Perishable items, enduring profits

A back-to-basics approach has served BJ's well as the economy has worsened and consumers have looked for value

At BJ's Wholesale Club in Natick, it's very much "Back to the Future."

Since Herb Zarkin emerged from retirement at the end of 2006 to take the reins at the struggling discounter, a job he last held in the early 1990s, it's been back to basics at BJ's.

The 69-year-old chief executive immediately made the back of the store his top priority. He slashed prices on traffic-driving staples such as milk and butter, which were no longer competitive with larger warehouse rivals Sam's Club and Costco. The company shaved its store hours, operating from 9 a.m. to 9 p.m. instead of 8 a.m. to 10 p.m., and invested the savings into getting better produce, dairy, fresh meats, and baked goods and making sure these more profitable items stayed stocked.

Zarkin's efforts quickly paid off: The perishables business was up 3 percent in the first quarter and jumped to 8 percent by the fourth quarter. The company rang up $9 billion in revenue, up 6.2 percent from the previous year, and improved its profit margin by 23 percent.

"It was really a year of getting back to blocking and tackling, getting back to the basics of running the business," Zarkin says.