The Supply Side: Sam’s Club focused on growing private brand
Private brands are essential in retail and warehouse clubs. Costco’s Kirkland Signature brand is worth about $75 billion, arguably one of the largest private labels in the country in terms of market penetration, according to a report from USB in 2019.
A few years ago, Sam’s Club began to work on its Member’s Mark private brand in hopes of driving more market penetration and brand affinity. That work continues, according to Prathibha Rajashekhar, senior vice president of sourcing and private brands Sam’s Club, who spoke recently at a virtual Greater Bentonville Area Chamber of Commerce event.
Rajashekhar said Member’s Mark strives to be a good brand for people and good for the planet. She said Member’s Mark aspires to be that brand customers “must have” because they trust the quality and value. The retailer is committed to taking Member’s Mark to the next level, but it won’t happen overnight, she said.
While Sam’s Club has made strides in recent years with growing Member’s Mark brand penetration, there is still work to do. Sam’s Club declined to provide the dollar value of the brand or its market penetration, only to say it is growing. In 2017, Sam’s Club said Member’s Mark represented $10 billion in sales, and last year the company said it was the top preferred brand on SamsClub.com.
“We’re looking to grow, but we don’t measure growth the way you may think,” Rajashekhar said. “Success for Member’s Mark will be measured in a way to ensure we’re constantly surprising and delighting members with quality products at an incredible value. We know that if we get that right, we will continue to be a strong asset to the overall Sam’s Club business.”
She said Sam’s is continuously evaluating its Member’s Mark assortment and adhering to and developing high standards for every new item.
“If our members aren’t impressed, then we consider if we need to remove the item or if there’s still potential to improve the item through renovation,” she said. “Developing new, innovative items is also key to our strategy.”.
She said the company uses member feedback and market data to determine which categories to play with private brand investment. She said Member’s Mark is leading in some categories and following in others. One area where more focus is ongoing is in Member’s Mark apparel.
Scott Benedict, a former buyer for Sam’s Club and now director of retail studies at Texas A&M University, said a strong private brand could be a real differentiator for retailers. He said the Kirkland Signature brand is that for Costco. Amazon has also made significant headway with the Amazon Basics brand, now the best seller on Amazon.com.
Benedict said Sam’s Club’s push into more Member’s Mark apparel is likely because it is an underdeveloped category. He said clothing is a higher margin category, making sense for Sam’s to do more. Benedict said Sam’s excelled early with Member’s Mark in consumable items from toilet paper to baby diapers. But recently, he was surprised to see a Member’s Mark two-wheel dolly.
“It was competitively priced, comparable in quality, and I was shocked to see Member’s Mark in a durable hardware category that shows the work being done to improve the brand’s scope and reach,” he said.
Rajashekhar said the retailer uses thoughtful analysis to decide which categories to expand, revamp or delete from the Member’s Mark offerings. In 2017, Sam’s added more than 300 new items to the Member’s Mark brand. Some are now trending well, and others have been removed. She said the Member’s Mark boxer brief had an online star rating of 3.19, but Sam’s Club removed the item because it did not live up to the quality needed, and consumers were not happy with it. Cheddar stuffed jalapeno peppers, a food item of Member’s Mark, also got a low rating of 2.1 online, and negative reviews prompted the retailer to remove the item. Another consumable removed was the Member’s Mark melatonin sleep aid, given an online rating of 3 and bad reviews.
She said Sam’s Club had updated other products like Member’s Mark cookware because members saw potential with the brand. Sam’s Club increased the gauge thickness, quality of handles and added pour spouts and drain holes to the lids. Sam’s Club also made updates to chocolate-covered almonds by adding more roast time for almonds and balancing the flavor profile more to member liking. The company made product updates to the Member’s Mark lobster bisque to improve the taste. Sam’s Club said the product now uses 100% lobster leg meat with increased cream, milk and butter.
Rajashekhar said Sam’s also added a Member’s Mark cookies & cream product, a new high protein shake and a frozen shrimp product. She said there is no set goal of categories Sam’s Club wants to have Member’s Mark products. She said the retailer would go where the data and members direct.
Sam’s Club can see some of the successes of the Member’s Mark brand in the high-end wicker, all-weather patio furniture that rivals the quality of Frontgate. Benedict said it is also a high-margin category and a differentiator for Sam’s Club compared to parent company Walmart. He said warehouse clubs have to strike a delicate balance between carrying the stock-up items members expect and the unexpected “have-to-have” impulse buys they see as they treasure hunt around the club.
He said SamsClub.com is a great testing ground and launching pad for items that might not have the metrics to make it into a physical club. He credits Sam’s with growing its online offering and said it has a head start over Costco in that area. Benedict said Sam’s Club had done the work on quality for Member’s Mark. It just needs time to seek member input and analyze other market data to decide where it makes the most sense to invest.
EDITOR’S NOTE: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.