BJ’s (BJ) is going down a bold path that one of its main competitors, Costco (COST) , embarked on a few months ago, which frustrated some of its consumers who are feeling the brunt of inflation.
Currently, BJ’s is starting to see strong membership growth. According to the company’s third-quarter earnings report for 2024, it has reached a “milestone” of 7.5 million members.
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Its sales are also on the rise as its comparable club sales (excluding gasoline sales), increased by almost 4% year-over-year. Also, its online comparable sales grew by a whopping 30%, compared to the same time period last year.
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BJ’s recent rise in popularity contributed to the company bringing in $115 million from membership fees alone during the third quarter, which is about an 8% increase from what it earned during the same quarter in 2023. It also managed to grow its net income by roughly 19% year-over-year.
BJ’s announces a major membership change
While BJ’s brings in healthy profits, it is feeling confident enough to make a bold membership change. The warehouse club just announced that for the first time in seven years, it will be raising its membership fees, effective Jan. 1, 2025.
The annual membership fee for BJ’s basic tier is set to increase by $5, making the plan $60 a year. For its most expensive tier, a Club+ membership, the annual fee will increase from $110 to $120, but with a new benefit that offers members two free same-day deliveries a year.
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“Since our last fee increase in 2018, we have invested heavily in the value of BJ’s membership,” said BJ’s CEO Bob Eddy during a recent earnings call. “We’ve raised average hourly wages by nearly 40% across our clubs and DCs. We provide better rewards and gas benefits and launched a new co-brand credit card to deliver more value to our members.”
Eddy also claimed during the call that the hiked fees will help the company invest in “labor and better value.” He also said that even though the company has recently seen some of its members pull back on their spending, especially with higher-priced items in “discretionary categories,” the company has “confidence” in raising fees.
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“We’ve got all-time high renewal rates,” said Eddy. “The behavior of our members is improving every day. And that gives us the confidence to announce the fee increase that we announced today.”
BJ’s is taking a page out of Costco’s book
The move from BJ’s comes after Costco raised its membership fees on Sept. 1 for the first time in seven years. Costco’s basic annual membership fee increased from $60 to $65, while its executive annual membership fee rose from $120 to $130.
Costco announced the price increases after it revealed earlier this year that it was increasing wages for managerial roles and hourly employees in its warehouses.
Costco members were divided on the change. While some welcomed the price hike with open arms, claiming that the increases were minimal, others weren’t too keen about the higher fees.
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Despite BJ’s upcoming price increase, it is still a cheaper option than Costco.
Sam’s Club is also another major competitor of BJ’s, and it hasn’t increased its membership fees since 2022. Sam’s Club is currently beating BJ’s and Costco in regards to pricing as a basic Sam’s Club membership is $50 a year, while its Plus membership is $110 a year.
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