Sam’s Club finding success with private brand push
Following in the footsteps of competitors Costco and Trader Joe’s, Sam’s Club set out to streamline its 27 private brands into one back in 2015.
In early 2017, Sam’s Club launched 300 new items under the Member’s Mark private brand. Some of the items rose to favorites by members, while others were revamped to better give customers what they want. Some of them went to the product graveyard, according to Pamela Gaik, vice president of private brands at Sam’s Club.
Gaik was the speaker at the Greater Bentonville Area Chamber of Commerce’s WalStreet Speaker Series held Wednesday morning (Dec. 12) in Bentonville at the Sam’s Club Home Office. In her role overseeing private brands, Gaik said Sam’s Club has a core strategy outlined by CEO John Furner to put products at the center between people and digital innovation.
Furner has said repeatedly the products in the clubs have to be the hero. Gaik said Member’s Mark is answering that call.
“We are seeing the power that comes from having just one brand and we’re holding ourselves to a very high standard for any item we put the Member’s Mark name onto,” Furner has previously said.
Gaik reiterated Sam’s Club is growing its private brand sales by double-digits as more members are choosing Member’s Mark. She said it’s now the No. 1 preferred brand on SamsClub.com, and it’s one of the fast growing brands in the U.S.
The penetration of the Member’s Mark brand increased approximately 90 basis points (0.9%) over the past year, according to Walmart President and CEO Doug McMillon’s commentary in the recent earnings call. He added Member’s Mark is key to Sam’s Club strategy to build a healthier business over the long haul.
Gaik told the supplier group Wednesday that the company has worked to improve the quality and present heightened value with its Member’s Mark items. For instance, she said the Jasmine Rice sold in clubs was formerly sourced through a local broker, but it now comes from Thailand. By working directly with the rice manufacture in Thailand, Sam’s Club was able to ensure the quality members want and bring down the costs.
She said some of the Member’s Mark items are a result of revamping based on what members want like clean ingredients, quality and value. She said one such revamp was the Chocolate Chunk Cookie.
“We listened to members, looked at trends within the industry and tweaked the ingredients: increased chocolate content to 25% of total weight, moved to an all-butter formula, added brown sugar to create homemade flavor and color and there are no artificial colors or flavors. When we finished, we then check with members to see if we got it right,” Gaik said.
Another big makeover was the Southern Style Chicken Bites. Gaik said Sam’s Club looked for a true North Star — which in the South is Chick-fil-A. The revamped product launched in the summer during back-to-school season and was only set as a seasonal item. But sales exploded after a social media post compared the item to Chick-fil-A nuggets, only better — available on Sunday, the day of the week Chick-fil-A restaurants are closed. She said the post went viral with more than a million shares.
“We sold out in July and have since put this item in clubs year-round because of its popularity with families,” Gaik said.
Nationwide, 81% of consumers buy private brands and 53% shop a retailer specifically for its private brands. Gaik said Sam’s is still working to get to a Trader Joe or Costco level, but the progress made in the past couple of years has been amazing. One out of every three items sold at Sam’s Club is a Member’s Mark item.
Gaik said Sam’s wants Member’s Mark to be a destination brand, something members can’t get anywhere else. She said Trader Joe’s and Costco do this very well. One example she gave are the Scandinavian Swimmers sold at Trader Joe’s.
“When I am in a city with a Trader Joe’s I want to stop in and get these items,” Gaik said.
When asked what categories Sam’s Club is looking to expand the Member’s Mark brand in the future, Gaik said women’s apparel and home goods. She said the company started with kids’ apparel about two years ago and it’s done well. Sam’s Club added men’s apparel last year and women’s apparel is next.
She said the home category also holds some opportunities for Member’s Mark given the company has the ability to source jointly with Walmart and Walmart International from around the world. She explained the specific items ordered could be different from Walmart but within the same category, creating substantial savings around bulk ordering and shipping efficiencies.
Other categories where Gaik said the company has made big strides with Member’s Mark include diapers, which cost 50% less than the leading brand and perform on par. She said the Member’s Mark pet food compares to Blue Buffalo, and is sold at a value to the national brand.
One of Gaik’s personal favorites are the baked beans, which were enhanced with the burnt ends from briskets also sold in clubs. Sam’s Club also worked with pitmasters from the Kansas City Barbecue Society to formulate its pre-smoked pulled pork, which is sold in a heat-and-serve package. The ingredients are pork, water and seasonings as the retailer sought to have a clean ingredient listing.
Gaik was clear to say Sam’s Club will continue to look for ways to grow Member’s Mark in the future. She said there are no plans to extend the brand into toys or consumer electronics, which happen to be hot sellers during the holidays. She said Member’s Mark items in the food and decor categories typically do very well in the holiday season.
“I have to earn my Member’s Mark shelf space just like the national brands we sell,” Gaik said. “If a Member’s Mark product sells well, it gets retained. If not, it might get revamped and then again it might get tossed.”
Sam’s Clubs locations typically carry between 6,000 and 7,000 items. A certain amount of turnover is important for clubs who also have to keep new items coming in to satisfy the treasure-hunting members.