Grocery Stores And Chains Costco
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ByJacob Smith|
Since Price Club, the very first warehouse club, was founded in 1976, the business model has gone from strength to strength. In the 1980s, reporters at The New York Times were astounded by how cheap items stocked by warehouse clubs were; this remains the main appeal of warehouse clubs today. In an interview with Beverage Industry, business analyst and researcher Sujeet Naik explained how these stores manage this: "Club stores often have lower prices compared to traditional supermarkets due to their ability to negotiate better deals with suppliers and pass on the savings to customers."
Today's customers are spoiled for choice when it comes to warehouse clubs. As two of the most popular, Costco and BJ's Wholesale Club have become the go-to grocery store for millions of Americans. However, given the similarities between the way the two businesses operate and what they stock, many people struggle to decide whether to purchase a Costco membership or a BJ's Wholesale Club membership. In this article, we provide you with all the information you need to make this choice.
There are many more Costco stores in the U.S.
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When trying to decide which warehouse club to become a member of, the first thing that must be considered is which brand has clubs close to you. Costco, which was founded in 1983and became the pre-eminent warehouse club when it merged with Price Club 10 years later, has the greatest number of stores in the United States,with well over 600. Despite only being founded one year later, BJ's Wholesale Club has far fewer locations. Statista puts the number at 243, most of them concentrated in the Southeast and Midwest. Naturally, this means that many Americans will only have access to Costco.
BJ's Wholesale Club is trying to cut this gap through steady expansion. The company has committed to opening 12 clubs during the 2024 fiscal yearand is well on its way to doing so. By targeting both new and existing markets, BJ's Wholesale Club hopes to build its customer base across the U.S. Of course, it's in Costco's interest to maintain its numerical advantage. Thanks to the success of its overseas locations, it has plenty of money to do so. A lot of its global earnings are being pushed into opening many new American Costco clubsthroughout 2024 and beyond.
Non-members can shop at BJ's Wholesale Club
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Both Costco and BJ's Wholesale Club work on a membership model. This means that prospective customers must pay an annual fee if they want to shop in the company's stores. This poses a conundrum for first timers who are forced to pay their membership fee without ever having experienced what it's like to shop at that club. BJ's Wholesale Club offers a workaround wherein customers can get a one day shopping pass. This pass allows them to visit BJ's Wholesale Club stores and purchase items, albeit while paying a 15% surchargefor the privilege. A similar pass is also available for BJ's Wholesale Club online shopping services.
Costco does not offerany type of free or short term pass. However, non-members are allowed to make purchases in Costco pharmacies. What's more, Costco does allow non-members to shop online. The reason why many people choose not to is simple: The products generally cost more when sold via the website, and every order is topped with a 5% surcharge. This means that it's nearly always worth it — unless you are only conducting a cheap, one-off shop — to simply pay the membership fee and shop at a physical Costco club.
BJ's membership fees are cheaper
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There are two membership tiers available at Costco for non-business owners: Gold Star Membership and Executive Membership. For a long time, these memberships cost $60 plus applicable sales tax and $120 plus applicable sales tax per year. As of September 1st, 2024, the cost of these memberships will increase to $65 and $130respectively. Both memberships last for 12 months and include two membership cards, give customers the ability to shop both online and in-store at any worldwide Costco location, and can be canceled at any time. The executive membership also sees members earn a 2% reward on certain Costco purchases and gives them discounts on Costco services.
BJ's Wholesale Club also offers two membership tiers: The Club Card Membership and The Club+ Card Membership. These two memberships are slightly cheaperthan those offered by Costco with the former costing $55 and the latter costing $110. While both membership tiers cover an entire household and allow customers to shop both online and in-store, the Club+ membership, like Costco's executive membership, makes them eligible for 2% back in rewards. In addition to this, Club+ members also get $0.05 off each gallon of gas they buy at BJ's Gas.
Given that the benefits are almost identical, customers might be attracted to BJ's Wholesale Club because its membership is slightly cheaper. However, we would suggest that other factors should also be considered, not just an initial saving of a few dollars.
Costco locations boast a food court
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It is no secret that Costco boasts an exceptional food court that serves a variety of well-loved items. Most famous of these is the Costco Hot Dog and Drink Combo, a fan favorite that offers incredible value. Speaking to The Seattle Times way back in 2009, Costco co-founder Jim Sinegal said, "Everybody talks about it. People look at that hot dog and say a buck fifty, this is unbelievable ... It's one of the things that we're known for." Sinegal was right then and he's still right now; the hype aroundCostco's Hot Dog and Drink Combo, and the food court in general, is a massive feather in the company's cap. Some people even suggest it's worth paying a Costco membership just to have access to the food court.
Since 2016, BJ's Wholesale Club has not been able to offer a similar draw; it was losing money on its food courts, so it opted to lease the space out to Dunkin' Donuts. Unfortunately, many of the Dunkin' locations failed to make money and were subsequently shuttered. At the time of writing, some BJ's Wholesale Clubs still boast a Dunkin' Donuts location in-store, while other, newer stores, have small snack shops. However, what's certain is that the company lacks a food court that has the same quality, consistency, and fame as Costco's.
BJ's customers can use manufacturer coupons
Costco's company policy is that it does not accept manufacturer coupons. Instead, the company prefers to focus its energy on negotiating great deals with vendors and passing these savings onto its members. That being said, Costco does offer its own exclusive deals both in-store and online, many of which are listed in the company's monthly warehouse saving book.
