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Placer Bytes: BJ's Wholesale on the Rise, Off-Price Potential?

by 
Ethan Chernofsky
 on 
May 18, 2020
Placer Bytes: BJ's Wholesale on the Rise, Off-Price Potential?

In this Placer Bytes we dig into the huge potential BJ’s Wholesale Club is showing and how two Off-Price leaders are positioned for the months to come.

BJ’s Driving a Rebound

BJ’s Wholesale Club is in the midst of a massive rebound. Visits to the wholesaler were up 18.2% in Q1 2020 as opposed to a 1.7% decline in the year prior. And there are signs that this turnaround is only picking up.

After a mixed 2019 when many months saw visits declining year over year, BJ’s kicked off 2020 with January visits down 3.0% year-over-year. Yet, this all changed with the pandemic hitting. Every month in the quarter saw visits rise with 7.3% increase in February, a 34.2% increase in March and a 9.9% increase in April. And while the crazy peak in March may not be reached again in the near future, the long term strength looks to be building. Visits during the week between April 27th and May 3rd, were 20.8% above the baseline for the period between January 2018 and May 4th, 2020. This surpassed the visit totals for all but three weeks during the period, the week before Christmas in 2018 and the height of the pandemic shopping in March 2020.

It’s also possible that this growth doesn't let up. The coming months will likely be guided by a heavier consumer orientation toward value and grocery, the exact position BJ’s holds. Additionally, the membership model incentivizes ongoing visits, helping BJ’s to sustain the success it experienced in Q1.

Off-Price, On Point?

Yes, the subtitle doesn’t really make sense, but how do you pass off that literary opportunity, I certainly couldn’t. But the real question is whether consumers will pass over apparel shopping in the coming months. Ross and Kohls both had a rough quarter with visit declines of 48.1% and 53.0% respectively. And, while this is certainly understandable considering the circumstances and closed stores, the bigger question focuses on the long term potential. 

And there is a very strong argument for why it’s there. January is generally not a great month for apparel following the surge of the holiday season. Yet, Ross saw a visit increase of 8.8% in January and 12.2% in February prior to visits plummeting as stores shuttered.

Kohls saw a similar trend with visits rising 8.7% and 7.6% year-over-year in January and February before taking their pandemic driven plunge. 

And this brings the conversation to the critical question, can visits return or has something fundamentally changed? There is the possibility that apparel simply falls out of favor for the coming months of economic uncertainty and these two brands struggle accordingly. However, there is a very real possibility that a period of surging traffic could be on the way. The influx of new inventory because of major brands being closed in the spring, the treasure hunt appeal and the value orientation could position these brands to thrive. 

Additionally, key competitors may be feeling the heat even more. 36.8% of Kohls shoppers and 30.6% of Ross shoppers also visited a JC Penney during this period. With potential store closings on the horizon on the back of bankruptcy announcements, much of these visits could be up for grabs. The combination of very strong performance heading into the crisis, effective positioning for the coming period of economic uncertainty and a weakened competitive landscape may actually set these brands up to thrive in the coming months and years.

Will BJ’s Wholesale continue to grow? Can these off-price apparel giants thrive in 2020? 

Visit Placer.ai to find out.

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