The Supply Side: Sam’s Club execs discuss goal of doubling revenue

by Kim Souza ([email protected]) 125 views 

Sam’s Club is on a roll, growing revenue and membership with rising sales of the Member’s Mark private brand and a profitable e-commerce business up 17% in the most recent quarter. But that isn’t enough, according to Megan Crozier, chief merchant at Sam’s Club.

She recently told the media during Walmart shareholders week that the club business aims to double its revenue soon.

“I know that sounds ambitious, but we know we can do it. And we have a plan in place,” Crozier said. “In 2016, we were a $56 billion business; today, we are nearing $100 billion. We will continue to deepen our digital engagement with members and suppliers while delivering disruptive values for our loyal members.”

She said Sam’s will use strategies that include digital and omnichannel commerce, which blends clubs with e-commerce. Retail advertising should also add to the coffers. Crozier said when a member uses Scan & Go or orders online for club pickup or delivery, there are multiple points for engagement — engagement being a corporate-speak term meaning opportunities to try to sell more products or services to a customer. According to the Walmart division, omnichannel shoppers spend more than members who shop only inside clubs.

One way Sam’s brings members the items they want is by seeking feedback through digital engagement before and after shopping trips. Sam’s said it seeks input from more than 50,000 shoppers who buy Member’s Mark brand products on new products before and after they reach clubs.

“At Sam’s Club, we have a long history of listening to feedback from our members and putting their needs at the center of everything we do,” Crozier said. “It’s an integral part of how we develop our Member’s Mark products, and in today’s ‘experience economy,’ our approach sets us apart from other retailers in ways that deliver real value to our members.

“Our approach goes beyond traditional focus groups and surveys, with true engagement that will shape the future by creating more personalized experiences for our members. And this collaboration is already happening at scale. We see the opportunity to include all members in the future.”

Wanting to revamp its summer grill offerings, the retailer sought the help of its Member’s Mark shoppers in the Dallas/Fort Worth metro area.

“Our product development team identified a group of active and passionate grillers through a questionnaire to members,” Crozier said.

The company used the survey to verify a wealth of experience and expertise. The company distributed 20 prototypes to select Member’s Mark shoppers in the Dallas area who tested the grills by cooking, filming and reviewing their experiences. Their feedback led to developing a grill that included adjusted features to ensure it was tailor-made to resonate with member’s needs and preferences.

“The future of customer engagement is participatory as retailers and customers collaborate in commerce to create a win-win experience,” said R. “Ray” Wang, CEO of Constellation Research, a San Francisco area-based research and advisory firm. “Sam’s Club is pushing the boundaries of retail in today’s ‘experience economy’ with customer engagement strategies designed to get the promises of collaborative commerce.”

Crozier said the quality of the Member’s Mark brand became a primary focus in 2020, and brand merchants began to focus on quality after implementing competitive prices.

“This was relevant for me, and I was in the discussions because I had experienced poor quality on a family purchase,” Crozier said. “During the pandemic, I was home with a 3-year-old and a 5-year-old, and they needed something to do. So, I ordered a Member’s Mark backyard pool from Sam’s Club. We put it up, and it broke. I began to ask merchants about bad reviews or quality issues, and they said the return rate was very low. We were not looking at quality metrics at that time.”

Crozier said Sam’s Club began engaging more with members in various ways to glean insights on quality issues with Member’s Mark products. She said the data insights received were rich and deep, leading to a harsh quality review and member input from design to performance of each product carrying the Member’s Mark brand. Crozier said member input is fundamental to the ongoing success of the Member’s Mark brand. Sam’s Club executives said that the focus on disruptive price, member input and quality approval are part of why families and small businesses choose the wholesale club.

In the recent quarter ending April 30, Sam’s Club saw stellar results compared to the prior-year period with record membership, including the premium Plus member. Executives said the rise in memberships and conversions to the Plus level affirms that the retailer is delivering on price.

Sam’s CEO Chris Nicholas said in the recent earnings call with analysts that Plus membership is 54% of Sam’s member base and up 3.3% in the year. He attributed the growth to deep consumer engagement, lower prices and improved quality and pricing with Member’s Mark products. Since the re-launch of Member’s Mark in 2022, the private brand has grown to more than one-third of Sam’s Club sales, or about $27 billion last year.

“Member’s Mark, our own brand, is setting the bar for quality and value,” Nicholas said. “People want really great items at really great value, and we just continue to give them that.”

Nicholas said the Scan & Go technology and the frictionless walk-out technology powered by artificial intelligence, now in 120 clubs, make Sam’s Club a convenient, time-saving option.

According to Nicholas, that business is already profitable, with upward of 80% of Sam’s Club’s online orders being fulfilled from clubs instead of distribution centers. He said the retail media business is also growing and is accretive to the top-line revenue, which was up 11% in the recent quarter.

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 Firebend.