The news: BJ’s Wholesale Club plans to cut about 20% of the items it carries over the next couple of years, CEO Bob Eddy said on the company’s second-quarter earnings call. Legacy clubs carry about 7,500 SKUs on average today. Eddy wants to get to between 6,000 and 6,500.
A cut that size decides which vendors keep shelf space. Volume pools into the items that stay, orders per supplier get bigger, and replenishment in clubs and distribution centers gets simpler because there are fewer items to slot and count.
What changed: BJ’s has tried this before, and it went badly. “We have had efforts to cut SKU count in the past and I would argue we did not prosecute that opportunity in the right way,” Eddy said. “We just cut SKUs, which cut sales, and then we added some SKUs back.”
The new version removes duplication and adds new products in the same pass. In the soda category, BJ’s no longer carries cans, one-liter and two-liter bottles of the same drink. Further, it is adding newer segments like healthy sodas.
Eddy described it as “removing unnecessary choice.” That means, the volume from a cut item moves into the versions that remain, while the freed space goes to products BJ’s did not carry before.
The work runs category by category through the company’s category management process, under merchandising chief Stephanie Reiling. Beverages and active nutrition were reset in the second quarter, and Eddy named both as strengths in the quarter.
General merchandise, where Reiling’s experience runs deepest, comped up 5.3%. “We will go through this assortment ruthlessly,” Eddy said.
New clubs are the proof BJ’s is pointing to. They open with SKU counts in the 6,000s, and 22 of the 23 clubs opened between 2022 and 2024 comped above the chain average last quarter. Even at the target, BJ’s stays well above Costco, which reports fewer than 4,000 active SKUs per warehouse in its core business.
The backdrop: The cut is also a margin project. BJ’s spent about $20 million of tariff refunds on member price cuts in the first quarter. Eddy said the company is now “just about through” those refunds.
Asked how BJ’s funds price investment without them, he pointed to assortment work with suppliers, a share of suppliers’ own tariff refunds, retail media and gas profit. Merchandise margin fell about 20 basis points in the second quarter on price investment.
The pattern: BJ’s is the third large retailer to put a number on an assortment cut since March.
The counter: The biggest precedent runs the other way. Walmart cut an estimated 15% of SKUs in some categories in its Project Impact remodels starting in 2009. It then reversed course in 2011 and added about 8,500 items back per store under “It’s Back” shelf tags, after shoppers went elsewhere for the missing products.
BJ’s own earlier attempt failed the same way, by Eddy’s account.
Retailers are not all narrowing, either.
Chains that run third-party marketplaces are widening assortment in the same window, because sellers hold the inventory: Lowe’s marketplace catalog has more than doubled in a year. And Best Buy relaunched a marketplace last year to add items it does not stock. The narrowing is specific to retailers that own their inventory.
What’s next: BJ’s sets more reduced categories in September. And Eddy said the next wave lands around the end of the year, with the full 20% coming out ratably over the two years. The first read on whether sales hold through the holiday assortment comes with third-quarter results in November.
