I would disagree about limited CapEx at Sam's Club, and Walmart in general. Nearly every Sam's store in my area has been completely refreshed or remodeled in the last few years, with one store relocated to a new building as recently as 2015 (Fullerton, CA). They are currently in process of completing the project of rebranding across most of SoCal which is entailing a completely new layout with seasonal (and snack product) center store, expanded electronics set, complete signage and repaint refresh, new customer service area, expanding fresh departments including new walk ins for produce and dairy, and new exterior repainting and signage. The stores are for all intents and purposes being completely remodeled in this initiative and the finished product is the best looking and most consistent format Sam's has ever rolled out. It really looks light years from Walmart. I could actually imagine someday where Walmart converts some stores to the Sam's Club format. Sam's seems to be able to operate in some lower end areas without the shrink problems since they have the same limited hours of Costco - actually they close even earlier at 8pm now.arizonaguy wrote: ↑April 27th, 2022, 4:00 pmCostco's problem (and Sam's too) is that their largest customer base seems to be those in the Generation X and Boomer generations. That customer base will be shrinking over the next few decades.buckguy wrote: ↑April 27th, 2022, 3:04 pm Costco has surprising gaps in their coverage, so they have room to grow. Next year, they're opening their first store in the Buffalo area, which could support more than one store. They only have a few stores in the Philly area--they have better representation around Pittsburgh which is a much smaller and less affluent metro area. They have stores in Connecticut but none in the New Haven area.
Costco has been able to identify opportunities to open stores in built up areas---they have locations in the DC area, one in a mall that had a dead wing, another near new the Amazon 2nd HQ that normally would be viewed as challenging to locate such a large store. They found a location not far from one of the Walmart that's closing outside of Cleveland, which needed more creativity than Walmart's and opened around the same time. The DC Costco has been very successful, despite being not too far from a suburban store--it used to be easy to shop on weekdays, but not anymore. Costco also has the advantage of not being tied to another business and one with a tarnished reputation.
A lot of younger generations do not shop at Costco anymore other than when they are with their parents. I've noticed that Sam's Club has a lot more younger families shopping there versus Costco the last few times I've been there (although I'd imagine a lot of the younger families are on the membership deals that Sam's club sends out in the mail).
Younger generations (millennial and younger) love online shopping and aps. Costco's online shopping / app experience is bad (and that's putting it nicely). Costco's website / app is designed to get customers into the store. Younger people do not want to shop inside the store.
The Sam's Club / Walmart relationship presents some issues if they were to ever separate. Sam's Club probably gets better deals from vendors by being a subsidiary of Walmart. However, as Sam's Club isn't Walmart's core business it also gets the least amount of capital spending of any Walmart entity. If Walmart was to somehow spin off / sell Sam's Club, Sam's Club's costs would rise causing higher pricing and probably making the chain less competitive with Costco.
If Walmart starts building new stores again, we might see a new Sam's Club here or there. However, it's very clear that Walmart and Wall Street seem to want to focus almost all capital expenditures on online shopping over the near term.
I do believe that they could be separated someday however the challenge is that Sam's is using the Walmart distribution system. But many retailers are moving towards 3rd party logistics due to the flexibility it provides and I'm sure that Walmart would not mind signing a 99 year contract or something similar to continue to provide such service.
Walmart is fully remodeling 1200 stores this year to some version of their new "airport" prototype; however I would say that it has not been fully executed in remodels of older low ceiling, smaller stores. It looks amazing for Walmart in a new building (Lake Elsinore, CA) and seems to pack a smaller store with more SKUs, somewhat the opposite of when Target reduced their assortment so drastically to introduce the P-fresh grocery setup. It's like Walmart is reversing the reductions from when they made similar reductions in the past.