Major club stores like Sam’s Club, BJ’s Wholesale, and Costco are ramping up efforts to enhance their offerings and win customer loyalty. It's working -- and working well, too. Consumers are so happy with the new benefits and prices they are seeing that visits are up year over year and subscription renewal rates are above 90%.
These stores are doing such a good job with value proposition that traditional grocers are adopting some of the club stores' business models.
“The line is continually blurring between clubs and traditional retailers,” contends Brian Numainville, principal at The Feedback Group. “Some traditional grocers have introduced membership programs, like Hy-Vee’s Perks Plus program, which costs $99 per year or $12.95 per month, and offers things like free delivery and express pickup, as well as exclusive product offers and fuel saver rewards.”
To get out in front of the pack, club stores have focused on three consumer-centric areas:
- Private label brands
- Technology advancements
- Growing deals and benefits
How are each of the club stores putting those into action? ConsumerAffairs looked into the current landscape and here’s what we found.
Sam’s Clubs
Sam's Club is focusing on digital innovations and expanding its grocery offerings. CEO Chris Nicholas, told Fox Business News that the company's emphasis on "digital connectivity" and its private-label brand gets the credit for the increase in member retention.
Sam's Club is also seeing a boost in "Plus" premium memberships. Customers who sign up for that get free shipping on orders over $50, curbside pickup, and 2% Sam’s Cash on in-club purchases.
The company has also introduced AI-enabled exit technology to reduce exit times and the "Scan & Go" app which allows customers to ring up items while they shop and pay via their phones, making shopping more efficient. Nicholas said these efforts are part of a broader push to enhance customer convenience and appeal to younger demographics, such as millennials and Gen Z.
As far as its private label brand Member's Mark is concerned, Sam's wants to elevate it into more of a lifestyle brand by expanding its home goods selection, including furniture and small appliances.
Sam’s is doing it in an interesting way, too. Instead of making top-down decisions, it’s leaning in on member feedback as to what products align best with customer values -- everything from voting on exclusive flavors to testing and trialing new items like grills.
Costco
Costco has introduced several consumer-facing innovations over the past three years. These include a way to invest in gold and platinum bars, enhancing its app for better user experience, and expanding its delivery services, especially for high-demand items like appliances and furniture.
But the area where Costco has put the most emphasis is price. Costco CFO Gary Millerchip recently told investors that the chain is cutting prices on its private brand Kirkland Signature products.
Price cuts reported by GroceryDive include reducing standard foil by $2, to $29.99; macadamia nuts by $5, to $13.99; and a 3-liter bottle of Spanish olive oil by $4, to $34.99.
Costco’s also expanded what it’s selling in the food aisles, adding in international food products and organic products like golden maple syrup and cashews -- another smart move given the fact that Costco's $6 billion in organic sales, last year, was enough to dethrone Whole Foods as the U.S.'s #1 seller of organic food.
BJ’s Wholesale Club
BJ’s may not be the household name that Costco or Sam’s is, but it’s earned a right to be in the same conversation. The retailer recently opened its 245th location in Palm Coast, FL, and is making significant headway in expanding its regional footprint in the Southeast.
Not unlike Costco and Sam’s, BJ’s is investing heavily in private label and fresh offerings (produce and deli items, for eample) with a goal of growing its private label sales to 25% and then 30% in the coming years.
And BJ’s is going toe-to-toe with Sam’s and Costco on things other than food. There’s BJ’s Gas which runs a little more than a dime cheaper than its competitors as well as optical centers and tire centers. In other words.
The company also has its eye on non-club retailers like Walmart. Leading up to Easter, BJ’s offered a collection of Easter essentials just like Walmart did. Another plus, as Melissa of Gfld MA said in her ConsumerAffairs review of BJ’s, is that the company offers a better deal with coupons because BJ’s allow customers to use both store coupons and manufacturing coupons.
BJ’s does realize that it must fight for position though and is putting a lot of emphasis on things that Costco or Sam’s don’t do, at least not with any frequency. One core value is being active in the community to try and help improve local food security but also strengthen BJ's local ties. One such reflection of that was partnering with Feeding Northeast Florida to donate unsold produce, meat, and dairy.
What's next?
It's hard to forecast what the future of BJ's, Costco, and Sam's will look like exactly, but all three are so devoted to the value propositions and experiences, they’re putting a lot of their chips on expansion.
BJ's CEO Bob Eddy said the company hopes to wrap up 2024 with 12 new locations and has more new units in the pipeline than at any time over the past 20 years.
Costco plans to open 25 to 30 new stores globally per year over the next decade. Sam's Club is opening 30 new stores over the next five years, its first expansion in nearly a decade.
All this leads to one thing: the warehouse club industry is dynamic and competitive, but BJ's, Costco, and Sam's are well-positioned for continued success. By continuing to spend money on technology, amplifying private label offerings, and expanding their footprint, they are adapting to changing consumer preferences and reinforcing their value proposition. As these retailers continue to innovate and evolve, they are likely to remain a dominant force in the retail landscape for years to come.