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BJ's stores are concentrated in the Eastern United States, which allows the company to streamline distribution and marketing. The high concentration of stores in this geography however, can sometimes lead to cannibalization. Furthermore, BJs doesn't benefit from the same economies of scale as its larger competitors. Scale is very important in the warehouse business, because margins are extremely thin, making low costs and high volumes essential to profitability.
BJ's makes money by selling a wide range of food and general merchandise items, gasoline (at select BJ's locations) and from membership fees. 
BJ's revenues in 2006 grew by 7.2% over 2005. However, Operating Income was negatively impacted by lower sales and margins, especially in higher margin departments such as jewelry and furniture. The company also had more holiday season markdowns in 2006, compared to 2005.
BJ's introduced the warehouse club concept to New England in 1984 and has expanded throughout the Eastern United States. At the beginning of 2007, BJ’s operated 172 warehouse clubs in 16 states. 
BJ’s private brand consumer products are generally are priced well below the top branded competing product, but still carry higher margins for the company. At the end of 2006, BJ's private brand products had achieved a sales penetration of approximately 13% of food and general merchandise sales. The company expects its private brand products to continue to represent an increasing percentage of sales over time, which may help margins. Sam's Club and Costco Wholesale (COST) have also launched their own private brands in their stores.
BJ's has grown over the years by opening many stores on the East Coast. Since 2001, BJ’s has grown from 118 clubs to 172 clubs in 2007. Opening more stores will make it more convenient for customers to find BJ's locations and contribute to more memberships. BJ's expansion may lead to more memberships in the long run, but could immediately hurt sales of already existing BJ's clubs due to overlapping markets. If BJ's can strategically open new clubs in areas where clubs do not exist, or where the competition isn't well established, BJ's will gain market share and more memberships. On the other hand, if BJ's opens new clubs near already existing BJ's clubs, the new clubs will steal sales from old clubs, or cause cannibalization.
The wholesale club market has two big players in Sam's Club and Costco Wholesale (COST), which have a combined 90% market share. While BJ's has remained focused on the East Coast, Costco has taken away market share from Sam's Club by opening new clubs throughout the Midwest and the South over the past years.
The wholesale club market is fiercely competitive and margins are thin. All three companies charge their members an annual membership fee.
|Retailer||2006 Sales (millions)||Membership Fees||Membership Sales (Mil)||# of Clubs|