Key Takeaways

  • BJ's Wholesale Club said on its first-quarter fiscal 2025 earnings call Thursday that it is focused on getting more than half of its members into its higher-tier Club+ membership program to boost loyalty. Higher-tier members spend more and renew at higher rates.
  • President and CEO Bob Eddy revealed that higher-tier membership penetration rose 1 percentage point year over year in the quarter, surpassing 40% for the first time. "The momentum in our membership is a direct reflection of the exceptional shopping experience we provide at BJ's," he said during the call.
  • Digital experiences are also playing a key role in growth. Eddy noted that digitally driven comparable sales grew 35% year over year, driven largely by rapid curbside pickup and same-day delivery services.

Deep Dive

BJ's is willing to sacrifice some profit margin in exchange for a better e-commerce experience, with the rationale that higher customer loyalty more than compensates for the cost.

According to Eddy, digital orders accounted for more than 50% of sales in the first quarter of fiscal 2025, marking the payoff of the warehouse club's efforts in in-store pickup, curbside pickup, and same-day delivery. He added that the benefits of convenience outweigh potential downsides.

"These services can be a bit more costly because our associates are picking items for members and even helping load baskets or trunks for curbside pickup," Eddy said. "But member shopping behavior tends to increase as they engage more with these digital conveniences, and that incremental spend typically covers the added cost."

Eddy also said BJ's is investing in technology to reduce the financial and time costs of in-store fulfillment. The warehouse club is using autonomous inventory robots and artificial intelligence to generate efficient order batches and picking routes, which has cut the time associates spend gathering items by more than 45%.

Technology is also improving the in-store experience. According to Eddy, the quick-pay option that allows customers to check out with their phones, while still a small portion of the business, is growing every day.

These investments drove strong quarterly results. According to the company's earnings report, comparable sales excluding gasoline rose 3.9% year over year. Net sales increased 4.7% year over year to more than $5 billion, and membership fee income grew 8.1% year over year to $120.4 million.

While BJ's digital strategy is proving effective, some companies have found that an overemphasis on online convenience can negatively impact the in-store experience.

For example, Target's digital strengths failed to rescue its disappointing first-quarter fiscal 2025 results, which Neil Saunders, managing director of GlobalData Retail, attributed to employees focusing on rapid order fulfillment while neglecting core in-store services.

For now, however, BJ's digital-first strategy is steering the company along the path executives envision.

"We are committed to enhancing customer lifetime value and increasing engagement with our business, and members tell us every day that these convenience services are highly valuable," Eddy said.