BJ'S LAUNCHES SELF-DISTRIBUTION OF PRODUCE IN 26 STORES

Elliot Zwiebach

BOSTON -- BJ's Wholesale Club, Natick, Mass., intensified its effort to compete more aggressively with conventional supermarkets last week with the introduction of self-supplied produce at 26 stores in the Southeast.

The company's goal is to transition all clubs to the self-distribution produce program by the end of the year, Michael T. Wedge, president and chief executive officer, told attendees at the CIBC World Markets Consumer Growth Conference here last week.

"This is a significant merchandising initiative involving a transition from third-party procurement of fresh produce to self-run," Wedge explained. "It's all part of our mission to dramatically improve the quality and consistency of our fresh offerings."

In other disclosures during his talk:

Wedge said BJ's plans to resume its historic expansion rate of 10% growth per year beginning next year, with 15 to 16 new clubs planned, after concentrating on other areas for the past few years. This year's growth will include 10 new clubs, 15 to 20 renovations, 12 additional pharmacies and 10 to 12 gas stations, he pointed out.

He said most expansion in the Northeast over the next two years will consist of penetrating existing markets, which have the potential to achieve higher returns than new markets. In its newer marketing areas in the Southeast, "we'll continue to build out to achieve critical mass," he added.

Wedge also said BJ's will open its second-generation concept store in Florida by the beginning of next year, based on the success of its first concept store in Kissimmee, Fla., whose sales are averaging 10% higher than the rest of the Orlando market after 10 months. That store includes an enhanced electronics assortment, a wider selection of jewelry and other luxury items, dressing rooms and a kids' club, Wedge noted.

Wedge said BJ's has invested heavily in the last few years in a "consumer insight" initiative to determine what its non-business members want, and it's been using the data to adjust its merchandise and marketing.