A struggling Sam’s Club refocuses on treasure hunt deals, daily values

Sam’s Club executives are focused on more “newness” everyday in the 650 clubs across the country in hopes of improving the lackluster financial performance that has labeled it the laggard in Wal-Mart’s retail portfolio.

Sam’s club delivered a 0.4% comp excluding fuel and 3.8% comp decline including fuel, results that continue to frustrate Wall Street and Wal-Mart management in the first quarter of fiscal 2016. CEO Rosalind Brewer recently told the media that this year will be one of investment and testing new ideas that pack value into memberships and bring more excitement into the club shopping experience.

During a recent tour of the Sam’s Club in Bentonville, management unveiled several new merchandising plays in the retailer’s turnaround game plan.

TAKING RISKS, TECHNOLOGY
Sam’s Club merchant teams were told to take more risks on items and to turn over the merchandise in quick fashion so that there is “more newness, more often.” For instance, the housewares department had 35% new products in spring 2014. This year 85% of items are new to the clubs. Women’s apparel is nearly 100% new merchandise season to season and men’s is roughly 75% new merchandise, according to club management.

Technology is another area of the club where buyers have taken some risks. Selfie-sticks were one of the most popular items sold at Sam’s Club in recent months. Chief Merchandising Officer Charles Redfield said he was initially concerned with how many selfie-sticks were procured, but the clubs were able to move the merchandise making the item the top seller for the holidays.

The electronics merchant teams for online and physical clubs attended the consumer electronics show in January and found new items they are rotating into the clubs each month of this year.

One of the ways Sam’s Club merchants are gauging interest among members is with a new electronics catalog for Sam’sClub.com. Management said the first catalog featured a drone on the cover which retailed at $1,141 and it sold well enough to merchandise it the 600 clubs this year.

Redfield said Sam’s Club members are first adopters of technology and merchants are always looking to stay ahead of the curve. In the last year, 4K television was one of the items Sam’s Club invested in for its members. He said 4K television makes up about 11% of U.S. television sales today, but at Sam’s Club it’s more like 20% of television sales. Management expects it will be as much as 50% of their television sales this year. Sam’s merchants are looking to add a 4K Blu-Ray player and a camcorder by the holiday season of 2015.

Management said televisions average between 8% and 10% price declines each year, but at Sam’s Club its average selling price is up because of the higher ticket 4K television sales.

Another tech area Sam’s Club is positioning itself is in the 3-D printing space. The retailer carries the MakerBot 3-D printers in all of its clubs as of this month. While the technology is still in its infancy, Sam’s Club execs say the device has sales potential. The company has tested the market with MakerBot and while it’s not a major part of retailer’s sales this year, units are selling. They said local schools are purchasing them to try an unlock student creativity. Architectural firms are buying them to create 3-D renderings for proposed projects and design firms are purchasing them to create product prototypes.  

Sam’s said its members are responding to this product and that will help the retailer learn its way through this technology.

‘SHOCKING VALUES’
Sam’s Club recently launched a new online daily deal to its members through an email notice. The items are labeled “Shocking Values” and range from lobsters to Big Green Egg Ceramic Grill. The items offered are bigger ticket items from a $59 Cleveland Wedge Golfing Iron to a $5,299 Breitling Chromatic GMT Wrist Watch.

Sam’s Club management said offering deals on large ticket items help members to realize the value in their membership. 

“Our members consider each visit to their neighborhood club and SamsClub.com a treasure hunt for unexpected savings, and Shocking Values is a new extension of that experience,” said Jamie Iannone, president and CEO of SamsClub.com.

Members can find the daily deal via logging on to the retailer website, checking the mobile app or they can sign up for a daily email notification.

Sam’s Club said the featured items are hand-picked, well-known brands which are chosen based on members’ interests, top trends and popular selling items across a wide range of categories including electronics, apparel, home decor and outdoor/garden. These deals are for a limited time with limited quantities.

TASTE & TEST
In the fresh food and health and wellness areas of the club members will see more demonstrations this year as the retailer plans to “taste and test” new product offerings before the purchase.

Adding more than 30 new organic food items to the mix was a big step made earlier this year given Sam’s Club has just 95 different organic items out of roughly 6,000 total items in the entire big box format. Brewer said the addition of more organics was a direct response to what members wanted and it’s also one of the metrics being used to draw more millennials to the Sam’s Club format.

Fresh food is another push by Sam’s Club as members may purchase freshly made dinner entrees ranging from chicken parmesan to chicken enchiladas with sides and salad offerings as well. Club management said meal solutions are popular with a wide range of members who seek quality, portion control and value.

Carol Spieckerman, CEO of newmarketbuilders, applauds Sam’s Club efforts to ramp-up organic and gluten-free items. 

“These are the types of actions that drive trip frequency and have the potential to make Sam’s a destination for fill-in trips and bulk-buying stock-ups on staples,” she said.

ANALYSTS REACT
Investment analysts who watch Wal-Mart are hoping the changes help the Club’s finances.

“Sam’s Club performance has been frustrating but we hope that management’s focus on merchandise assortment, marketing, member rewards, and e-commerce investment will drive future traffic and ticket improvement,” noted Budd Bugatch, analyst with Raymond James & Associates.

Spieckerman said the biggest danger for Sam’s Club is the myriad programs and promotion launched over the past few years could create confusion for members.

“So Sam’s is smart to simply and clarify programs like Click and Collect (rebranded as Club Pickup) … It will take time for the awareness of these changes to take hold, particularly with shoppers for whom Sam’s isn’t top-of-mind, but Sam’s deserves credit for driving continuous improvement,” she said.