Sam’s Club on Wednesday (Feb. 14) pared down its membership levels from three to two. The basic membership for $45 remains, and the $100 “Plus” membership comes with free-shipping on 95% of items sold online with no order minimum.
Plus members will continue to receive the benefits such as cash rewards, early shopping hours as well as pharmacy and optical discounts.
Sam’s Club CEO John Furner said last fall he wanted to simplify the membership process, noting that the retailer had tried to serve too many different member types. He said there is really just one member, a value-conscious consumer who might also own a small business. He told the investment community in October Sam’s Club would create a more simplified membership system with increased value.
The Club membership formerly known as “Sam’s Savings” did not include the free shipping perk with no minimum purchase, nor the added benefits of a higher-costing Plus membership. Sam’s said it will lower the membership cost for Club and Plus members who want to buy additional memberships for employees, friends and family. He said add-on memberships can be purchased at a slightly lower rate of $40. Plus members can add up to 16 additional members and Club members can add up to 8, according to corporate spokeswoman Laura Ladd Poff.
Jamie Iannone, CEO of SamsClub.com, said the retailer has also scoped out the regions where it will place online fulfillment centers in several of the shuttered club locations following the closure last month of 63 Clubs. That move also eliminated more than 7,500 jobs. Retail management said the closures were a result of financial performance during a recent profitability review.
Memphis was the first site announced by Sam’s Club for a fulfillment center, and Iannone said the retailer plans to ship its first packages from the new site early this spring.
“Our Memphis center will teach us a lot as we build out this new eCommerce supply chain. We plan to accelerate the growth of this network in the back-half of the year. Other regions being considered for fulfillment centers include Texas, Central Florida, the Mid-Atlantic, Southern California, Chicagoland and the Northeast, “ he said.
Sam’s Club has relied on Walmart’s supply chain network to make online deliveries. Furner wanted the function brought in-house hoping to better manage it and control costs as part of his overall effort to improve Sam’s Club margins.
Wall Street will be watching next week as Walmart will report its fiscal 2018 year-end earnings that include Sam’s Club. Stephens’ analyst Ben Bienvenue expects Sam’s to report total sales of $59.092 billion, an increase of 3% from the $57.365 billion reported last year. He expects Sam’s to report same-store sales growth of 2% for the fourth quarter and 1.9% for the full year, each slightly below Walmart U.S. metrics.
Budd Bugatch, a retail analyst with Raymond James, said the jury is still out on Furner as he just wrapped up his first year as CEO for Sam’s Club. He likes Furner’s focus on product, people and digital capabilities, but is not sure improvements at Sam’s Club will impact investor perception about parent Walmart.
“That’s a hard judgment for a retailer that is nearly $60 billion in size; but, unfortunately, we think that is the stark reality. It will be interesting to see if Furner and his team can change that during the next few years,” Bugatch said.