Dive Brief:
- BJ's Wholesale Club has agreed to purchase four refrigerated distribution centers from Burris Logistics for an undisclosed price, the retail chain announced in a press release on Tuesday.
- The acquisition of the facilities, located in Rocky Hill, Connecticut; Orlando, Florida; Elkton, Maryland; and Independence, Kentucky, will permit BJ's to manage its perishable supply chain in-house, the company said.
- BJ's is bolstering its cold chain management capabilities as grocery sales play a leading role in driving its revenue growth.
Dive Insight:
The decision by BJ's to acquire the refrigerated distribution centers reflects the increased emphasis the company has recently been placing on its fresh foods business.
As part of the deal with Burris, a family-owned company it has worked with to handle logistics for perishables for more than two decades, BJ's will take over a private transportation fleet, the real estate and workers associated with the facilities, and the capital assets needed for the operations, according to the announcement.
"The addition of these four facilities and the private fleet is part of a larger strategy to expand and scale efficient supply chain capabilities, positioning BJ's for continued growth while delivering the best quality and freshest products to our members," Jeff Desroches, executive vice president and chief operations officer of BJ's, said in a statement.
The sale, which has received approval from both companies' boards of directors and is subject to regulatory review, is expected to be completed in the second quarter of 2022.
BJ's has posted rising grocery sales in recent quarters as it has benefited from altered grocery-buying habits driven by the pandemic. Grocery sales led the company's business during the third quarter of 2021, which ended on Oct. 30, with comparable sales for the department rising 6% year-over-year and 25% on a two-year stack.
The membership-based retailer, which is set to open its 226th location on Friday in Michigan, also posted strong growth in its grocery business during the second quarter of last year.
Efforts by BJ's to move away from outsourcing its perishables distribution operations puts it in the company of discount retail chain Dollar General, which has also taken steps to self-distribute foods that need to be kept chilled. Dollar General finished the initial rollout of its DG Fresh initiative last year, allowing it to transport frozen and refrigerated merchandise to more than 18,000 stores from 12 facilities, Chief Operating Officer Jeff Owen said during the retailer's third quarter earnings call in December.
