Change Is in the Air
Successful companies understand the importance of change in the road to continued growth. As Ben Franklin once said, “When you’re finished changing, you’re finished.”
And Westborough, Mass.-based BJ’s Wholesale Club Inc. is one retailer that certainly understands the need to shake things up a bit. The privately held club store retailer is wholeheartedly embracing change — in the store brand space and beyond — in the name of growth and success. BJ’s recently added seasoned own-brand veteran David Atkins in the newly created position of vice president of own brands, as well as embarked on a revamp of its own brands program that emphasizes internal and external collaboration.
New role for own brands
The changes that have already been made to BJ’s own-brand program — or are still underway — trace their roots to a strategy shift that began almost two years ago, Atkins says. The retailer decided to place a greater importance and emphasis on its store brands to help drive loyalty to its clubs.
“Our leadership recognized that this was an opportunity for us to deliver great value for our members,” he says. “So over the past couple of years, we’ve embarked on this journey and have made significant progress.”
That journey also found BJ’s whittling 10 of its own brands down to just two: Wellsley Farms for food and beverages and Berkley Jensen for non-foods. According to Atkins, it was difficult for the retailer to maintain clarity and awareness for so many brands. BJ’s researched brand equity and loyalty among its members, and ended up deciding to keep what it deemed its two strongest brands.
Both brands boast exceptional quality — equal to or better than national brands — and represent a great value to BJ’s members, he explains. One new Berkley Jensen product that has already become popular with members is a laundry detergent.
“The performance is really, really strong,” Atkins notes. “We’ve been able to drive a lot of new members to the laundry category. They appreciate the premium clean without a premium price.”
And product differentiation also has become more important to the retailer as a way of driving repeat visits to its clubs.
“Our initial efforts around own brands were more centered on national brand equivalent and a handful of breakthrough items,” says Pete Poutre, BJ’s senior vice president of food perishables and grocery.
“Now we’re putting greater emphasis on unique and innovative items for our members to experience. And having those wonderful items in our club truly adds value to our membership.”
Chris Neppl, executive vice president of merchandising and logistics for BJ’s, notes that the change in focus also stands to benefit BJ’s.
“Own brands will help foster an emotional connection and build trust with our members that will ultimately drive loyalty and trips,” she says.
But the work has not been limited to products; store brand packaging, too, has been getting a lot of attention. Atkins says BJ’s worked with branding agency CBX to revamp Wellsley Farms and Berkley Jensen packaging and then tested different brand designs with its members to ensure the company was delivering what was needed in terms of messaging.
“When we’re introducing new products, we’re identifying upfront the three to five key reasons to buy,” he explains. “And [ensuring] that we make certain these messages come across on our packaging whether it’s through photography or through text to help members choose the right product.”
Collaborating internally
Another huge change to BJ’s private brand strategy is the move toward a collaborative approach to store brand marketing, merchandising and more, Atkins says. That means that the pricing, merchandising, marketing and logistics teams must understand the brand objectives and are expected to play a crucial role, along with the own brands team, in the brands’ success.
“What I want to be able to do in my role is to make sure that we establish guidelines, processes so that we know what we’re executing against, and then have the subject matter experts take the lead in terms of bringing our own brands to market,” he says.
Poutre calls the collaborative effort “exciting.” “We have a lot to accomplish in a relatively short period of time as it pertains to our own brands,” he adds, “and frankly, it’s vitally important to stay in sync and use all of our resources. This will ensure we align on what our priorities are and how we go to market.”
Right now, BJ’s buyers and divisional merchandising managers are working together to prioritize the list of store brand items that make the most sense for members from a development standpoint, Poutre says. On the Wellsley Farms side alone, more than 100 items are currently in the queue to be developed and launched within the next 18 months.
“Not only do we have a robust pipeline of new items in the queue, but our merchandising efforts pertaining to how we display them in club — as well as our marketing vehicles and the demos we conduct in club — have been accelerated a great deal,” he explains, noting that every single new product in the pipeline has a launch marketing plan behind it. Marketing vehicles that put own brands front and center range from e-mails and couponing to the BJ’s Member Journal member publication.
“Own brands works very closely with the marketing team to ensure key product messaging is incorporated into various promotions throughout the year,” says Maria Fruci, BJ’s manager of external communications. “Whether our members are looking for fresh meal solutions for their family, learning about the best pet food for their four-legged friend or finding great value on seasonal merchandise for entertaining, together we identify the best marketing vehicles to drive awareness on our high-quality own brands assortment.”
On the merchandising end, collaborative efforts include end-cap and pallet displays, as well as product demos. But BJ’s internal collaboration efforts aren’t limited to corporate-level functional areas.
“One of the most enjoyable parts of my job is working with many different departments to make certain that we’re delivering against the brand promise,” Atkins says. “So we make certain that team members who are working in the club understand what we’re trying to achieve while giving them what they need to execute it correctly.”
