Zayre is 2nd major discounter to start wholesale club arm

Discount Store News, Oct 29, 1984

MEDFORD, Mass. -- The Zayre Corporation has become the second major discount chain to enter the wholesale membership club fray, launching a new division which it hopes will comtribute $1.5 billion to corporate sales by 1989.

Zayre unveiled BJ's Wholesale Club, as part of its growth-through-diversification effort, which already includes the original Zayre discount store arm and two off-price apparel chains. BJ's virtually duplicates the wholesale membership format originated by the Price Club chain.

(Wal-Mart was the first major discounter to enter the wholesale membership club field, with its Sam's Wholesale Club, currently operating five stores.)

Zayre plans to operate 25 BJ's by 1989, and expects each to generate $30 million after the first 12 months of operation, according to Mervyn Weich, president of the division.

Three BJ's have already opened. The first, in Medford, Mass., opened in mid-September, and the second and third, in Johnston, R.I., and Hialeah Gardens, Fla., were set to open at presstime. A fourth BJ's is scheduled for Hartford, Conn., next spring.

Corporate management anticipates each BJ's will reach $65 million in annual volume within six years of each opening, according to Weich.

BJ's is a separately staffed and headquartered, wholly owned subsidiary of the Zayre Corp., which last year hit just over $2.6 billion in sales Zayre discount stores accounted for just under $2 billion, with off-price apparel chains T. J. Maxx and Hit or Miss at $475 million and $236 million, respectively.

To benefit from the name recognition Zayre enjoys and to take advantage of the company's expertise in specific market areas. BJ's are initially planned only for areas where Zayre discount stores are currently operating.

"We'd have to be crazy not to be capitalizing on the fact that we're owned by Zayre. As we get bigger and the name BJ's means more, there will be less reason to buold BJ's in areas where Zayre stores are," said Weich.

Zayre, however, has put virtually none of its own stamp on BJ's, which, judging from the Medford store visited by DSN, closely follows the price structure, merchandise mix and store layout of the wholesale club format pioneered by the San Diego, Calif.-based Price Club.

At the Medford BJ's, as in most wholesale membership clubs, high-ticket items are used as a lead-in at the front of the store.

For example, an IBM PC computer system was marked at $2,699.62 and was set out on the main traffic aisle. CE, also located in the front, included a Magnavox projection TV priced at $1,768.12 and a Magnavox model VR 8485 portable VCR for $845.24.

Across the race track aisle from CE, Seiko watches were displayed in a freestanding Plexiglass case, with a men's model at $80.67 and a ladies' watch for $135.94.

Targeting the small business owner, BJ's displays two sku's of 30-in. X 60-in. office desks, with genuine oak at $326.33 and steel $167.99. A Casio cash register was $184.92.

Like most wholesale clubs, BJ's concentrates on getting the best deals on identifiable brands. "We don't buy on programs. We're committed to having a consistency of products, but not necessarily always the same brand," Weich explained.

Although BJ's sells mostly hard goods, Weich envisions eventually expanding the 3,500-sq.-ft. apparel section, which included Jordache women's jeans at $10.85, a Members Only jacket for $29.94 and London Fog Raincoats for $109.

BJ's approximately 3,500 sku's are displayed in a warehouse atmosphere that appears less stark than many others, thanks to bright orange steel shelving, blond wood checkout stands and several skylights.

While self-service is the rule, BJ's also offers free installation service for members who buy Michelin radial tires at prices from $30.96 to $80.58. Wheel balancing costs $5 per wheel in the six installation bays located in the back of the store.

Business members pay a $30 annual fee with two optional associate memberships available at $10 each.

Employees of certain companies and members of selected organizations, such as credit unions, can also obtain membership cards. They don't pay a fee, but must pay 5% over posted prices.