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As Walmart-owned Sam\u2019s Club undergoes a growth spurt, with plans to double <\/span><\/span><\/span><\/span><\/span><\/span>its sales, profit and membership<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> in the next eight to 10 years, the club retailer\u2019s CFO said convenience, fresh food and omnichannel offerings play key roles.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201c[W]e\u2019ve really invested heavily and focused on improving convenience and improving experience, and every trend we see with consumers is they want that,\u201d Todd Sears, senior vice president and CFO of Sam\u2019s Club, said at the Evercore Consumer & Retail Conference earlier this month, based on a Seeking Alpha transcript.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSam\u2019s Club has already increased its sales by 50% over the last five years, with the COVID-19 pandemic serving as a \u201cshot of adrenaline,\u201d Sears said, noting this growth was \u201cpurely organic\u201d as sales increased while the company maintained roughly the same number of locations.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nOver the same five-year period, Sam\u2019s Club has also seen its member base grow 33%, he added.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nAs the retailer looks to continue growing organically, it is remodeling all of its clubs to give shoppers a \u201cconsistent elevated experience throughout,\u201d Sears said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSam\u2019s Club is still working toward its previously stated target of opening 30 clubs over the next five years, Sear said, noting the club retailer plans to be able to open 15 clubs annually, though he did not specify when this would be.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nNew locations will open in markets where there is a \u201cgood enough addressable market\u201d so the company can achieve its \u201caverage member base\u201d within a few years of opening, he said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cIn real estate, it takes a while to build up a pipeline and get going,\u201d Sears said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nFresh foods and both online and in-store digital tools are serving as key areas that the club retailer is looking to hook consumers with and make shopping at Sam\u2019s Club more convenient, Sears said.\u00a0\u00a0\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nThe importance of fresh food <\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\nFresh food continues to be a traffic driver for Sam\u2019s Club\u2019s business, Sears said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cIt\u2019s where the member assesses quality immediately, and they can tell that difference. And so in a lot of clubs, we\u2019ve already remodeled our fresh area, but those we have not, we needed to get it up to the same standard that we have in our best clubs around fresh,\u201d Sears said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nDuring the company\u2019s most recent quarter, its comparable-store sales increased nearly 7%, growth that is \u201cpretty healthy in retail\u201d and was primarily driven by fresh food purchases and health and wellness products, Sears said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSushi is one of the key fresh food areas for the club. Sam\u2019s Club has sushi displays and a sushi chef in 581 of its 600 clubs, Sears said. As the club remodels locations, it\u2019s making sure that the sushi chef is \u201cfront and center,\u201d he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\n\n
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\nSushi island and florals at the Sam’s Club store in Grapevine, Texas.<\/p>\n
Permission granted by Sam’s Club<\/p>\n
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\u201cIt adds this theater,\u201d Sears said. \u201cSushi is a big traffic driver. [It\u2019s] one of the reasons why people come all the time, and the quality of it is excellent.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nKeeping prices consistent for important fresh items is another area where Sam\u2019s Club aims to differentiate itself from competitors.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nThe retailer has not raised prices on pineapples and bananas even though those items are imported, Sears said. Instead, the chain focused on reducing spoilage and waste as a way to offset any cost increases it may feel from tariff-related price hikes, he said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nBuilding out digital capabilities in-store and online<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\nAs Sam\u2019s Club leans into convenience, omnichannel retailing is playing an increasingly important role, Sears said.\u00a0\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cWe believe the future of club retail is omni,\u201d Sears said. \u201cAnd so that\u2019s why we are investing heavily in omni.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSam\u2019s Club\u2019s online shopping app is migrating to the same platform that the Walmart app uses, which will help create a seamless experience for consumers who are already familiar with Walmart\u2019s app, Sears said. The migration started a few weeks ago and is scheduled to be completed in a couple of months, he said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nSam\u2019s Club is seeing success with its in-store technology deployments. Scan & Go accounted for 35% of sales during the company\u2019s most recent quarter, up 600 basis points from a year ago, Sears said \u2014 \u201ctremendous growth in a technology now that’s 9 years old.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nMeanwhile, the retailer\u2019s computer vision solution for <\/span><\/span><\/span><\/span><\/span><\/span>automated receipt checking<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> is cutting down on labor at the exit, reducing shrink and making it faster for consumers to leave the store, Sears said. The technology can check twice as many items and has identified 17% more unpaid items than manual checks, Sears said. While some items, like alcohol, require manual checks, the majority of purchases can go through the exit arches, cutting down the time they spend in-store, Sears said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\n\n
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\nComputer-vision receipt-verification exit trusses at the Sam’s Club in Grapevine, Texas.<\/p>\n
Courtesy of Sam’s Club<\/p>\n
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E-commerce accounts for 17% of Sam\u2019s Club\u2019s sales, excluding fuel, up 300 basis points from a year ago, and the digital channel saw sales increase 27% in the latest quarter, Sears said. While most of the chain\u2019s e-commerce sales are curbside pickup, members are also using the other channels, he noted.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cCurbside pickup and shipping have been growing pretty consistently for a number of years. However, delivery has been what\u2019s really taken off as of late,\u201d with that channel growing 160% year-over-year in the latest quarter, Sears said.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nThe club retailer\u2019s <\/span><\/span><\/span><\/span><\/span><\/span>newly launched pizza delivery<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span> is introducing members to the delivery channel, Sears said, noting that the service \u201chas exceeded our expectations.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cWhat\u2019s surprising is the average order value of a pizza order is 10X the price of the pizza, so people are adding other things to the basket,\u201d Sears said. \u201cThe other thing that is interesting is that a significant percentage of the total orders, members are choosing to pay for it for delivery through express. \u2026 The value on the pizza is so big. They\u2019re willing to pay that extra money to have it delivered that much faster.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n
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