Sam’s Club Steps Up to the Plate
Stuck at home during the Covid pandemic, Megan Crozier needed a way to keep her two young children entertained. She bought an inflatable pool from Sam’s Club. After just a few uses, the pool began leaking air, leading to disappointment. For Crozier, chief merchant of the Walmart-owned membership club, that trashed pool catalyzed a years-long effort to catch up with chief rival Costco and the popularity of its private brand, Kirkland Signature.
Raising the Bar for Member’s Mark
Sam’s Club is trying to raise the bar for its brand, Member’s Mark, as it opens more locations. The label’s makeover has become critical for Sam’s Club as it aims to close the gap with Costco, which has roughly the same number of U.S. clubs but about twice as much annual revenue. Net sales for Sam’s Club totaled $86.2 billion in its most recent fiscal year, compared with $176.63 billion for Costco’s U.S. clubs.
Sam’s Club CEO Chris Nicholas emphasized, “The club model survives because brilliant merchants focus on creating or buying exceptional items. Costco did a great job over the years with Kirkland, and we saw that succeed.”
The Competitive Edge of Private Labels
The popularity of Kirkland’s brand, which includes a diverse range of items like vodka, batteries, and dress shirts, has helped drive membership sign-ups and renewals. Michael Baker, a retail analyst for D.A. Davidson, remarked, “Costco’s success with Kirkland Signature created a formula that Sam’s Club can follow.”
Sales of private label products increased 34% between 2019 and 2023 to $236.3 billion. Exclusive offerings, such as products you can’t find anywhere else, are essential for clubs that require shoppers to pay a membership fee. Annual fees cost $60 at Costco and $50 at Sam’s Club, with higher-tier memberships costing $120 at Costco and $110 at Sam’s Club.
Member’s Mark Transformation
Over the past several years, Sam’s Club has consolidated its private labels from more than 20 different brands into a single one: Member’s Mark. It announced new goals for food and merchandise standards that it aims to reach in 2025, such as switching to antibiotic-free poultry and fair-trade certified coffee beans. Additionally, a new program allows customers to help co-create Member’s Mark items by giving feedback on flavors, design, and more before the retailer greenlights an item for the shelf.
Customer-Centric Approach
Nicholas mentioned, “They are exacting, like, ‘Hey, this seam is not good enough or the stitching here needs to be better, or this needs to be double stitched, or you haven’t got enough lobster in your lobster mac [and cheese].’”
Myron Frazier, Sam’s Club senior vice president of private brands and sourcing, stated that the company aims to turn Member’s Mark into a well-respected lifestyle brand. The store brand plans to expand into home categories, offering more indoor furniture and making its line of small appliances.
Signs of Success
Some signs indicate the moves are paying off. Sam’s Club has reported a record number of members each consecutive quarter for over a year. Customer transactions rose 5.4%, and the average ticket price declined about 1% in the most recent quarter, which could point to shoppers opting more for Member’s Mark items. Nicholas noted that the private brand’s sales growth has outpaced the rest of the store.
Looking Ahead
Since 2020, Member’s Mark has launched, tweaked, and upgraded more than 1,200 items. One of those reformulated items? It’s an inflatable pool. Crozier said it works well now, adding, “And we sell many of them.”
Sam’s Club’s efforts to revamp Member’s Mark signify a solid move to challenge Costco’s dominance with its Kirkland brand. Sam’s Club aims to create a private label that competes and thrives in a competitive market by focusing on quality and customer feedback. As the rivalry continues, the success of Member’s Mark will play a crucial role in Sam’s Club’s growth and customer loyalty.
