Sam's Club Adding 30+ New Stores in First Expansion in years

[arizonaguy]

Walmart has been facing tons of shoplifting recently. They looked at Costco and see how successful it is, and Costco has relatively low shoplifting. Walmart views Sam's Club as more profitable. Some Walmart locations might do better as Sam's Clubs.

There are some closed Walmart stores in high theft areas, but there are few stores to serve the people. Perhaps they could be reopened as Sam's Clubs. There is an abandoned Walmart in Oakland, California.

That location in Oakland, California might have worked for Sam's Club about 15 years ago when the focus was more B2B. I remember one of Sam's slogans around that time was "We're in Business for Small Business" or something to that effect. I doubt you'd get a lot of regular consumers to shop in that location.

[ClownLoach]

What exactly would be the plan of adding more Sam's Club stores? There was a store in New Caney, Texas, but it closed just a few weeks shy of being open for only a year. There's still a lot of vacant store boxes left from the closures in the 2010s...and no Business Center equivalent, not since the one prototype from the late 2000s.

I think the plan is to try to get some growth at Sam's Club again. They must have decided it is cheaper to operate/build Sam's Clubs and they can get a more favorable ROI building more of these, than building more Wal Marts...?

I hope this won't be like the announcements we see every few years about hundreds of new Neighborhood Markets coming, which never materialize...

The discussion points on TV were that there are many gaps in Sam's Club's network of stores. Some discussion here includes the entire Pacific Northwest, South Orange County CA, and San Diego (only 1 there vs a billion Costco stores). There is a big opportunity for them to grow sales because there are so many areas they are not in. I expect they're going to come back to all 3 of the above mentioned markets and more. These aren't going to be incremental stores that just cannibalize existing locations.

[Alpha8472]

There are only 2 Sam's Clubs in the entire San Francisco Bay Area. Oakland has no Costco and the nearest Costco to Oakland is jam packed with customers. There is no shortage of customers who want to shop at a warehouse club. Oakland can support a Sam's Club and this will relieve the pressure on the overwhelmed Costco nearby.

I got an advertisement for 50 percent off a Sam's Club Membership. Many people would try that out over the horrendous overcrowded Costco. If there is a Sam's Club gas station, that would be great too. The gas stations in Oakland are so high that it is like price gouging.

[ClownLoach]

There are only 2 Sam's Clubs in the entire San Francisco Bay Area. Oakland has no Costco and the nearest Costco to Oakland is jam packed with customers. There is no shortage of customers who want to shop at a warehouse club. Oakland can support a Sam's Club and this will relieve the pressure on the overwhelmed Costco nearby.

I got an advertisement for 50 percent off a Sam's Club Membership. Many people would try that out over the horrendous overcrowded Costco. If there is a Sam's Club gas station, that would be great too. The gas stations in Oakland are so high that it is like price gouging.

It seems this is the right time to return to markets they failed in or never made significant inroads to. They weren't competitive until they finished the near half decade long transformation recently. They did it the right way. First they fixed the house brand, then the technology, and finally the physical stores. They aren't perfect by any means but they're still launching new and improved product lines. It is obvious they're focused on the same customer as Costco, but they have the right strategy to capture that customer for the first time. The days of Sam's being Walmart in bulk are over. There are many people who have not seen a Sam's in the past 5 years and they would be shocked.

[buckguy]

Sams relies a lot on promotional pricing of their memberships and if they take that away, they'd need to be much better than Costco to sustain growth. They also have to compete with BJs in Eastern and Midwestern markets who seem to have their own loyal fans.

Costco has locations on this side of the country that I doubt Sam's/WM would be able to duplicate. A few examples--an empty mall anchor they probably got on very favorable terms in Wheaton MD, the last large area for retail construction in DC proper--right off the Baltimore-Washington Parkway and and the main freeway through DC----and an inner ring location near Amazon's second HQ with a lot of new residential construction-----they got that when the area was somewhat in decline. Those stores do enormous volumes. The one near the recently closed Mayfield Heights Ohio Walmart is in an unusual location (next to a freeway surrounded by residential) in a prime big box area--again, enormous volumes in a first rate area with nothing like their space likely to be available in the future. I've seen some similar kinds of locations in other cities. Costco seems much more creative in its locations and knows how to reach its demographic.

