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Can Sam's Club Overtake Costco?

November 5, 2012

There will be skeptics, but Rosalind Brewer, CEO of Sam's Club, since January, believes the company has a chance to catch up to Costco — or at least make it a competitive race.

In an interview with The Wall Street Journal, Ms. Brewer laid out some strategies and tactics that could help the wholesale club achieve its goal of being a $100 billion dollar business. Costco, for its part, is nearly there with $97 billion in annual sales vs. Sam's $53.8 billion. While Sam's has only about 68 percent of the employees of its rival, the company has 616 stores to Costco's 612.

Here are some things Sam's Club is doing, or will do soon, to build business:

  • Open stores earlier in the morning to meet the needs of same-day shopping small business customers.
  • Raise membership fees (current cheapest consumer membership is $40 vs. Costco's $55).
  • Build stores in metro areas vs. rural.
  • Offer a rebate to members based on purchases.
  • Bring in new brands such as Eddie Bauer and Lucky to differentiate from discounters.
  • Emphasize Apple products. (Costco doesn't carry many of them.)
  • Open more new stores than in recent years.
  • Expand self-checkout and enable associates to spend more time on the sales floor.
  • Get pharmacists to interact more with members to offer complementary services.
  • Provide more organic food and better produce, meat and seafood.

As Sam's Clubs opens new stores or expands and updates older ones, it will take a three-pronged approach to announcements, emphasizing job creation, savings for the community and donations to charity.

A press release on the just expanded Addison, IL store noted that:

  • The store employs 190 associates and created 40 new jobs.
  • The revamped store includes expanded pharmacy services, a new vision and hearing center, a new digital photo center and a fuel station.
  • Members receive a 200 percent guarantee on fresh produce and meat, with 100 percent on everything else.
  • With the expansion, Sam's presented grants totaling $19,000, to a variety of charities including the Addison Food Pantry, the Boys and Girls Club and the Autism Society of Illinois.
  • Sam's Club Plus members receive additional savings including customized offers without having to clip coupons.

 

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