Sam’s Looks Beyond Small Biz Customers
Sam’s Club, it is well known, has built its very substantial business by catering to the needs of many much smaller businesses. It’s primary competitor, Costco, has built its reputation by satisfying the desires, both mundane and extravagant, of individual consumers. The stark portrayal of the two chains, one business-focused and the other with a consumer bent, is both overly simplistic and inaccurate. Sam’s, for example, will generate a little less than half of its revenues this year from non-business members.
There is truth, however, that Sam’s has sought for some time to be seen as
more individual-friendly without turning its back on its core small business
customers. The April 2006 RetailWire discussion,
Sam’s Wants a Piece of Costco’s Pie, looked at how the Walmart-owned chain
was seeking to grab consumer market share from its rival in both “affordable” and “unaffordable
With that in mind, it’s interesting to see that the new (old) news is that Sam’s is continuing to look for ways to attract more individual members to its clubs. One of the current draws, according to an article on the Meat & Deli Retailer website, is the club’s expanding selection of prepared foods and heat-and-eat dishes.
“People are time starved, but they still want tasty and nutritious food at home,” said Shawn Baldwin, Sam’s Club vice president of fresh merchandising. “The key is to provide items that are fast to prepare and high quality.”
According to the Meat & Deli Retailer report, Sam’s recently launched a home meal replacement program in 200 clubs with plans to add another 100. Among the items on the “menu” are hot rotisserie chickens at $4.97 for a three-pound bird, Angus sirloin burger with garlic mashed potatoes, chicken Alfredo with penne pasta, and tequila-flavored turkey mignon. The club also recently upgraded the quality and selection of deli meats with its own Castlewood brand.
“The key is stick to quality, while also balancing value,” said Mr. Baldwin. “It is a way to differentiate ourselves.”
Bill Bishop, chairman of Willard Bishop and a RetailWire BrainTrust panelist, said, “Sam’s Club offers a great value and is causing some supermarkets to put more emphasis on family size packages. But more importantly, Sam’s Club is getting shoppers who are going to make a large purchase to first think about visiting its locations.”
Discussion Questions: Has Sam’s broken through the image that it is a small business store and not “right’ for individual consumers? Conversely, has Costco established its small business credentials? Can the warehouse chains serve small business customers and individual consumers without coming across as being unfocused by their own club members?