Gasoline Siphons BJ’s June Sales

Discussion
Jul 12, 2002
George Anderson

BJ’s Wholesale Club Inc. reports that gasoline sales had a “slightly negative” impact on comparable club sales due to price deflation. Comparable club sales rose 4.1 percent for the month and have increased by 3.9 percent year-to-date. BJ’s ended the month with a total of 61 gasoline stations in operation compared with 39 one year ago.

Sales for June increased by 14.9 percent to $584 million from $508 million in June 2001. “BJ’s June sales performance reflects strong sales in many seasonal categories such as air conditioners, lawn and garden products, and grills,” BJ’s President and CEO, Jack Nugent, says.

Other strong general merchandise categories included fans, automotive, domestics, jewelry, prerecorded media and residential furniture. Weaker categories of general merchandise included computer equipment, men’s apparel, office supplies and tires. Food categories with strong sales increases included beer and wine, liquor, pet foods, prepared foods, snacks, and water. Weaker food categories included cigarettes and dairy.

Moderator Comment: If legislation is enacted to outlaw below-cost sales of gasoline, will the rule be applied across all retail categories? What impact would the elimination of loss leaders have on retailers and consumers?

BJ’s along with numerous other big-box retailers is looking to drive traffic to its clubs through aggressive gasoline pricing programs.

Convenience stores and others have serious concerns about the encroachment of big-box retailers into gasoline using below-cost pricing to gain market share. There have been several bills proposed at both the state and federal level to ban loss leader pricing tactics for gasoline.

Thanks to EH for the topic suggestion. [George Anderson – Moderator]

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