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Wholesale Store Innovation: Sam’s Club Takes the Lead

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In the 1980s, wholesale clubs revolutionized retail. Wholesalers, like BJ’s and Sam’s Club have succeeded but, the warehouse concept hasn’t change much since then. That’s why Walmart is developing an entirely new concept for Sam’s Club. The store is in Lower Greenville, a neighborhood of Dallas, Texas. Sam’s Club will test new technology at this store/wholesale store innovation lab. Said Jamie Iannone, CEO of SamsClub.com and Executive Vice President of Membership and Technology, “While this will be a membership club like all Sam’s Club locations, this club will be designed to help us innovate and improve our member experience. The focus will be on making shopping with us even easier through a more digital experience.”

 

More Food, Less Everything Else

Sam’s Club is making is a drastic change in assortment. The new direction is smaller and more edible. Most Sam’s Clubs offer closer to 6,000 distinct items. The new store will feature between 1,000 and 2,000 items. Traditionally Sam’s Club prioritizes bulk dry grocery, softlines (clothing, linens) and hardlines (electronics, appliances, gear).  The Lower Greenville location will lean towards more grocery and ready made food items.

 

Technology Drives Convenience

The original draw of the wholesale club model was convenience. Families and businesses loved Sam’s Club and it’s rival wholesalers.  Normal grocery stores were a nightmare for buying in bulk. Wholesale clubs ushered in an era of less trips and easier experiences.

But, some parts of the wholesale club experience were inconvenient. Field Agent, a retail auditing firm, discovered that over half of respondents to a survey disliked the crowds found at wholesale clubs. 39% complained about the checkout process. Sam’s Club has made a huge investment in wholesale store innovation with technology designed to address these weaknesses and increase convenience. One example: Strategically positioned kiosks that Sam’s Club is calling “endless aisles”. Sam’s Club offers a dozen patio sets but may only have space to display two or three sets in a smaller format store. Shoppers can use Endless Aisle kiosks to browse Sam’s Club full selection of patio sets. Sam’s Club will then ship it to their homes. The assortment of larger store, available in an easy-to-navigate smaller footprint. Brilliant.

Sam’s Club is also going big on mobile to further drive convenience. Here’s a list of what Sam’s Club members can do on their smartphones:

  • Skip the checkout line and pay by scanning items using Scan and Go.
  • Receive curated daily alerts at 9AM everyday. These alerts are part of Sam’s Club Shocking Values program, with steep discounts (up to 60%).
  • Refill prescriptions
  • Use mobile check-in for Club Pickup, Sam’s Club curbside click and collect program. This program has been completely overhauled. Customers build and save a shopping list online. They can use the mobile app to notify a store that they’re on their way and, in some locations, reserve a parking space. Sam’s club CEO, Roz Brewer told Fortune “Our members are telling us it’s one of their favorite apps.”

 

Ecommerce is King

Over the last few years, profits and same-store sales have been stagnant. Ecommerce has been the shining star in the Sam’s Club universe. According to Supply Chain Dive, Sam’s Club ecommerce business grew 25% in the first quarter of 2018. These numbers are eye-popping but not new. TBP reported a 27% growth rate in ecommerce for Sam’s Club in the first quarter of 2016. This sustained hyper-growth is why Sam’s Club is putting ecommerce front and center.
 
Stores like the Lower Greenville one may become more common. Sam’s Club is transforming 12 existing locations into online fulfillment centers. These fulfillment centers make same day delivery possible, for SamClub.com. They also make it possible for members to place Club Pickup orders for same day pickup at stores.
 

New Membership Tiers

Sam’s Club is also driving wholesale store innovation by rethinking the way that membership works. One of the defining features of wholesale clubs is the membership model. These stores charge an annual fee, then sell deeply discounted merchandise in bulk. This offers the customer a low-cost way to stock up. Business owners are particularly fond of wholesale clubs because they offer commercial memberships.

The Lower Greenville store will continue the membership format. However, in 2018 Sam’s Club moved to a two-tier model. Club memberships offer base access for $45 a year. Plus memberships are $100 a year, and include free shipping as well as other perks. This is a clear move to compete with Amazon’s successful Prime membership. These online synergies are at the heart of the new Lower Greenville location.

 

The Future of Wholesale Store Innovation

The Lower Greenville store represents new trends in brick-and-mortar. Retailers are reworking their formats. The line between ecommerce and brick and mortar is blurry. Kiosks in brick and mortar stores are driving ecommerce. Fulfillment centers built to support ecommerce enable same day pickup in stores. One hand feeds the other. All of this drives convenience.

Sam’s Club has experienced consistent success since it entered the market in 1983. Competitors such as Costco opt for a more low-tech approach. But Sam’s Club has continued to be the leader in wholesale store innovation. That’s a direct reflection of have a parent company that’s a leader in retail technology. Innovation is happening in Lower Greenville and Walmart continues to dominate the competition.

To learn how retailers use CB4 artificial intelligence to improve the in-store customer experience click here.

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