There’s a reason so many people are willing to pay Costco’s annual membership fees.
Costco does a lot of things to offer its members exceptional value, from its low prices to its incredibly generous return policy.
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For Costco, there’s nothing more important than the member. And the goal is to get members to not only shop consistently, but encourage them to spend more by introducing exciting new inventory on a regular basis.
As Costco CEO Ron Vachris said in a Wall Street Journal interview, “We love the phrase, ‘you came in for a rotisserie chicken and you spent $300.'”
It’s this “treasure hunt” mentality that gives Costco a leg up over its competition.
Costco has developed its Kirkland brand with such care that it’s become synonymous with both exciting new products and quality products. That’s a tough thing to accomplish for a store brand.Â
And it’s part of the reason Costco members tend to remain loyal to the store.
BJ’s does a few things better than Costco
In the warehouse club space, there are three major players:
- Costco
- Sam’s Club
- BJ’s
Sam’s Club has long been regarded as a major competitor of Costco due to its large U.S. presence. With its smaller footprint, BJ’s has a much smaller share of the market.
Still, BJ’s reported in August that it recently reached a big milestone. During its most recent quarter, the company’s membership base grew to 8 million. The renewal rate at BJ’s was also an impressive 90%.
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While Costco may not view BJ’s as its strongest competitor, BJ’s does better than Costco in these key categories:
- Membership costs. BJ’s charges $60 per year for a basic Club membership and $120 per year for a Club+ membership. Costco’s basic Gold Star membership is $65 per year and its Executive membership is $130.
- Benefits at the pump. At BJ’s, Club+ members get 5 cents off per gallon every day. Costco Executive members don’t get a discount and don’t even get to earn 2% cash back on gas purchases.
- Curbside pickup. Not everyone wants to battle warehouse club crowds. BJ’s offers curbside pickup, which Costco doesn’t.
- Manufacturers’ coupons. BJ’s accepts them, while Costco does not.
Should Costco be worried about BJ’s?
Most retail experts would not consider BJ’s a major threat to Costco — more like a nuisance.
Costco operates more than 900 warehouse club stores worldwide, with more than 85% of them located in the U.S., Canada, and Mexico. BJ’s, in contrast, operates less than 300 warehouse club stores that are concentrated in the Eastern U.S.
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Costco’s massive footprint and reputation have, for years, enabled the company to negotiate great deals with suppliers to offer quality products for less.
But BJ’s clearly has an edge over Costco in a number of key categories. And the company is expanding.
In March, BJ’s announced plans to open between 25 and 30 new warehouse club stores over the next two years.
Notably, BJ’s is planning to expand outside its East Coast concentration with a number of stores scheduled for the Dallas-Fort Worth area beginning in early 2026.
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“Economic expansion and a growing population make Texas a great fit for us,” said Chairman and CEO Bob Eddy. “We believe our unique club model, which delivers savings of up to 25% off grocery store prices every day, will resonate with the families in this area.”
If BJ’s continues to broaden its reach into new markets, it could soon pose a threat to Costco — even if it’s not currently well-positioned to take too many customers away from Costco.
Maurie Backman owns shares of Costco.
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