Will Sam’s Club customers be okay with paying a higher membership fee?
Sam’s Club is increasing the price of its annual membership options for the first time in nine years. The increase comes at a time when the chain’s sales have been on the upswing as members turn to the warehouse stores to save money at a time of high inflation.
“Club” members will see their annual subscription fee increase from $45 to $50 and “Plus” members will pay $110, up from $100, as of Oct. 17. Sam’s is looking to take the sting out of any increase by reimbursing members for the upcharge in the form of Sam’s Cash that can be used to purchase products in the chain’s clubs.
Ciara Anfield, chief member and marketing officer, said Sam’s was increasing its fees as part of an acknowledgment that its memberships are more valuable in light of improvements it has made, including upgrading the quality of products it sells, investments in curbside pickup and same-day delivery and the option to use Scan & Go self-checkout technology in its clubs.
Ms. Anfield, in an interview with CNBC, likened Sam’s actions to a homeowner who has made improvements to their home.
“There’s an expectation that after you invest in this home, it will be worth more,” she said. “We’ve made investments and we believe our proposition, our membership is now worth more.”
Sam’s membership fees will still remain below that of Costco, its chief rival. Costco charges $60 for its “Gold Star” and “Business” memberships and $120 for an “Executive” membership. Costco last raised its membership fees in June 2017.
Costco, which has traditionally raised its membership fees every five-and-a-half years, has given no indication that it plans to do so soon. The retailer is expected to next report its quarterly and full-year earnings on Sept. 22.
Bob Nelson, Costco senior vice president, finance and investor relations, in May told analysts on the chain’s earnings call that those discussions were taking place among the company’s executive leadership, but no action was being taken.
“Given the current macro environment, the historically high inflation, and the burden it’s having on our members and all consumers in general, we think increasing our membership fee today ahead of our typical timing is not the right time,” Mr. Nelson said at the time.
BJ’s Wholesale Club, a smaller competitor to Costco and Sam’s, charges $55 a year for its “Inner Circle Membership” and $110 for its “Perk Rewards” and “Business” memberships.
- Walmart-owned Sam’s Club raises annual membership fee for the first time in nine years – CNBC
- Costco Wholesale (COST) Q3 2022 Earnings Call Transcript – The Motley Fool
- Should Costco raise its food court prices? – RetailWire
DISCUSSION QUESTIONS: Do you think Sam’s Club members are open to paying more for their memberships at this point in time? Do you expect Costco and BJ’s to follow with their own increases, or will they see an advantage in putting it off for the time being?