To paraphrase a well-known tagline, membership has its benefits. As BJ’s Wholesale Club reported second quarter 2022 earnings on Thursday (Aug. 18), value creation for members was the strategic core of a strong quarterly performance, with digital sales also making big contributions.
Executives on an earnings call with analysts called out ways that BJ’s members realized value on purchases like gasoline discounts, also seeing growth from digital initiatives and new store concepts. BJ’s reported Q2 comp store sales of $274 million.
President and CEO Bob Eddy said store traffic, grocery and perishables all pushed earnings higher, calling that member count growth “impressive at 6% year over year. This was led by a combination of strong renewal rates and membership acquisition held by our growing success in digital acquisition, with digitally acquired member penetration rising.”
Groceries were a strong performer, with general merchandise and sundries comps also rising.
Eddy said renewals “hit a record of over 77% this quarter” as the big box retailers also improved member mix, and higher tier membership penetration grew to 37% year over year, “helped by increasing adoption rates for our co-branded credit card.”
Related: BJ’s Wholesale Club Opens Smaller BJ’s Market in Warwick, RI
“I’m sure the fact that members are able to save an extra 10 cents on gas has something to do with that,” he said, adding, “Higher tier members are more valuable, given their higher spending and greater loyalty.”
Commenting on digital, Eddy said, “We are generating robust growth across our digital channels anchored by buy online, pick up in club and curbside. Through the pandemic, our members have significantly altered the way they engage with us. Today, more than half of our members engage with us digitally, and this compares to approximately 25% pre-pandemic.”
Digital Does Its Part
He added that BJ’s is focusing more on data to drive digital experience and convenience for members, saying, “Everyone knows that value has always been a hallmark of the wholesale club industry, but it hasn’t always been as convenient as we want. Digital helps us solve that problem. If we can give people dollars back and time, both sources of huge value, we should absolutely be doing that, and that should help us win long term.”
Pointing to omnichannel efforts, Eddy said, “We see potential for even more digitally-enabled growth in the coming years as we further enhance our capabilities, deepen loyalty through targeted personalization, and unlock opportunities and retail media.”
He added, “Digitally-engaged members typically have higher average baskets and shop with us more frequently, which increases the likelihood for membership renewal.”
On expansion plans, Eddy said BJ’s will open 11 new stores this year, with Columbus, Ohio, Indianapolis and Nashville set to receive new BJ’s locations next.
Chief Financial Officer Laura Felice noted that “digitally-enabled sales in the second quarter grew 47% year over year, and over 350% on a three-year stack. Approximately 80% of our digitally-enabled sales are fulfilled by our clubs with services like BOPIS and same-day delivery.”
See also: DoorDash Moves Further Into Grocery With First Wholesale Club Partnership
Felice added, “We are seeing sustained strength in our grocery business, and we believe we can continue gaining market share because of our intense focus on value. We are also operating in a rapidly-evolving marketplace where high inflation is still impacting many aspects of our business. We’re working to stay ahead of shifting consumer behavior.”
It can be inferred that higher-earning paycheck-to-paycheck consumers are making up a larger percentage of the higher tier of members the chain is attracting.
Responding to an analyst’s question, Eddy said, “We’re seeing new members come in from across the economic spectrum as well. Even as you do see some pressure on the lower side of the economic spectrum, given the waning and government stimulus, those folks need to save money more than the average and we’re certainly seeing a lot of a lot of folks on the higher end come in as well as they search for value.”
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More