Costco and BJ's Wholesale Are Testing Small Store Formats -- Via The Adaptive Reuse Of Vacant Big Box Real Estate
Club operators Costco and BJ’s are not only adding new standard format warehouse clubs but are also testing small format stores -- via the adaptive reuse of vacant Big Box real estate
Last month BJ’s Wholesale BJ 0.00%↑ affirmed plans to open between 25 and 30 club stores over the next two years.
Including a site in Delray Beach, FL that will be just 53,000 square feet, or roughly 1/2 the size of a typical BJ’s Wholesale Club.
This smaller store will be BJ’s Market, a relatively new concept that primarily sells food and grocery items.
Despite the smaller size of BJ’s Market, it offers the same pack sizes and pricing as the Company’s standard clubs.
Company executives refer to the BJ’s Market concept as “an exciting new innovation lab for BJ’s Wholesale Club” that offers “the same great savings and value our members know and love, but delivering a convenient location closer to home.”
The BJ’s Market set to open in Florida will be just the second small format concept store for the Company — and it will be located in a former Winn-Dixie supermarket space.
The first BJ’s Market, which opened in 2022, is also located in an adaptive reuse of Big Box real estate:
A former Toys R Us in Warwick, RI.
BJ’s Wholesale is not the only club store operator relying on the adaptive reuse of existing real estate to test small format stores.
Costco COST 0.00%↑ has also opened a few small format stores in vacant Big Box real estate.
Such as the “Home Showroom” that Costco opened last year in Alaska.
It is located adjacent to the Costco Warehouse club in South Anchorage — and is an adaptive reuse of a 58,000 square foot former Toys R Us store.
The Home Showroom is a store format that Costco appears to be testing for the sale of furniture, appliances, fitness equipment and other home accessories.
But unlike at a traditional Costco Warehouse club, members do not walk out of the showroom with any merchandise.
Instead, all purchases made in the showroom are for delivery only to members that live in eligible area ZIP codes.
Costco acquired the Toys R Us building after the toy retailer’s 2017 bankruptcy and initially had used the space to stock excess merchandise.
But it was not open to the public nor was it advertised as a club location for members.
To create the Home Showroom, Costco separated the stock area from the “front of the house” and arranged the products in a manner that allows members to browse, touch and examine them.
The Anchorage site is not Costco’s only Home Showroom — or even the only small format concept that it is a product of adaptive reuse.
In 2022 Costco opened a similarly sized showroom in a converted Sears Outlet store in Puerto Rico.
Costco real estate officials have noted that additional Home Showrooms are also in the works.
Though they did not reveal specific locations or a timeline for these new openings.
BJ’s Wholesale Club and Costco may not decide to expand the BJ’s Market and Costco Home Showroom small format stores.
But, either or both companies do add future sites — or test other smaller format concepts — it will likely be in adaptive reuses of 2nd generation Big Box retail space.