ROGERS, ARK. – Second place doesn’t sit well with Walmart, and the company’s Sam’s Club wholesale club division is pulling out all the stops to narrow the gap with Costco.
At a briefing here last month in advance of Walmart’s annual shareholder meeting, Sam’s Club president/CEO Rosalind Brewer described a “merchandising transformation” that is driving traffic back into the chain’s cavernous stores.
The tenets of the strategy, explained, merchandising executive VP Charles Redfield, include a broad assortment, “great pricing” on quality, name-brand products, and “more newness more often,” as club members often frequent the stores several times a month.
Within the electronics and home media department of a Sam’s Club in Bentonville, Ark., the dictum translated into a focus on large-screen and Ultra HD TVs, wearable fitness devices and wireless portable audio.
“Our members are the first to try new trends, and there are a lot of new technologies that play to them and will present opportunities for the rest of the year,” said Dawn von Bechmann, technology, entertainment and office senior VP, during a store tour. “The CE malaise has been well documented and has been a challenge, but we are extremely optimistic.”
On the TV front, size clearly matters, von Bechman said, pointing to a showcased 80-inch Vizio Razor LED TV that retailed for $2,998. “TVs are getting bigger,” she said, and Sam’s Club will soon make way for 92-inch models that represent its next step in size.
“It seems like some TVs have to be bigger than the living space,” Redfield quipped at the briefing. “It’s counter-intuitive to their high cost and the growth in urban markets, but TVs are an emotional buy, and the increase in screen size is not slowing down. You’d think at some point they’d get too big, but we haven’t found it yet.”
Ultra HD TVs similarly skew toward the warehouse club’s clientele, which tends to be more affluent and acquisitive. “The category’s been pretty niche, comprising only 5 percent of industry sales this year, but our percentage is much larger,” von Bechman said.
To fan the flames and meet demand, Sam’s Club has at least one 55-inch Samsung Ultra HD TV in each of its 636 stores, and shows 65-inch displays in select locations. It will soon add LG and Vizio models to the mix.
Despite a 50 percent increase in available native 4K content over last year, von Bechman still doesn’t believe it’s enough. However, her customers’ desire to “future-proof their purchases,” the advent of sub-$2,000 models, the availability of 4K cameras and camcorders, and the improved picture quality of even an upscaled image should help the chain drive substantial sales during the holidays, she said.
To appeal to the truly aspirational shopper and help pull traffic, Sam’s Club placed a curved, 90-inch Sharp OLED display at the front of its tech department. “It’s not mainstream and we won’t sell a lot, but it’s symbolic,” von Bechman explained. “We stand for technology. Sometimes we display products that aren’t ready for primetime, but members expect us to educate them and show what’s ahead.”
In lieu of derivative models, Sam’s Club also differentiates itself through service, and to that end is offering a $99 extended- service plan through SquareTrade for TVs priced $500 and more that includes delivery, installation and setup, and four years of product protection.
Elsewhere, technology services VP Michael Chaney declared wearables “a great, growing business” that’s “ready for this Christmas” thanks to trend-hungry customers, and pointed to a current selection that includes Samsung’s Gear 2 smartwatch and the Fitbit Flex and Samsung Gear Fit fitness bands.
Wireless audio is represented by Klipsch’s GiG ultra-portable speaker and SOL Republic’s Bluetooth Deck, whose “heist” mode grabs signals from up to four other sources. Chaney also cited Mophie’s Juice Pack line of portable mobile- device battery chargers as a popular wireless accessory.
Adjacent to the tech department is Sam’s Club’s seasonal fare, which this summer includes a selection of goodbetter- best outdoor gas grills under the KitchenAid and private-label Member’s Mark brands. Seasonal senior director Kirk Boyd said the step-up KitchenAid model, which features a ceramic infrared main burner, is priced at $1,299, or about $400 to $500 below market.
“The savings can pay for Sam’s Club membership for more than 10 years,” he said.
CEO Brewer said other Sam’s Club initiatives include cash rewards for elite Plus-level members; a “click ‘n’ pull” service allowing in-store pick-up of online orders; restructuring the store labor model by removing some managementlevel positions; growing the consumer vs. the small-business customer base; an automatic replenishment service for frequently purchased items like ink and toner; the addition of 44 new stores this year and next; and improvements in online and cross-channel retailing.
“The opportunity in dot-com is amazing,” noted Jamie Iannone, an eBay and Nook veteran who became president/CEO of SamsClub.com in January. “The lines between digital and physical are blurring considerably, and mobile is exploding – you can check prices or inventory availability and make a purchase from your pocket.”
