Sam’s Club sees big opportunities to grab share

The situation: Walmart-owned Sam’s Club is making several notable moves to put the wholesale club in position to capitalize on consumers’ growing focus on value and willingness to trade down to private label products.

The details: The improvements fall into several different buckets across the company.

• Supply chain: Sam’s Club is merging its corporate supply chain team with Walmart’s team, which it says will help it “move even faster and better leverage [Walmart’s] enterprise systems and infrastructure,” per Business Insider.
• Labor: The wholesale club will raise its minimum wage to $16 per hour, up from $15, while also boosting wages 3% to 6% for its nearly 100,000 employees based on their tenure. The retailer expects the investments will push the average hourly rate for Sam’s Club associates above $19, with the potential to earn thousands of dollars annually in bonuses.
• Promotions: The retailer is currently offering an annual membership for $15, $35 less than its typical rate, while also offering a host of incentives to expose shoppers to the club’s benefits. For example, first-time users of the Scan & Go mobile checkout experience, curbside pickup, or delivery from club receive $10 back.
• Technology: The retailer introduced innovations such as AI-powered arches equipped with cameras in some locations that eliminate the need to wait for an associate to check shoppers’ receipts upon leaving.

The context: Sam’s Club is on a winning streak.

• The retailer’s revenues are up nearly 50% over the past five years despite its US store count remaining flat.
• Sam's Club US member total and Plus membership hit record highs in Q2. Its membership income was up 14.4% year over year (YoY) and Plus penetration rose 320 basis points YoY.
• The club has been particularly successful at appealing to younger consumers as it has grown its Gen Z membership 68% over the past two years thanks to younger consumers’ focus on value, CEO Chris Nicholas told CNBC.

Our take: Sam’s Club isn’t taking its gains for granted. The retailer recognizes that happy, satisfied customers are the essential ingredient to produce long-term growth, which is why its various initiatives are all aimed at delivering a top-notch customer experience.