Sam’s Club steady in wake of exec changes

Enjoying solid sales, Sam’s Club is poised to accelerate new club growth in 2013.

Change was in the air again this year at Sam’s Club as the warehouse club division welcomed yet another CEO and head merchant combination. In early 2012, Rosalind Brewer became president and CEO, and Charles Redfield was named EVP merchandising. The change could have had suppliers saying, “here we go again,” due to Sam’s history of senior leadership turnover. Instead, the transition was apparently painless for the 67% of survey respondents who sell products to Sam’s. Their responses were heavily shifted toward the strongest levels of agreement when asked whether the leadership transition was a seamless process.

The finding is noteworthy because a changeover in senior leadership can result in a new strategic direction that is potentially disruptive. However, in Sam’s Club’s case, it is enjoying solid sales momentum; and as Redfield has noted during several public appearances, his objective is to not screw it up. In fact, Sam’s is doing so many things right that new club growth is poised to accelerate in 2013.

Accordingly, an overwhelming percentage of respondents expressed the highest levels of agreement with the statement that Sam’s represents a significant distribution channel that will make a meaningful contribution to their companies’ growth in the next five years. And the good news for Sam’s as it looks to execute a 2013 growth plan that will involve a net increase of 10 to 15 new clubs is that suppliers contend they have a thorough understanding of the strategy senior leadership has developed to 
drive growth.

While suppliers’ overall view of Sam’s was generally favorable, it doesn’t mean there aren’t opportunity areas. For example, Sam’s has the potential to move more suppliers toward higher levels of agreement regarding the state of collaboration and merchant receptiveness to new ideas. Scores in these areas could be characterized as solid, but a relatively small percentage expressed the highest levels of agreement.

Where results were the weakest was regarding participation in a loyalty program in the process of being rebranded as Instant Savings following a launch several years ago as eValues. Less than ideal rates of supplier participation and a questionable return on investment by those who did participate prompted recent changes that look to be a win for members and suppliers. Initially developed as an exclusive benefit that could be leveraged to promote upgrades to the $100 Plus level, Sam’s has expanded eligibility to those at the basic membership level. Now with the new brand identity of Instant Savings, the program’s central value proposition is much clearer than it was under the ambiguous eValues moniker. The good news for suppliers whom Sam’s is dependent upon to provide the incentives that form the member value is that the offers they fund now reach Sam’s Club’s entire network of 47 million cardholders as opposed to the much smaller subset of Plus members.

Opportunity also exists with the Tastes ‘n’ Tips demo program. The potential exists for Sam’s to broaden participation rates and demonstrate a better return on investment from sampling activities, which are popular with members and add excitement 
to clubs.

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