTube and Facebook but they do not advertise much on internet. They are consistent in promoting the price and savings consumers get. I think marketing locally is a good idea for them. BJ’s is not an e-trailer or e-commerce site, although they let the members make purchases via internet. Sending direct emails to the neighborhood is effective for BJ’s as most people would have to visit the brick and mortar store anyway. But besides airing commercials during holidays BJ’s do not advertise much. I think they can target potential customers on social media. Since they already have their member profiles, it will be easier for them to target potential customers on social sites. Majority of BJ’s members come from income bracket of $75000 – $90000 (Troy, 2017), maybe they can expand the range. But informing potential customers about how they can benefit from the membership is crucial. They ran a promotion last year when they gave away free membership for 3 months, I think that was great. Anyone could come in and find out the benefits. They can use social media too. Using their Facebook page or YouTube videos they can tell target segment about all the options to save money.

4th and final point is fixing the problems BJ’s have. As Ken Krogue mentions “Price and quality are obvious, but in the age of mobile and the Internet, speed of service may be the new secret sauce.” With so many great promotions BJ’s is already doing great on price. But of course there are areas BJ’s can improve. One is customer service. BJ’s checkout lines take a lot of time.

To improve the checkout speed, they can install self-checkout counters, or they should promote buy online and pick up in a store more like Walmart does. So that is one area “Speed” they need to work on.

As BJ’s offer credit card and membership, they track consumer spending habit (Troy, 2017). They can make marketing more targeted. Based on shopping habit consumers should receive extra coupons. Right now their coupons are generic, so everyone gets every coupon. So most of the coupons get wasted.

Moreover, BJ’s should try to reach out to target segment using digital options. Leveraging social media presence would a good option. If target segment gets to know about the benefits they might sign up. From direct mail, target segment do not get to know the benefits very well.

 

Conclusion – BJ’s helps members live generously by saving them money. They reach out to target segment mostly via direct mail, promotions. But they should reach out to target segment using social media too. Potential customers need to know more about BJ’s, need to understand the benefits before they sign up.

 

 

 

 

 

 

 

 

References

Gane, G (June, 2017). Costco vs BJ’s Membership Comparison: Which Warehouse Club Is Better? Retrieved from https://www.christianpost.com/news/costco-vs-bjs-membership-comparison-which-warehouse-club-is-better-188621/

Krogue, K. (2015, March). What Is Value? The Costco Value Proposition. Retrieved from https://www.forbes.com/sites/kenkrogue/2015/03/26/what-is-value-the-costco-value-proposition

Troy, M. (2017, May). In Focus: BJ’s Wholesale Club. Retrieved from https://retailleader.com/focus-bjs-wholesale-club

PR Newswire (October, 2017). BJ’s Wholesale Club Comes to Roanoke, Saving Area Shoppers Nearly $60 Million in Savings with New Roanoke Location. Retrieved from https://finance.yahoo.com/news/bjs-wholesale-club-comes-roanoke-120000720.html

 

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