BJ's Looks to Improve Pricing vs. Rival Clubs

ELLIOT ZWIEBACH

NEW YORK — BJ's Wholesale Club is continuing to narrow the pricing gap between itself and its two major membership-club rivals, Herbert J. Zarkin, chairman and chief executive officer, said here last week.

“We're not looking to start a price war, but we want to get to within 100 to 150 basis points of Costco and Sam's,” he said during a presentation at the 14th Annual Goldman Sachs Global Retailing Conference.

Zarkin said BJ's has gotten more competitively priced on basic food items, “and as sales have improved, we've used the extra profit to lower prices in other categories, to increase payroll so we can operate better and to return money to shareholders.”

Asked about the competitive response to BJ's effort, Zarkin replied, “Costco ignores everybody, and rightly so, and Sam's has been somewhat more aggressive in some areas, and we've seen a narrowing of the differences among all three.

“But regardless of the competition, we know we have an obligation to [lower prices in order to] give our members better values, because they paid $45 to join.”

Asked whether he anticipates consolidation among the three clubs, Zarkin said it's unlikely the government would allow a combination of any two of the existing three operators. “So we don't see any business consolidation where one would take over another,” he said, “though it is possible there could be a change of ownership if someone buys any one of us.