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Don’t look now, but Sam’s Club is growing again.
More than a decade after its last major expansion, five years after closing more than 60 stores, and just before its 40th anniversary, the members-only warehouse club of Walmart Inc. of Bentonville enjoyed a renaissance, with a year-long streak of same-store sales growth and membership at an all-time high.
That success — driven by external factors I’ll get to in a minute — prompted the company to announce plans in January for more than 30 new stores across the country over the next several years. The first of the new stores will open in Florida next year. Executives promise that this new generation of Sam’s Clubs will be bigger – 160,000 SF versus 140,000 SF now – with better amenities, including a fish/sushi island, a full-service floral department, a walk-in dairy and a larger health center.
In addition, the company is improving its supply chain to support those clubs, modernizing existing distribution centers and launching five new ones. Late last month, Sam’s Club unveiled plans for a $142 million fulfillment center west of Atlanta in Douglas County, Georgia, which it says would create 600 jobs and increase its ability to distribute goods to customers in the Southeast.
The moves come as inflation and post-pandemic shopping habits make looking for deals at warehouse clubs cool again, even for higher-income customers. Early in the pandemic, shoppers hungry for toilet paper began to buy in bulk, not only for paper products, but also for food. Once inflation kicked in, that habit turned out to be even smarter. Customers also pulled out their Sam’s Club cards at the discount gas station last year amid eye-watering gas prices. As Jefferies analyst Stephanie Wissink told Yahoo Finance last year, “One of the strongest customer acquisition tools for them is gasoline. And when gas prices go up, that’s usually a net benefit to traffic to their pumps.
Speaking to CNBC on Jan. 26, Sam’s Club CEO Kath McLay said that as prices remain high, the Sam’s Club proposal has become more relevant.
“In times of inflation, times when people have pressure on their household budgets, it’s a time when Sam’s Club can really show up,” she said. “So I think the time is really right for us.”
So far, so good. On Feb. 21, Walmart reported same-store sales of Sam’s Club were up 12.2% in Q4, marking 11 consecutive quarters of double digital growth. Membership remains at all-time highs with membership income up 7.1% after the retailer increased annual dues from $45 to $50 for Club level members and from $100 to $110 for Plus members in October level.
The first Sam’s Club opened in Midwest City, Oklahoma, on April 7, 1983. According to Walmart, the store began as “a wholesale club to help small business owners save on everyday items they needed to run their operations.”
Since then, the customer base is not just business, but the warehouse club has become so much more – a place for fresh meats, new tires and high-end electronics, a bulwark against inflation, a 40-year-old entering his prime.