Warehouse Club Chains’ Share Gains Hold Even as Grocery Inflation Slows

Membership chains such as BJ’s Wholesale Club are seeing the gains they made at the highest points of grocery inflation hold strong, even as price increases moderate.

BJ’s, for its part, a membership warehouse club chain with 238 locations across 19 states, discussed this trend on a call with analysts Tuesday (Aug. 22) discussing its second-quarter 2023 earnings results.

Bob Eddy, the chain’s chairman and CEO, shared that the company’s gains in grocery have continued even as year-over-year food-at-home inflation has slowed, and in some categories even decreased.

“[We saw] sales growth across each of our income cohorts driven by increases in trips and spend per member,” he said on the call. “We were pleased with this result, considering continued grocery disinflation. … Our grocery and consumables business continues to be very strong.”

Eddy cited Circana research showing that the company has gained market share “once again,” seeing sales increase “nearly two times faster than our key competition” in the areas in which the wholesaler has a presence.

Similarly, on Walmart’s most recent earnings call Thursday (Aug. 17), the retail giant shared that comparable sales for its membership-only warehouse chain subsidiary Sam’s Club were up 5.5%, and the chain saw membership growth in the mid-single digits.

“Talking about the member health, we’ve seen historic growth in our membership base over the last few years, and we continue to see growth in absolute member numbers,” Sam’s Club President and CEO Kathryn McLay told analysts on the call. “… We feel strong about the health of our membership and the growth that we’ve seen.”

Additionally, Costco, a warehouse club chain with more than 850 locations around the world, shared in its monthly sales report for July that comparable sales have held strong relative to the same four-week period last year, with comparable sales up 2.5%. This is especially notable considering that July 2022 was toward the peak of the grocery inflation period, when food-at-home prices were up 13%.

Overall, the latest U.S. Bureau of Labor Statistics (BLS) Consumer Price Index (CPI) data revealed that year-over-year grocery inflation has declined from its double-digit peaks last year to just 3.6%, and month-over-month inflation in the category is only 0.3%.

Consumers have been looking for lower-priced options. Research from the May edition of PYMNTS’ Consumer Inflation Sentiment series, “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which drew from a survey of more than 2,000 U.S. consumers, revealed that 47% of grocery shoppers have switched to merchants that offer better prices.

Plus, data from the March installment of the report, “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” for which we surveyed more than 2,100 U.S. consumers, indicated that 44% of grocery shoppers are deal chasers, willing to go wherever they will get the best price.

Against this backdrop, another consumer-facing wholesaler is reentering the space. Food and household products distributor MSG Distributors announced Friday (Aug. 18) that it has acquired online consumer-facing wholesale retailer Boxed.com with a plan to bring back the eGrocer.