Rupesh Parikh: And then maybe just one follow-up question. Just given concerns on the top line for next year. In your current growth environment, what type of comp do you think you need to leverage expenses or SG&A?
Bob Eddy: I think it’s a little bit over 2% at this point, somewhere between 2% and 3% Rupesh, that’s — you think about our expense model, the biggest component of expenses after cost of goods sold is labor, and that’s about what we average from a wage increase rate. So somewhere between 2% and 3% would be a good way to think about it.
Operator: Our next question comes from Simeon Gutman with Morgan Stanley.
Simeon Gutman: Bob, I wanted to follow up on general merchandise. So the rate of change sounds like it’s improving. But overall, still I think, down in the high single digits despite that. So I was trying to put the pieces together. I guess, when do we — when does GM — could we get to an inflection? I guess this backdrop may not get us there quick. But all the data points that you’re citing, the sequential improvement, the change versus October sounds pretty good, but the overall rate is still not there. So what needs to change? And then what time frame does that happen in?
Bob Eddy: Yes. It’s a really good question, Simeon. I think what we’re seeing in this consumer environment is certainly blunting the impact of what our team has done. We were very pleased with what we saw in Q3 in terms of the rate of change. It was just about what we were projecting maybe a tiny bit shy. And the places that it was shy, it was in our estimation just the consumer environment that was really getting in the way there. The team has done a fantastic job designing new assortments, getting them on the floor, getting compelling products and price points out there. I think if you think about it from a long-term perspective, the thing that we’re looking for really is credibility in this business. There are places in GM that we have great credibility.
One of those might be TVs and electronics. People know that we carry the right brands. We carry them at compelling prices. And that business has always been a pretty good business for us. There are many, many other categories where we’ve had confused assortments, not presented in the right way, not the right brands on the floor. And we’ve tried to, in the last few calls, give a lot of context around what we’re trying to do there when we talk about categories like toys or home appliances or things like that. It’s something that we’ll have to do over and over and over again. We are incredibly pleased with what we saw in Q3 because it tells us that our members will react when we put great assortments on the floor. I think we’re at that point now where — we have the stuff that we need in some of these categories, but we have to make our members, number one, understand that we have those things.
They’re not used to us having great assortments in general merchandise. And number two, we have to do it repetitively, right? We need to build that — that appearance and that credibility with our members so that we become more of a destination from a general merchandise perspective, right? I would tell you, last year and the years before that, we were a grocery shop with some general merchandise that was really opportunistic. Our mission is to broaden our members’ trip missions to include general merchandise destination trips, right, coming to us for GM and maybe getting some grocery while they’re there. And we’re finally starting to see the green shoots on that stuff. So we’ve talked a lot about toys. We talked a lot about home. Apparel is probably the thing that is most mature from that perspective.
We’ve seen 2 or 3 new assortments there. The apparel sales were positive in Q3 as we continue to make that assortment better and gain that sort of repeat traffic and credibility factor from our members that’s what we’re after in all of these general merchandise categories. So the consumer environment makes it a little bit tough to tell you when we’ll turn the corner. Again, with a long-term focus, we’re incredibly pleased with what the team is doing, what our early reactions are. And we’ll just keep our nose to the grindstone and keep pushing to try and get that credibility and get that destination factor.
Simeon Gutman: And then a quick follow-up on what you’re thinking, the latest thoughts on membership fee hikes, how you think about it. If sort of needed for the P&L given, I don’t know, for various reasons, if SG&A is rising, do you use it as a lever? Or is it the consumer environment trumps everything else right now, the way you think about it?
