"We do not want to become a supermarket."
So said Michael Wedge, president and chief executive officer of BJ's Wholesale Club, the 150-plus-unit membership warehouse club based in Natick, Mass., in comments published last year in SN.
But BJ's recent moves and strategies might lead some to an opposite conclusion.
The company has been breaking with traditional membership club bulk-size merchandise practices in order to make its offerings more appealing to consumers who normally buy from supermarkets. Rival clubs Sam's Club and Coscto also cater to consumers, but BJ's has pushed the envelope farther, including:
Offering dozens of items in smaller packs in categories like meat, bakery, seafood and produce.
Merchandising wholesale and consumer-sized packs right next to each other.
Testing scent systems to make fresh-foods departments more appealing and conducive to impulse buying.
Installing supermarket-like aisle signs.
Wedge has added rhetoric to the battle with supermarkets through unusually blunt statements, which were published in SN.
Back in March of this year, he said, "Supermarkets certainly are in our crosshairs, when we look at less efficient forms of retail. We all know that's a business model under tremendous pressure."
Then, in May, he added, "We see tremendous potential for increased market penetration based on the supermarket industry's inefficiencies and higher retail prices."
Wedge has even called the Wal-Mart supercenter an "ally" in the battle to loosen the food market sharehold of traditional retailers.
It seems BJ's game plan is to pick up supermarket attributes to attract consumers, in the process distinguishing itself from Sam's and Costco enough to reduce competition with those operators. Sounds like a well-crafted strategy. However, there is an opportunistic element to all of this.
Gary Giblen, senior vice president and director of research for C L King Associates, New York, told me recently, "BJ's consumer focus is an expedient response to high supermarket prices in New England that result from limited opportunity for new supermarket entries. BJ's strategy has been notably less successful in non-union areas, such as Atlanta, where you have better-quality supermarket competition with lower prices."
How worried should supermarkets be when an operator like BJ's pushes harder on their turf? They should be watchful, but they might also remember that BJ's does not play on Costco's best-of-class field. That club operator has built a unique niche for quality and price.
That brings up a potential scenario that should really frighten supermarkets.
"If Costco ever bought BJ's, that would be scary for the supermarket industry," Giblen said. "It would put better management in charge of some assets in the Northeast and would accelerate Costco's penetration into certain markets."