In the estimated $225 billion warehouse membership business, Costco gets all the press while BJ’s is often an afterthought. The numbers tell it all:
But hidden behind those figures is an ace in the hole for BJ’s: It has more women shoppers. While only 43 percent of Costco’s online customers are women, half of BJ’s online customers are, according to statistics from SimilarWeb.
As a consumer segment, women make or influence more than 80 percent of all household spending. While Costco members’ household income is larger, about $100k to BJ’s $80K, both retailers index much higher among high-income households, $100k and above, according to Numerator.
That’s because high-income households tend to have larger families and they are also the ones that can afford to pay to play in the form of annual memberships to get significant discounts off each retailers’ maxi-sized packages. The real advantage for BJ’s in attracting more women will be realized as it zeros in on the most powerful of all consumer segments in the economy: HENRY women (high-earners-not-rich-yet).
Meet America’s Most Powerful Shopper: Her Name Is HENRY
For years, I have been preaching the gospel of targeting the affluent, especially the mass-affluent called HENRYs. Across the spectrum of the nation’s 128 million households, those in the top income bracket, $100k+, are growing faster than any other segment, nearly 26 percent as compared with only 3 percent among middle-income households from $50k-$99.9k.
And don’t assume that it’s only the very top of the top (ultra-affluents at $250k and higher) that hold the real spending power. You’d be wrong. While individually the ultra-affluent households have much greater spending power than the mass affluent HENRYs ($100k-$249.9k), as a group they only account for some 10 percent or so of the nation’s $7.4 trillion consumer economy.
Because of their significantly greater numbers – HENRYs total about 31 million households as compared with 6 million ultra-affluents, HENRYs alone account for nearly 40 percent of total U.S. consumer spending or some $3 trillion.
Because some 70 percent of HENRYs live in married family households, as compared with only 38 percent of those under $100k, HENRY women control the largest share of the nation’s spending, approaching $2 trillion, including the high-income women who are single heads of their own household. Just do the math. BJ’s stronger connection with HENRY women is an asset it can take to the bank.
Why BJ’s Not Costco?
While there is considerable overlap in the products offered by BJ’s and Costco and their prices and membership fees are pretty much in line with each other, BJ’s is less exclusive than Costco. For example, you can shop in a BJ’s without being a member, while Costco restricts in-store guests to card-carriers only.
BJ’s allows a one-day pass to buy and frequently offers a three-month free or low-cost membership trial. Costco doesn’t.
Costco tends to carry a wider range of higher-ticket items, like fine jewelry, furniture, outdoor/patio furnishings and supplies, appliances and household fixtures. BJ’s has these too, but its sweet spot are the everyday consumables that women with families need. These are what keeps the family’s CEO coming back again and again for more. BJ’s reports that it has some one million members that shop more than 50 times per year.
Critical to BJ’s plans to optimize its connection with HENRY women is to attract her early to grow with her as her family’s income grows. Think of the cost of providing for a new baby, which is largely limited to women aged 20-40 years. The costs have never been higher and BJ’s aims to help those young, millennial-generation mothers manage the inevitable hit to their finances.
From one-time needs, like cribs, seats, playpens and car seats, along with consumables, like diapers, wipes and formula, which brings moms back often, BJ’s aims to become baby-central. In-store it has reduced the display of bulky diapers to one national brand in order to make room for a single one-stop shop for all things baby.
Supporting busy moms anywhere and anytime she wants to shop is also a priority for BJ’s. It launched a new mobile app to make it more convenient, along with same day grocery delivery, buy online and pick up in store. It also supports its mobile and online shoppers with digital coupons which can be applied at checkout. As a strategy, digital coupons are more engaging than simply offering discounts. They fix BJ’s more firmly in the minds of budget-conscious moms.
And that is what is the real power behind BJ’s as it focuses on the high-income, young HENRY women. These are women who are first and foremost smart shoppers. They know how to use all the tools at hand to find the best prices for all the things they need for their families. They are also looking for super-convenience as their time is precious and managing the family finances to go as far as possible. They know that by strategic, opportunistic shopping they can live a lifestyle one or two rungs up the ladder.
While Costco has a similar formula of helping the higher-earning, higher-spending customer save money so they can buy more, BJ’s has a tighter handle on the most important higher-earner, higher-spending customer – the women in the household who control its spending.