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Product Offerings and Merchandising Like Costoo and Saw t Club. BU'- Wholesale sold and veteran-who enrolled at a BJ's club location could do so for a reduced membership fee. high-quality, brand-name merchandise at prices that were significantly lower than the Individuals and businesses could upgrade to BJ's Perks/ Rewards cord tor SITO. Perks prices fond at supermarkets. discount retail chains. department stores, drugstores, and Reward members received a free second card for a household member and could add up specialty retail stores like Best Bug is merchandise lineup of about 7.200 items included to three additional members for 530 each. BJs Perks Rewards members earned two consumer electronics, prerecorded media. small appliances, tires. jewelgo: health and percent cash back on in-club and online purchases: cash awards were issued in 520 beauty aids, household produets, computer software. books, greeting cards, apparel, increments and could be used for in-store purchases: awards expired six mouths from the furniture, toys. seasonal items, frozen foods. fresh meat and dairy products, beverages, dry date issued. Non-members could purchase online access to www.bis.com for $10 per grocery items, fresh produce, flowers. canned goods, and household products. About 70 year, which provided the benefits of member pricing for online purchases. Members could percent of BI's product line could be found in supermarkets. Sales of the company's two apply for a BITs Perks Plus or BJ's Perks Elite credit card (MasterCard) that had no annual private-label brands. Wellsley Farmis and Berkley Jensen accounted for about 20 percent credit card fee and served as a membership card. The Perks Plus card earned thres persent of total net sales. BI's prices of a representative basket of 100 items were consistentior cash back on eligible inclub and online purchases made with the credit card, while BJ's about 25 percent below comparable brand name products sold by its four leading Perks Elite cardholders earned five percent cash back on eligible in-club and online supermarket competitors. purchases made with the card. Bork, Plus and Elite cardholders received 10 cents off per Members could purchase thousands of additional products at the company's gallon at BJ's sas stations when using their card to pay for fuel purchases, two percent cash back on non-BJ's gasoline purchases and eligible dining out purchases, and one percent website, www.bis.com cash back on all non-BU's purchases everywhere dise MasterCard was accepted. Fuel BJ's warehouses had a number of specialty services that were designed to enable purchases made with these credit cards were not eligible for further cash back rewards: members to complete more of their shopping moreover, members with the $30 supplemental Business memberships had to upgrade to Pase C-40 the 555 primary membership caregory to be eligible for a BJ's Plus or Elite credit card. Since fiscal year 2014, BI's had grown co-branded Mastercards holders by 527 percent. In fiscal at Bi's and to encourage more frequent trips to the clubs. Like Costco and Sam's Club. BJ's year 2019, BJ's Perks Rewards members and co-branded Mastercards members accounted sold gasoline at a discounted price as a means of disolagine a low-price image to for 28 persent of members and 43 percent of spend, compared to 25 percent of members prospective members and providing added value to existing members: in April 2020, there and 39 percent of spend in fiscal year 2018. BJ's accepted MasterCard, Visa, Discover, and were gas station operations at 145 BJ's locations. Other specialty services included full- American Express cards at all locations: members could also pay for purchases by cash, service optical centers; tire installation services: a propane tank filling service: home check, or magnetically encoded Electronie Benefit Transfer cards (issued by state welfare improvement services: travel services: a car rental service: cell phone kiosks: and product departments). Manufacturer's coupons were accepted for merchandise purchased at the protection plans for appliances. electropies, and jewelry, Most of these services were register in any Club where the product was sold. BJ's accepted returns of most provided be outside operators in space leased from BIsT, chilly 3007, RI's abandoned merchandise within 30 days after purchase prescription filling and closed ail of its 46 inclub pharmacies. BJ's leadership team believed that members could save over ten times their $55 Inner Membership Bi's Wholesale CJab had more than 5,5 million paid memberships as of carly Ciacle membership fee versus what they 2020 and a total of 10 million cardholders that seperated membershp fee revenues of $302 million in fiscal 2020. Tadixidugis conid become Inner Circle members for a fee of $55 per Put CAL year that included a second card for a bouselyold member: cards for up to three other would have paid at traditional supermarket competitors if they spent $2.500 or more per family members and friends could be added to an Tuner Circje member's account for an year at BJ's on manufacturer-branded groceries additional $30 per card. A primary business membership cost $55 per year and included Marketing and Promotion BJ's increased customer awareness of its clubs primarily through one free supplemental memberstup: business members could purchase up to eigh addiional supplemental business memberships at $30 exel U.S, mulitary personnel-active social media, direct mail, public relations efforts, community involvement programs, marketing programs for newty opened clubs, and various publications mailed to membersthroughout the year. BJ's also had dedicated marketing personnel who solicited potential business members and who contacted other selected organizations to increase the number of members. Periodically, it also ran free promotional membership and initially discounted membership promotions to attract new members, with the objective of converting them to paid members. Warelouse Club Operations BJ's waretiouses were locater in both freestanding locations and shopping centers. Construction and site derelasment costs for a ful-sized owned BIs club were in the 56 million to SIO million range: land acquisition costs ranged from Si milton to SIO million but could be sisnificents higher in some locations. Each warehouse generally had an investment of $3 to $4 million for forares and ecuipmant; other one- opening expenses at a new club were usually in the $1.0 to $2.0 million range. Including space for parking and gas station operations, a typical fullsized BJ's club required 13 to 14 acres of land: smaller clubs typically required about eight acres Merchandise purchased from mamquocturers was routed either to a BJ's cross-docking faciliey or directly to clubs. Personnel at the cross-docking facilities broke down truckload quantity shipments from manufacturers and reallocated goods for shipment to individual clubs. generally within 24 hours. BJ's worked closely with manufacturers to minimize the amount of handling required once merchandise is recered at a club. BJ's contracted with a third party to operate three perishables distribution centers and deliver perishable products to its warehouse locations. Merchandise in BJ's warehouses was generally displayed on pallets containing large quantities of each item, thereby reducing labor cacuired for handing, stocking, and restocking. Backup merchandise was generally storeddunsted racks abae the sales floor. Most merchandise was pre-marked by the manufacturer so it did not require ticketing at the city Full-sized clubs had approximately $4 million in inventory. Management was able to limit inventory shrinkage to a smalt fraction of one Boncent of net sales by stristy controlling the exits of clubs, generally limiting customers to members, and using state ofthe art electronic article surveillance technology