Success at Sam’s Club can be a difficult and daunting proposition for brands that do not have experience in the club channel. One of the most common pitfalls is not appreciating the difference between a customer and a member. This may seem like semantics, but a club member is more than just a customer because they are choosing to pay money for the privilege of being part of a club. This tends to skew the shoppers to more affluent families with higher total basket sizes and brand affinities. Sam’s Club wants the shopping experience to reflect this by providing:
- Major brands with great values
- A curated assortment of items
- Disruptive pricing
- Special Experiences and Treasure Hunt Items
What does this mean for the brands and items we take to Sam’s Club?
When presenting items to Sam’s Club buyers they are looking for a value to show the member. The member expects that they are getting the best price/value due to having paid for the membership. Items need to be priced anywhere from a 15-25% value it would retail at on other channels.
Hitting these price points can present a number of challenges to the brands and require a certain amount of creative thinking is vital when addressing the following questions:
- How can we hit that kind of retail value – The membership model works on much thinner margins than traditional retail often creating the majority of retail price separation needed.
- How do we create the value they are looking for – Club shoppers are used to getting bigger pack sizes and cleaner packaging. This allows many brands to get scale advantages when combined with the limited number of items being sold competitively.
- Club members love to see items they cannot purchase anywhere else. Brands can develop interesting Limited-Time Only and Treasure Hunt-oriented items to work with this shopper’s desire for new and different offers.
The ability to offer special items and experiences that the member would not expect to see in the club at a disruptive price is the ultimate shopping experience for the member and is what every merchant is looking for. Because Sam’s Club works on a curated assortment, this means they are more selective in the items they are willing to consider placing in the club or online.* It is the brand and sales team’s job to get a merchant’s interest and we must consider all of the advantages of the club channel to do it, things like offering a special deal, a treasure hunt item, or disruptive pricing. This takes some creativity and thinking outside the box but are some of the most exciting propositions for the Sam’s Club Merchant Team.
When planning your launch into Walmart Stores Inc., you can quickly focus on Walmart stores alone, with its scope and assortment. In contrast, Sam’s Club requires more of a custom approach and sometimes brands will see it as a secondary opportunity or something to work on later as it requires a different mindset and sales type. We would suggest thinking about Sam’s Club at the beginning of your Walmart strategy as it will help you reimagine your value proposition and present you with opportunities to grow your business faster.
*Sam’s Club carries roughly 5% of the SKU count in comparison to the SKU inventory of a typical Walmart Supercenter. The online platform is used as collection enhancement to in-club offerings but is still curated for the members and is considered a proving ground before selection for an in-club placement. Curated space in-club and online means limited assortment possibilities, so a supplier should focus on items that are at or near the top in their category and those that have proven sales with a great value.