BJ's readies own brand assault on Detroit

Food retailing competition is heating up in the Detroit area, where BJ’s Wholesale Club is slated to make its market entry next month. The $13 billion operator of 217 membership warehouses is scheduled to open its first location in Taylor, Mich., on Nov. 19 and a second location in Madison Heights, Mich., on Nov. 2. A third location in Chesterfield Township, Mich., is planned for early next year.

Westborough, Mass.-based BJ’s is appealing to prospective members unfamiliar with its brand of retailing by touting 25% off grocery store prices, low gas prices and key differences relative to Sam’s Club and Costco Wholesale, such as a larger assortment of fresh food, smaller pack sizes and acceptance of manufacturer coupons.

BJ's sells numerous products under its two store brand lines: Berkley-Jensen, which includes food and non-food items; and Wellsley Farms, a premium line of products that includes dairy products, produce, snacks, coffee, wine, juices, heat-and-eat meals and more. BJ’s private brand penetration rate is about 21%.

In a recent earnings call with investors, BJ’s CEO Christopher Baldwin said that fresh fruits and vegetables were one of the fastest-growing areas of the business in terms of unit sold. Baldwin noted that produce, bakery, meat and rotisserie chicken have been strong performers.

The Detroit entry is a big deal for BJ's. The company hasn't entered a major new market in 20 years and it is primarily known for its presence along the East Coast. To compensate for lack of awareness in Detroit, the company has been running an aggressive ad campaign and pre-opened its gas stations in October to help with new member sign-ups.

Also, see BJ's entering Detroit market with sass.

Mike Troy is Editorial Director of EnsembleIQ's Grocery Group.