BJ’s Wholesale customers will face a significant store change

BJ's Wholesale is planning a significant change to its in-store offerings as it sees customer behavior shift.

In the second quarter of this year, the warehouse club saw its comparable club sales (including gasoline) increase by 11.9% year over year, according to the latest earnings report . Its membership also grew to a record 8.5 million.

As sales grew, BJ's overall customer visits rose by 4.9% year over year, slightly outpacing Sam's Club's 4.7% increase, according to recent Placer.ai data . The stronger demand comes as BJ's has been working to offer members lower prices using tariff refunds it received from the government.

"Traditional grocers have been raising prices, creating an even more favorable backdrop for our value proposition," said BJ's Wholesale CEO Bob Eddy on an earnings call on Aug. 21 . "We continue to gain share, and as our price gaps improve, unit share has become an even clearer signal of member preference."

As BJ's sees increased demand, Eddy said the company plans to revamp its in-store assortment by reducing SKUs (stock-keeping units), or individual product varieties.

"We find ourselves over-SKUed," said Eddy. "It has been a longstanding opportunity. We have had efforts to cut SKU count in the past, and I would argue we didn't prosecute that opportunity in the right way. We just cut SKUs, which cut sales, and then we added some SKUs back."

He said the company is now in the process of "removing unnecessary choice" from its stores, a change members will gradually notice.

Instead of carrying multiple versions of the same product, BJ's will narrow its selection, concentrate sales among the remaining versions, and add new, innovative items in untapped categories.

Eddy said the company has already made these changes in its beverages and active nutrition categories, which are already yielding positive results.

Related: BJ's Wholesale plans major store changes as customers pull back

"Think about in traditional soda, we do not carry cans and 1-liter and 2-liters of the same product anymore," said Eddy. "We are adding in healthy soda, like Poppi and things like that. That is the idea around the building."

He said these changes will roll out over the next few years, with the next waves happening in September and toward the end of the year.

"Our goal really is to take about 20% of our SKUs out over the next couple of years, and that will sort of happen ratably," said Eddy. "That will largely get the chain down to where we find ourselves in new clubs, maybe a little bit lower than that."