BJ's appeals with kosher, crab flavor, discounts Wholesale club targets Columbia

July 08, 1993|By Mark Guidera | Mark Guidera,Staff Writer

Crab-flavored potato chips and kosher foods may not have much in common, gastronomically speaking. But in the frenzied world of warehouse-style retailing, the two items are inextricably linked, at least in the Baltimore-area market.

You'll find both in bulk at the 116,000-square-foot BJ's Wholesale Club store in Columbia, which opened June 27.

"It's called knowing your market," says Herbert J. Zarkin, chief executive officer for Waban Inc., the Natick, Mass.-based company which owns BJ's.

Before selecting what to stock in the massive 6,000-item inventory of the new store, the members-only chain studied in detail the demographics and taste nuances of area residents.

The result: along with the tires, jewelry, TVs and toilet paper, customers will find an 8-foot section of kosher foods to appeal to a fast-growing Jewish population in Columbia. There's also crab-flavored potato chips, Old Bay seasoning, and Esskay "Oriole" brand hot dogs to woo transplanted Baltimoreans. Sweetheart brand paper products are on the shelves too, a tip of the hat to locally produced products.

BJ's has made its appreciation for the nuances of individual markets a hallmark of the company. Mr. Zarkin hopes that attention to detail will ensure strong sales volume at its Columbia operation.

The company expects 60 percent of its members to be residents, and the other 40 percent to be small business owners buying items for resale. The expected percentage of "general customers," or residents at the Columbia store is about 10 percent higher than at the average BJ's. The higher estimate is based on the 200,000 population living within 10 to 15 miles of the new Columbia store.

The Columbia store on Snowden River Parkway, which employs 130 people, opened along with another BJ's in Owings Mills.

The two new stores complete BJ's plan, launched three years ago, to ring the Baltimore area with stores in a move to gain market dominance over competitors such as Pace Warehouse and Wal-Mart Stores Inc.'s Sam's Club. BJ's has four stores open, more than any other warehouse club in the Baltimore-area. The company says it is looking at other undisclosed locations in the region.

To date, BJ's is the first warehouse operation to open in the county, though Wal-Mart Stores Inc. continues its fight in the courts to get approval for a store location on Ridge Road in Ellicott City.

BJ's executives expect to draw customers from Laurel, where competitor Pace Warehouse has a store, and possibly Glen Burnie, where BJ's has a nearby store in Pasadena. Drawing customers away from existing same-chain stores -- called "cannibalization" in the retail industry -- was a gamble Mr. Zarkin and company were willing to take to achieve dominance in the Baltimore area.

In the short run, he says, the new store in Columbia may hurt sales at the Pasadena store.

But in the long run it should build member loyalty for BJ's because customers know there's always a BJ's close by.

So far, membership sign-ups have been "very strong" at the store in Columbia, said Neil Swartz, assistant manager for merchandising. Both new locations feature a tire service center, a mail-order prescription drug service, a travel club, and a Burger King mini-restaurant.

Mr. Swartz says many customers are coming into the store for a look before deciding whether to purchase the $25 annual membership.

Customers can obtain a one-day pass to shop, but must pay a 5 percent surcharge on their purchases.

The club's marketing strategy is to offer a narrow selection of items for bulk purchase. For example, customers won't find the numerous variations of toothpaste that a grocery chain might carry, but they will find a few brands in bulk at a discount.

Product discounts range widely. For example, some jewelry items are discounted as much as 80 percent, said Mr. Zarkin, while household items on average are discounted about 15 percent. Food items, he says, are priced 26 percent lower than grocery chains.

While the company does not divulge expected sales volume at its stores, Mr. Zarkin said, company executives believe the Columbia store could prove one of its strongest. The company's best store is on Long Island, N.Y., he said.

The reason for the upbeat outlook for the Columbia operation: the area's higher than average household incomes -- almost 56 percent of the county's 69,000 households have incomes of $50,000 or more.

Also, BJ's executives were attracted by the Columbia area's preponderance of families living in homes they own -- a critical target market for the 38-store chain.

"Columbia is a very unique opportunity for us," said Mr. Zarkin, who was recently promoted to chief operating officer from his former position as president of BJ's.

"It's a planned community with very high household incomes, very affluent with lots of owner-occupied dwellings. We cater to the middle-income and above-the-middle-income family which lives in their own home, so this location is perfect for us."

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