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BJ's Wholesale (BJ) Digitization Efforts Help Win Customers

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Zacks Equity Research
·3 min read
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In this ultra-competitive retail landscape, BJ's Wholesale Club Holdings, Inc. BJ has been making multiple changes to its business model to adapt and stay relevant. Evidently, the company has been benefiting from coronavirus-induced spike in demand, courtesy of its better pricing, private label offerings and merchandise initiatives.

This operator of membership warehouse clubs has been also making investments to enhance omni-channel capacities, in the wake of rising competition. Undoubtedly, this Westborough, MA-based company is leaving no stone unturned to improve top-line performance and expand customer base.

Let’s Introspect

The coronavirus pandemic and the resultant stay-at-home trends led to an increase in online shopping. Clearly, BJ's Wholesale Club has been sparing no effort to bolster omni-channel operations and ramp up delivery services. The company has been directing resources toward expanding digital capabilities in order to better engage with members and provide them a convenient way to shop, including same-day delivery, curbside pick-up and buy-online, pickup-in-club (BOPIC).

The company has built a strong digital portfolio with Bjs.com, BerkleyJensen.com, Wellsleyfarms.com, delivery.bjs.com and the BJ’s mobile app. This facilitates members to buy, review products and digitally add coupons to their membership card. Markedly, the company has launched curbside pickup and expanded BOPIC service for fresh and frozen grocery items at all its locations.

During the third quarter of fiscal 2020, digitally-enabled sales surged 200% and added 4 percentage points to comparable club sales, excluding gasoline sales. This followed an increase of 300% and 350% in the second and first quarter, respectively.



Meanwhile, comparable club sales during third-quarter fiscal 2020 rose 14.1%, following an increase of 17.2% and 19.9% in the second and first quarter, respectively. Excluding the impact of gasoline sales, comparable club sales surged 18.5% during the third quarter. Impressive comparable sales growth of 19% in the grocery division contributed to this upbeat performance.

Notably, the grocery division gained from increased demand for fresh meat, frozen meals, fresh produce, beverages, salty snacks, paper products, cleaning supplies, and health and beauty items, owing to the coronavirus outbreak.

Wrapping Up

BJ's Wholesale Club’s focus on simplifying assortments, expanding into high-demand categories and building own-brands portfolio bodes well. The company also remains committed toward enhancing omni-channel capabilities and providing value to customers. Cumulatively, these endeavors have been contributing to growth in membership signups and renewals, resulting in higher membership fee income, higher average members per club and decent comparable club sales growth.

Notably, the company looks well-poised continue momentum in the new year, given its sound fundamentals and growth efforts. Impressively, shares of this Zacks Rank #3 (Hold) have climbed 99.2% in the past year compared with the industry’s growth of 0.6%.

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