The clubs are very excited about the own-brand expansion efforts, adds Gina Iacovone, BJ’s senior vice president of field operations.
“The team members recognize this expansion as an opportunity to highlight the quality offering of our merchandise. From the new packaging being bright and bold to the great value these products represent, the clubs have confidence that once our members experience these brands, they will become raving fans and enhance their continued loyalty to BJ’s,” she says.
Seeking out partnerships
Internal collaboration is crucial in BJ’s efforts to build a best-in-class store brand program, but external collaboration also plays a very significant role. Atkins says the retailer must have a strong connection with its supplier partners — from an innovation perspective, in particular — so those suppliers view the relationship with BJ’s as a priority.
“I would say that this is one of our top initiatives because a strong collaboration with suppliers is invaluable to our success,” he says.
That means BJ’s will be working hard to educate its suppliers — existing and new — over the next year on what its own brands stand for and how it aims to bring new products to market, Atkins notes. It’s important for the company to deliver the right products and packaging to market, especially considering the limited-SKU environment in which it competes. Combining BJ’s member insights with its supplier-partners’ category expertise will be crucial to doing so as well.
“What’s important for us is to make sure we’re doing the research upfront, really developing the concepts — in many cases, with our suppliers — so we’ve got a product that will be extremely meaningful to our members,” he stresses. “If we make a mistake, being a limited-SKU environment, the risk is greater. But what’s truly positive, though, is if we nail it, the reward is greater,” he adds, noting that a lot of volume can be driven through the club channel.
Atkins adds that suppliers also have the ability to partner with BJ’s to develop more exciting general merchandise than what could be developed for a traditional grocer.
“Our Berkley Jensen line includes pet food, apparel, cookware, seasonal décor, outdoor entertaining options and much more,” he says. “We want to drive awareness to the supplier community of the growth opportunities within Berkley Jensen as we explore new ways to bring relevant merchandise in-club. New suppliers can help bring in expertly engineered Berkley Jensen products that reinforce our commitment of caring for our members. These products will continue to position BJ’s as a convenient, one-stop shopping destination.”
Atkins says BJ’s specifically aims to partner with suppliers to create products that support the brand objective by driving loyalty to its club locations.
“Those products should lead to repeat purchase,” he notes. “We definitely want products that also scream value to our members.”
Poutre says BJ’s currently has a great supplier base, although the retailer is “very particular” when it comes to choosing suppliers that are able to fulfill the promise of the premium-positioned Wellsley Farms.
“In that regard, we take the development of specifications of products very seriously, and our suppliers do as well,” he says. “But as we continue to look for points of differentiation; we talk about these breakthrough items and things that are just going to be unique to BJ’s and our members, and that really forces us to go beyond our current base of suppliers. We’re looking for innovative products to continue to delight our members with really great things at a really great value.”
One major focus area on the Wellsley Farms side is organic, Poutre notes. In fact, 25 percent of the 100-plus items BJ’s currently has in the brand’s product development pipeline will be organic.
“When we poll our members, organics is the number one category they ask us to do more of,” he explains. “It’s really hard to beat the value and quality that we’re offering.”
Another major priority is responsible sourcing, Poutre adds. (See the sidebar, p. 14.) To this end, BJ’s has been doing great work within seafood sustainability and other areas.
“That really has been a change for our buyers as well,” he says. “It’s not just about the best cost; it’s about quality and it’s about sustainability. …People want to be associated with companies that have similar values regarding the environment and the supply chain, and BJ’s is deeply committed to the long-term health of local and international communities and sourcing environments.”
A strategic plan
BJ’s also has been putting into place other changes that will allow it to meet its new store brand goals. Working with Atkins, for example, the retailer recently restructured the own-brand marketing budget so it will be able to use targeted dollars more strategically, Poutre says. And own brands also will play a pivotal role in new-member recruitment efforts.
“One of the things that we’re going to be offering our potential members are a number of high-velocity coupons for great Wellsley Farms and Berkley Jensen products to try as they are thinking about joining,” he says. “They will show the great value and quality of our products.”
BJ’s also plans to add to its own brands team to ensure it has “the right brand focus” to meet its “aggressive expansion goals” going forward, Neppl notes. Key private brand goals, looking ahead, include executing a product development model that includes “a more thorough process from concept development to post product launch” (a joint effort of the own brands and merchandising teams); continuing to launch new innovative products that set BJ’s apart from other retailers in terms of quality and value, exclusivity and differentiation; and to enhance existing supplier partnerships while fostering new ones by engaging in efforts to educate these suppliers about the company’s own-brand goals and priorities.
“By aligning with BJ’s overall focus, own brands will meet the needs of value, freshness, selection and quality for our members,” Neppl adds.