BJ’s Shrinks the Club | Fast Five Shorts

Bj's Wholesale Club is opening its second small format BJ's location, this time in Delray Beach, Florida.

According to storebrands.com the new BJ's Market is 55,000 square feet, about half the size of a typical BJ's Wholesale location.

BJ's first introduced the market concept in Warwick, Rhode island back in 2022, making this only the second test of the smaller footprint format.

The store features fresh food preference, produce, sundries and seasonal products and is positioned as a convenient weeknight grocery run or a fast weekend trip.

BJ's EVP of strategy and development Bill Werner said, quote, bj's Market offers unbeatable value on groceries combined with a smaller footprint that makes for a quick shopping experience.

End quote.

John, we're going to you again who should be the most scared if a smaller format club operation preference proves successful, especially in Rhode island and Delray Beach, Florida.

Yeah, are there two different, two more different places?

Can we start there and they took them?

Yeah, this, this one's super interesting and, but in, in many ways a bit perplexing.

You know, you wait four years to take the second bite of the apple.

I hope you learned a lot right about the first one and then in a very different location.

I think my, my takeaway on this one or my take on it is I think this format will have limited potential because it's targeting a fairly thin sliver of the market.

So the way I would think through this is you have a club format, club, fundamentally limited SKU assortment and low pricing on a per ounce basis.

I mean obviously the dollar amounts could end up being quite large.

The last time I walked out of a Costco.

But on a per ounce basis, hopefully you're doing better.

That's fundamentally the value prop and their own quotes are saying we want you in and out.

Very convenient.

Hey, you just have a few minutes on a Wednesday night, go get your staples because you're not going to get a super wide assortment of things in experimentation.

So if I play that out, the other thing by the way, sorry, real quick, is that they are going to be ecom capable.

I saw that in the headlines as well that you can do curbside pickup and so on.

So they want you in and out or maybe just park in and park out and off you go with, with your goods.

So all that to me translates to this is almost like a mini fulfillment center.

I mean it sounds like a ghost store in some ways.

Right.

And we've seen other retailers kind of experiment with this.

You know, somebody comes in, they get their staples, they know what they're going to shop for.

Very little impulse buying and they're in and out.

Okay, who is that consumer and how many dollars are in that kind of trip demand moment, if you will.

I just don't know that it's that big.

So in terms of, you know, retailers that would be concerned, I think everyone's just kind of going to be on a bit of wait and see.

Maybe the ones that are more price oriented probably are a little closer to the, you know, the hot zone.

But the whether this format does well or not and they get to that third and fourth and fifth star, God knows where is going to depend on.

Is there actually enough demand out there for a pretty lock and load trip, you know, replenishment of sorts?

Are there enough dollars there to make this worthwhile for both the consumer and BJ's?

Right?

Yeah.

No, I think you bring up some really good points, John.

I looked to like the Costco early opening example too of like, you know, when you eliminate some of those friction points for people to get those essentials, like if milk bread, you know, produce becomes lower price available and it's a quicker in and out experience like DJs is kind of hammering in in this headline, you know, that to me brings issue for the public's locations in Florida, the regional players, the Winn Dixies in Florida that are, you know, those, that's where people are going for those quick in and out trips.

And if they can now get, you know, bulk pricing for those, those items that they typically are doing in and out trips on, I think that's where, where we, we could have some concern.

But I think your point is, is well taken in that there's, this is the second location that they built.

So what kind of scale do we really think that they're going to get and how much of an impact will that end up having?

Ken, let's go to you next.

What are your thoughts on, on BJ's and the slower price format?

Who should be scared?

You know, the regionals should be scared.

It kind of ties nicely into the first couple of topics.

Amazon's closing their grocery offering, but now BJ's is going to open a different one.

It's an interesting dynamic for me because, you know, they talk about going in for a quick run on a Wednesday night.

Quite honestly, when I go to Costco on a Wednesday night, there's nobody there either.

So I can make that run pretty quick.

So it's a, it's a, it's finding that niche.

You know, Rhode island could not be more different than Delray Beach.

So I'm fascinated as to how they're figuring out their demographics and what they're shooting at.

But yeah, you know, well, they can give it a go.

It's going to be interesting.

I think unfortunately, too many people are getting used to saying, well, I'll just order something and maybe the online drive thru pickup, excuse me, will work for them.

But more and more people are saying, I'm not even going to go out on a Wednesday night.

I'm just going to have it get delivered to me by some retiree in Florida, which the last time I checked there's a couple.

So we'll see how that works out.

Yeah, 40% or something.

I think I just heard of the population in Florida are still residents and retirees.

Okay, Chris, what do you think?

Who should be worried?

Yeah, I mean, I think, you know, I think it's interesting that you guys, you guys think these stores are so dissimilar.

I actually think they're closer than they appear in the mirror.

Because if you think about where the first one is, it's right in BJ's backyard.

Right.

And so BJ's, I think is looking that at that as the first experiment.

And I kudos to them for taking time to roll out the second one because that tells me that they waited potentially to get the operations down to the point where they felt confident they could roll it.

So where do they take it?

Well, they take it down to Florida where there's a lot of East Coasters that probably already have familiarity with the brand.

And every East Coaster, when they come down there for the weekend, for the week, for the six months period when they're snowboarding, whatever, is already going to have the BJ's membership.

So that's sticky.

And they're going to have the experience and now they're going to be like, maybe I'll try this.

So yes, I agree, the regional grocers are at risk here.

I think this is a concept actually that everyone needs to be watching for that reason.

Because if you can make a club experience work in 50,000 square feet, it's huge.

Now can they, I don't know if they can make it work in Florida.

They might be able to make it work in their own backyard.

But the one retailer that I think needs to be paying really close attention to this, it's not going to surprise anyone is Target.

Because Target has always had that reputation as the place you go when you're on vacation, and this could take that away.