The warehouse club sector has seen significant growth in recent years, fueled by the surge in food prices during the pandemic. BJ’s Wholesale Club, a rival to Costco and Sam’s Club, has been making moves to expand its presence, with plans to open a dozen new stores this year. This includes a potential move into North Texas, a region where the company currently does not have a presence. This expansion comes as Costco and Sam’s Club are also planning to open new stores, with Costco planning to open two dozen new locations in 2023.
Despite being the smallest of the three leaders, with sales of almost $20 billion last year, BJ’s is looking to capitalize on the changing consumer landscape. Consumers are no longer shocked by inflation and are voting with their spend, with higher foot traffic reported at all three warehouse club merchants. Costco, BJ’s, and Sam’s Club have all seen an increase in monthly visits compared to before the pandemic, indicating a shift in consumer behavior towards these warehouse clubs.
The increase in foot traffic has put pressure on traditional grocers, who are now faced with the challenge of retaining customers and competing with warehouse clubs. The key to success for traditional grocers will be in understanding the competitive landscape, listening to what customers want, and finding ways to compete with the price advantages of warehouse clubs while leveraging their own strengths. This will require a customer-focused strategy, with an emphasis on agility, learning, and partnerships to gather the necessary data and insights.
The move by BJ’s into North Texas and the expansion plans of Costco and Sam’s Club highlight the competitive nature of the warehouse club sector. With consumers increasingly turning to these warehouse clubs for their shopping needs, traditional grocers will need to find ways to differentiate themselves and attract customers. Building out fleets to address customer concerns about distance to the nearest club is one potential solution, but understanding and meeting the complex needs and preferences of consumers will be crucial for long-term success in this challenging market.
As consumers continue to grapple with inflation and higher food prices, the appeal of warehouse clubs as a one-stop shopping solution is likely to continue. Costco, BJ’s, and Sam’s Club are all looking to capitalize on this trend by expanding their presence and offering more value to shoppers. For traditional grocers, the challenge will be to find ways to compete with the growing giants in the sector while maintaining profitability and meeting the evolving needs of their customers. This will require a thoughtful and customer-centric approach that takes into account the changing landscape of the grocery industry.
