Retail News India
Retailwire: Sam's Club Turns 25
By Tom Ryan, managing editor, RetailWire
[Editor's Note: Through a special arrangement, here is an excerpt from one of RetailWire’s online discussions, along with the results from RetailWire.com's instant poll. US-based RetailWire.com presents the latest industry news and issues with key insights from a "BrainTrust" of retail industry experts.]
Described as “strictly an experiment” by Sam Walton when it first opened in 1983, Sam’s Club has grown to 715 locations, including 122 in foreign territories. A host of owners of caterers, restaurants, motels, and other small and larger businesses recently gathered at Sam’s locations across the country to celebrate the 25th anniversary of the wholesale club concept of Wal-Mart.
One of those thankful small business owners attending was John Wells, owner of Catfish John in Rogers, AK. About 95 per cent of what the restaurant buys comes from Sam’s.
“I’ve been using Sam's Club for years, but they really stepped it up about six years ago when they really started bending over backward for small-business owners like myself,” Mr Wells told the Arkansas Democratic Gazette. “I've come to them with supplies I’ve needed and figured there’s no way they’re going to be able to do it because I’m too small. But then they come through again and again. They really listen.”
Cathy Cronemiller for two decades has picked up everything from diapers and baby wipes to cleaning products and food for her six child care centres in Midwest City, OK. While she used to browse the aisles with a giant cart, Ms Cronemiller now faxes in her twice-weekly orders and, when she arrives, the items have all been pulled off the shelves and readied for pick-up.
Savings continue to keep Ms Cronemiller coming to Sam’s.
“That has remained at 25 per cent to 35 per cent cheaper over the years,” she says
In more recent years, pharmacy, optical, photo services, fresh produce, and hundreds of items aimed more at the store’s personal customers have been added to the floor space. Yet, business owners still account for a little more than half of its members.
"Our focus on business members has been strong over the years, but we also bring value to the individual member," Greg Johnston, executive vice president for operations at Sam's Club, told the Arkansas Democratic Gazette
The anniversary comes as the club channel is significantly outperforming other retail channels in the tough economy. In March, US comps rose 3.5 per cent at Sam’s, 5 per cent at Costco, and 6 per cent at BJ's Wholesale Club.
George Whalin, president and chief executive officer of Retail Management Consultants and a member of the RetailWire BrainTrust, believes that as gasoline and food prices continue to rise, consumers should gravitate to clubs.
“I think warehouse clubs generally are positioned to do well in the recession,” he said
Focusing on the small business owner is a stout strategy. Many use Sam's exclusively for their buying power vs wholesale distributors. Sam's has positioned itself well. They are plentiful and have located themselves well in the United States and internationally. Costco and Sam's are viewed differently. Costco is noted for quality and high-end products, while Sam's is more noted for the staples and small business owner buys. It appears they are targeting two different demographics.
Warehouse clubs offer an excellent value proposition to small business and consumers. Pricing is on par with, if not cheaper than, dealers. And the convenience of shopping when you want with the ability to do your personal shopping at the same time is more of a lifesaver then a timesaver. Clubs have really expanded their assortment and allocations. This all adds up to a winning formula for small business owners. Sam's seems to carry more upper-end products especially in televisions and laptops, so their pricing may seem higher than Costco's, but the quality is there. Costco's return policy is still more liberal than Sam's, which business owners take into account when joining a club.
We had memberships to both Sam's and Costco for years, and have recently dropped our Sam's card. Costco's quality and item choices seemed so much better than Sam's that we couldn't see keeping both. Costco does cater to a more upscale and health-conscious consumer, and that also factored into our decision. I believe both are extremely well-positioned for our present economy. The only clinker in this is how far people will drive with the high gas prices in order to save? The most likely answer I believe will be fewer trips and larger purchases to minimise the gas-cost burden.
It's always interesting that independent business owners cry foul from the big box that is competing against their market, yet feel no compunction to do business with their independent supplier and, instead, shop at Costco or Sam's Club. You can't expect to succeed when you don't do what you tell others to do.