A sign hangs outside a Sam’s Club store on January 12, 2018 in Streamwood, Illinois.
Scott Olson | Getty Images
WalmartOwner Sam’s Club said Wednesday that the warehouse club’s membership is at a record high and inflation-stricken shoppers are looking for deals on bulk merchandise as it raises its annual dues this fall.
Fees will increase from $45 to $50 for club members, and from $100 to $110 for higher-level Plus members. The changes take effect in October. 17.
This marks the first fee increase in nine years for an entry-level membership. Sam’s Club hasn’t raised the price of its Plus membership since it debuted in 1999.
This brings Sam even closer to his opponent costcoit charges $60 a year for a basic membership and $120 for a higher-level “Gold” membership.
Sam’s Club is raising annual fees as warehouse clubs take advantage of budget-conscious customers. In the early months of the Covid pandemic, shoppers turned to Costco, BJ’s Wholesale and Sam’s Club to stock up on large cans of toilet paper, household cleaners and soup. In recent months, those shoppers have sought to escape inflation by looking for cheaper gas and deep volume discounts.
At the same time, inflation can affect growth. In a note to members Wednesday afternoon, Sam’s Club CEO Kat McLay said the company is “considering the financial pressure on wallets right now.”
With that in mind, he said, Sam’s Club will pick up the tab this year by paying a fee increase in Sam’s Cash that can be used at its stores.
Investors also weighed in on a potential increase in Costco’s payout. The club last raised its fee in June 2017 and have historically raised it every 5½ years, which would put it on track this year.
Costco CEO Craig Jelinek shot down growth talk on CNBC.Screaming in the street“In July. “I can tell you that we think about it every year, but it’s not on the table right now in terms of dues,” he said. “I’ve made that very clear. I don’t think it’s the right time.”
Sam’s Club has approximately 600 stores in the United States and Puerto Rico. Although it did not disclose the number of its members, it said that it was at an all-time high in the last quarter. Membership revenue rose 8.9% in the quarter ended July 31.
Its sales growth is outpacing other parts of Walmart’s business. Same-store sales at Sam’s Club rose 9.5% in the most recently reported quarter, while Walmart U.S. grew 6.5%
Sam’s Club made the decision to make the move because of the investments it has made in recent years, from improving the quality of the products on its shelves to adding new and convenient ways to shop, said Ciara Anfield, Senior Member and Chief Marketing Officer.
In recent years, it has added in-store pickup, offered same-day home delivery, revamped its User’s Mark private brand and launched a smartphone app called Scan & Go, which people can use to call out items as they walk down the aisle. Eddie Bauer began carrying brands such as La Mer and Banana Republic. Even some baked goods were enjoyed, such as cinnamon rolls made with French baking techniques.
He compared the spread of these new benefits to spending money on building a house or remodeling projects.
“There’s an expectation that once you invest in that house, it’s going to go up in value,” Enfield said. “We have made investments and believe in our proposition, our membership is now more valuable.”
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