West Lebanon
BJ’s Wholesale Club, the membership-only retail box store, has filed a development plan to build a gas station on the site of the former Friendly’s restaurant, which would make it the only gas station on the heavily trafficked Route 12A corridor south of the Interstate 89 interchange in West Lebanon.
The plan, filed earlier this month and to be taken up at the Lebanon planning department’s May 9 meeting, calls for demolishing the restaurant building and in its place building a six-pump facility with a canopy and kiosk. The new gas station would be a new option for drivers in the heart of the Upper Valley’s busy retail shopping district, where the sole gas station along the corridor in recent years has been the Sunoco gas station and Sandri convenience store located on the north side of Exit 20.
BJ’s Gas, as the station would be called, may also trigger a gas price skirmish among the area’s filling stations, at least based on the history of what happens when a “wholesale club” outlet such as BJ’s, Costco or Wal-Mart opens and competes against nearby gas giants such as Mobile, Exxon and Sunoco, according to Patrick DeHaan, a senior petroleum analyst with GasBuddy.com.
“You’re most likely to see a downward effect on prices at gas stations within one to two miles away, usually 1 to 3 cents per gallon,” DeHaan said. “They are going to have to be more competitive than stations 10 miles to 20 miles away.”
Drivers do not have to be enrolled in BJ’s $50 annual membership program to purchase gas at the store’s pumps, although only BJ’s members receive the discounted price and BJ’s “Perks Plus” and “Perks Elite” credit cardholders are entitled to an additional 10 cents per gallon discount.
Not all BJ’s Wholesale locations sell gas. Among BJ’s six locations in New Hampshire, gas is available at only the Tilton and Portsmouth locations. There are no BJ’s Wholesale stores in Vermont.
BJ’s would not reveal how much it typically charges per gallon for gas, other than to describe its price as “competitive” against that charged by other area stations, said Maria Fruci, a company spokeswoman. But GasBuddy.com, in its 2015 survey of gas prices, ranked BJ’s No. 6 out of the top 100 “best value brands” and charging on average 10.8 cents below other stations within the same ZIP code.
But gas prices fluctuate wildly, depending on the region, seasons and crude oil markets and the “average” price may not reflect what customers pay at BJ’s Wholesale stores in New Hampshire. New England gas prices tend to be the second highest in the country after the Western states, according to U.S. Information Administration, averaging about $2.50 per gallon for all grades in 2015.
For example, Amy Tallman, the human resources coordinator for SAU 70 in Hanover and who lives in Newbury, N.H., said gas typically appears to cost about 5 cents less per gallon when she fills up at BJ’s Wholesale store in Tilton, N.H. Pushing her toddler son in the shopping cart as she exited BJ’s Wholesale in West Lebanon last week, Tallman called the prospect of adding gas service at the store “a great idea,” although she typically shops at BJ’s Wholesale only once a month or less.
Other customers agreed the price differential, especially in the current period of lower gas prices, might induce them to fill the tank during a run to the box store, but would not be enough to entice them into making BJ’s in West Lebanon their regular filling station.
“I wouldn’t go out my way for it, but if I was making a run to the dump or on shopping in West Lebanon, I would definitely keep my eye on it,” said Kevin O’Neill, a “semi-retired” engineer who lives in Etna and is on the adjunct faculty at Dartmouth College’s Thayer School of Engineering, while he was wheeling a shopping cart full of household supplies in the BJ’s Wholesale parking lot on Thursday.
GasBuddy.com’s DeHaan said BJ’s Wholesale sometimes opens its gas stations with an eye-popping, limited-time discount on gas as a promotional strategy. “They might offer a fantastically low price to get everyone talking,” he said, before raising it. He said it is not unusual for wholesale clubs to use gas as a “loss leader” to draw customers to the store for shopping, similar to the way the membership clubs use low-price food courts in the hope that people stopping in for a $1.25 hot dog will end up roaming the aisles and grab merchandise off the shelves.
Friendly’s closed in 2014. Initially, the owner of the property, Korpela Family Trust, had sought another restaurant to occupy the building. But the cost of refurbishing the kitchen and service area for the 30-year-old building deterred potential tenants, said Tom Prieto, vice president at Bedford, N.H.-based Granite Commercial Real Estate, which was handing the property.
That opened up an opportunity for BJ’s Wholesale to approach K&J Associates, which manages the property, with a proposal for building a gas station on the site, Prieto said. Previous attempts to interest the Westborough, Mass.-based retailer in the site had not been successful, Prieto said, although that recently changed.
“It was always no, no, no,” Prieto said. “Then it was ‘yes.’ BJ’s all of a sudden turned around and said they were interested.”
In selecting West Lebanon as a store location to also sell gas, BJ’s Wholesale will be tapping into a corridor that sees about 14,000 vehicles passing through daily, according to the New Hampshire Department of Transportation, among the densest stretches in the Upper Valley apart from the Washington Street commercial district in Claremont.
“Because they’ll be on the southbound side of the highway, I think they will do very well there,” predicted Peter Johnson, principal in K&J Associates. “It will be a benefit to the whole area. … And I’m enthused because I’m a customer.”
BJ’s Wholesale is owned by private equity firms, Los Angeles-based Leonard Green & Partners and Luxembourg-based CVC Capital Partners, which jointly bought BJ’s for about $2.8 billion in 2011. Leonard Green & Partners controls several large consumer retail chains, including J. Crew, fabrics and craft retailer Jo-Ann Stores, Sports Authority, The Container Store and David’s Bridal.
The entry of wholesale club stations is sometimes fought by traditional gas station and convenience store operators. St. Albans, Vt.-based R.L. Vallee Inc., which owns Maplefields convenience stores and Mobile gas stations across the state, is suing Costco over whether the membership store chain should be able to add gas pumps at its Colchester, Vt., outlet.
Vallee, which owns two gas stations near the Costco store, is appealing to the state Supreme Court an environmental court decision last year that approved Costco’s plans. Vallee claims Costco’s gas station doesn’t do enough to protect the environment, in addition to creating traffic problems in the area.
The West Lebanon Route 12A stretch, despite being a traffic magnet in the Upper Valley because it encompasses more than 140 retail business across seven shopping plazas, has had only a single gas station since the Irving Oil gas station closed during a major overhaul of the Exit 20 interchange in 2010. The eyesore building sits on a small parcel overgrown with weeds.
Work crews were observed at the site earlier this month appearing to be vacuuming the underground gas storage tanks. Upper Valley real estate brokers say Irving is waiting for the lease to expire on the Kleen Laundry store, which is on the adjacent parcel, in order to expand and build a “super” convenience store and gas station.
Irving Oil did not respond to requests for comment.
John Lippman can be reached at 603-727-3219 or jlippman@vnews.com.