Costco also seems willing to experiment with broadening their product line with things like Vitamix blenders at the high end and quality clothing lines toward the lower/middle end.

[jamcool]

Yet Costco only takes one type of credit card-Visa

[storewanderer]

Sams relies a lot on promotional pricing of their memberships and if they take that away, they'd need to be much better than Costco to sustain growth. They also have to compete with BJs in Eastern and Midwestern markets who seem to have their own loyal fans.

Costco has locations on this side of the country that I doubt Sam's/WM would be able to duplicate. A few examples--an empty mall anchor they probably got on very favorable terms in Wheaton MD, the last large area for retail construction in DC proper--right off the Baltimore-Washington Parkway and and the main freeway through DC----and an inner ring location near Amazon's second HQ with a lot of new residential construction-----they got that when the area was somewhat in decline. Those stores do enormous volumes. The one near the recently closed Mayfield Heights Ohio Walmart is in an unusual location (next to a freeway surrounded by residential) in a prime big box area--again, enormous volumes in a first rate area with nothing like their space likely to be available in the future. I've seen some similar kinds of locations in other cities. Costco seems much more creative in its locations and knows how to reach its demographic.

Costco also seems willing to experiment with broadening their product line with things like Vitamix blenders at the high end and quality clothing lines toward the lower/middle end.

I don't think Sam's is ever going to beat Costco. It isn't going to happen. But they are going to be making some inroads and making their presence more felt. I also think this Sam's expansion will take some grocery marketshare from some parties. I am not sure which parties. Part of the challenge of a Sam's expansion is going to be to not take share from Wal Mart which I think a lot of changes they've made in the past few years will help them capture a different customer.

Sam's has significantly broadened its product lines in clothing and kitchen products in recent years. I suggest visiting some Sam's locations to see what they are doing and give the entire place a hard walk.

[mbz321]

Yet Costco only takes one type of credit card-Visa

And? They make an exclusive deal to keep transaction fees low.

[veteran+]

Does Sam's Club take all credit cards?

[SamSpade]

Veteran+, I believe after the Discover card arrangement ended, Walmart opened Sam's to all cards.

Now on to Clown's point,

First they fixed the house brand, then the technology, and finally the physical stores. They aren't perfect by any means but they're still launching new and improved product lines. It is obvious they're focused on the same customer as Costco, but they have the right strategy to capture that customer for the first time. The days of Sam's being Walmart in bulk are over. There are many people who have not seen a Sam's in the past 5 years and they would be shocked.

My parents got in on Sam's with a low-floor membership price late last year as gasoline prices surged. Their warehouse in our community is in-between two Walmart stores and also near their local grocer and pharmacy so it kind of made sense. The warehouse is tricky because you're talking about 1 - 2 person mature household needs.

I did notice how the membership card has no photo and probably could be shared.

Yesterday evening, the store was not busy at all about an hour before closing (this is also the only Sam's warehouse for hundreds of miles) and closing out the trip check out was really easy with self check out, though this setup was unlike any I'd ever seen. The hand scanner was very helpful/useful.. The employee scanned 3 items upon exit; I'm not sure if the software directs that or if the employee just had to scan 3 random items.

As for the warehouse itself - it has always been a large space, Walmart even expanded this club once in the early '00s as my uncle was the supervisor on that job. The way that it is now designed, it doesn't feel like you've entered a cavernous busy environment like Costco at all. There are aisle markers explaining what is down aisles almost all over the store, alongside (at least on this visit) employees for assistance. The store was also playing Walmart radio (or a version of it) and it made the place feel bustling even with fewer customers. Shopping was easier than Costco without all the fork lift moves, weird dead ends and closed areas. (maybe this is more of a PNW problem?)

In food, there are items that could potentially bring households in regularly (the same inexpensive 3 pound rotisserie chicken, pre-cooked ribs, for example) alongside one I never expected in a Walmart operated store, fresh-squeezed orange juice. There do seem to be fewer options than at Costco, but not enough to largely notice. Overall, I could see this being a highly complimentary store to Costco, especially at a lower membership cost.

As a 1 - 2 person household myself, we've mainly gone in with someone for a Costco membership, used it for gasoline discounts and a health or auto related purchase that is more affordable than elsewhere (tires / glasses / contacts). Though the optometrist offices have raised their prices at Costco where I am (they are technically separate practices).