BJ's Wholesale Club has a completely different policy. It acceptsboth its own and manufacturer coupons, giving customers more opportunities to save. This policy even extends to non-members who are visiting BJ's Wholesale Club on a one day shopping pass. What's more, customers are able to stack coupons, meaning they can use multiple coupons on the same item to dramatically reduce its price, although some rules do apply. This means that anyone wondering how to make the most of their trip to BJ's Wholesale Club must remember to use their coupons.
The ability to use coupons can result in huge savings, as one customer highlighted on Reddit. They remarked,"As someone who has both BJs and Costco membership, I would say one major plus is that BJ accepts both manufacturer coupons and warehouse coupons ... There's been times where I've stacked 3 coupons on a single item and scored great deals on personal care items like shampoo and vitamins. The other day I scored a 40 oz bag of Starbucks coffee beans for $7."
Costco's meat offerings are unparalleled
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While Costco's food court is perhaps its most famous aspect, the company's meat department is not far behind. Countless people have celebrated the quality and breadthof Costco's meat department, including professional chefs and butchers. In an interview with Food & Wine, executive butcher Walter Apfelbaum said, "Costco sells some of the most beautiful prime beef I've seen out of the restaurant industry. They have huge buying power." Regular customers echo this sentiment, highlighting how both the quality of the meat and the personalized serviceoffered by Costco's meat cutters and butchers are excellent.
By comparison, BJ's Wholesale Club's meat department is somewhat lacking. The company does maintain good standards by employing meat cuttersand stocking well-known brands such as ButcherBox. What's more, its meat department is easier to navigatethan Costco's and pre-packaged, small quantities of meat are much more common. However, when it comes to quality, Costco is far superior. It's not that BJ's Wholesale Club's meat department is bad per se, just that Costco is simply in a league of its own.
BJ's allows you to order party platters online
Both BJ's Wholesale Cluband Costcooffer a range of foods designed for catering large events. These include sandwich platters, customizable cakes, and deli boards. While these offerings are by and large the same, the way in which you order varies between the two clubs.
At Costco, party platters range from exceptional to disappointing, and must be ordered in-store. Customers are required to fill out a paper form at least 24 hours priorto their desired pick-up time and leave it in the designated drop-off box. This somewhat archaic method will come as little surprise to Costco members, many of whom have repeatedly criticized the company's dysfunctional and terrible website. In some instances, customers might be able to order Costco platters over the phonebut this is at the store manager's discretion.
The process of ordering party platters from BJ's Wholesale Club is somewhat more modern, with customers able to order both cake and deli platters via the company's website. However, BJ's Wholesale Club does require a longer notice period with most orders only being ready after 36 hours have elapsed. Deli meats and cheese can be ordered via the company's app. These orders are usually ready to pick up after 30 minutes.
Costco does not have a full service deli
At Costco, lunch meats, cheese, and other deli items can be bought in-store. However, these items are pre-packaged and cannot be cut to customer specifications. BJ's Wholesale Club, on the other hand, boasts full service delisin many of its clubs. These manned stations offer a range of cheeses and meats that can be cut and prepared by expert staff as the customer wishes.
Although a full service deli is only one facet of a grocery store, it's one that many customers value. One person wrote on Reddit, "I LOVE the deli counter at BJ's because I can get a variety of small amounts of deli meat and cheeses that work for me as a single person (as little as 1/4 a pound), whereas Costco only sells deli meat and cheese in bulk which is inconvenient for me." Indeed, many others claim that joining Costco is a "no-go"for the simple fact that they don't offer freshly sliced deli meats.
On average, BJ's stores carry more products
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One of the main ways that Costco keeps its prices down is by only offering a limited number of products. It is not uncommon for clubs to only stock a single type of item, say one brand of spinach, as this means that the item will sell in bulk. In turn, this allows Costco to aggressively negotiate with vendors, ensuring the product's price is extremely low. It's for this reason that most Costco clubs only stock around 4,000 products, approximately 25,000 less than most grocery stores.
While those used to warehouse clubs are comfortable having a limited product choice, people who are new to the grocery store model often find it difficult to adapt. Knowing this, BJ's Wholesale Club opts to stock more products in its stores, usually around 7,200. This amount ensures that products stocked by BJ's Wholesale Club still sell in bulk but that customers also have a greater degree of choice. Of course, some customers still prefer Costco's sparser shelves.
Costco executive members can earn up to $1,250 in rewards
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Both Costcoand BJ's Wholesale Club'spremium membership tier have a feature wherein members earn an annual 2% reward on certain purchases. This means that if someone spends $3,000 a year at Costco or BJ's Wholesale Club they will receive anapproximately $60 rewardat the end of the year. Of course, if that customer spends more, their reward will be larger.
The two companies both cap the amount a customer can receive per year. At the time of writing, BJ's Wholesale Club's Club+ members were allowed to receive a maximum of $500 per 12 month period. This is far less than the cap placed on Costco's executive members who, as of September 1st, can earn a maximum of $1,250 in rewards per 12 month period. A potential $750 difference in rewards is no trifling matter and may cause some of BJ's Wholesale Club's Club+ members to switch their allegiance in the near future.
