BJ’s is the latest club store to expand into new markets, income brackets

Club stores are having a moment in 2024: All three major warehouse membership chains, Costco, Sam’s Club, and BJ’s, have announced plans this year to aggressively expand their footprint while pitching themselves as an affordable option for shoppers looking to stretch their dollar.

The latest expansion news comes from BJ’s, which this week said it plans to open five stores in the Southeast and Midwest. The company previously said it’s on track to open 12 new locations in 2024 and sink $500 million into capex.

“Our real estate pipeline is the strongest it’s been in 20 years, and we look forward to helping even more families save up to 25% off grocery store prices as we add clubs to both new and existing markets,” Executive VP Bill Werner said in a statement.

BJ’s expansion plans, combined with its appeal to cost-conscious shoppers, indicate a broader shift in the warehouse category, John Clear, director at Alvarez & Marsal Consumer Retail Group, told Retail Brew in an email.

“It shows how club stores are now traversing income brackets, showing how attractive the value proposition is for multiple consumer profiles,” he said. “This should be worrying for competitors in traditional grocery as well as the discount and dollar chains.”

Clear added that continued inflationary pressures are pushing consumers toward club stores and private label brands, marking a departure from the trend after the Great Recession, when discount chains such as Dollar General kicked off massive, yearslong expansions.

Now the major discounters are struggling, and club stores are seeing more demand from cash-strapped customers.

Indeed, during the company’s most recent earnings call, CEO Bob Eddy acknowledged that “our lower-income members shopped with greater frequency in the fourth quarter, even as their wallets remain pressured.”

BJ’s store strategy could help build on these trends, Clear explained, noting that the chain’s latest round of store openings are in “smaller urban areas with lower relative average household incomes than is the standard strategy for the channel.”