As more Americans struggle to buy groceries and other staples on a budget, many have turned to retail warehouses and wholesalers, which allow them to buy items in bulk at a typically reduced cost per item.
Two of the most popular wholesale warehouses are Costco (COST) and Sam's Club, which have 848 and 600 locations across the U.S. and Puerto Rico respectively.
The basic model of a U.S. wholesaler is simple: customer who wish to shop there pay memberships, which typically renew annually. That membership affords them the opportunity to shop at any of the huge stores across the country, which contain a mix of generic (store-brand) and brand name goods. Typically, memberships include other benefits programs, including free shipping, fuel discounts, prescriptions, and travel savings. The cost to belong typically runs between $45-120 annually, depending on the tier and benefits a member may select.
Sam's Club Plans To Expand Its Footprint
While having 600 stores across the country is no small feat, Sam's Club has a plan to catch up to Costco's seeming dominance to gain what market share is left to be captured while folks are paying extra close attention to their wallets.
The club is owned by Walmart, (WMT), which is a key advantage for its plan to scale. With its nearly 11,000 retail stores, Walmart is no stranger to deliberate expansion; the company understands how to maximize its reach without maxing out its expenses.
Most of that boils down to two factors: reaching people where they already are and operating fulfillment centers efficiently; 90% of Americans live within 10 miles of a Walmart, and the company has been able to scale its e-commerce business so quickly because it has 210 distribution centered in key pockets around the country which can dispatch goods rapidly.
So Sam's Club is tearing a page out of that book, announcing it will expand its footprint in areas people are migrating to.
"The first location, which is planned in Florida, is slated to open in 2024. In addition to new clubs, the company has a multiple-year plan to invest in and modernize its supply chain through new distribution and fulfillment center locations across the country, including cutting-edge automation. Sam's Club will launch five new supply chain fulfillment and distribution centers in 2023, with the first location planned in Georgia in Q3," the company said in a press release.
It's More Than Just Expansion, For Sam's Club
But expanding for the sake of expansion is a corporate fool's errand. Which is why the wholesaler plans to improve several key member-facing factors that it hopes will attract more customers.
Some of those factors include improving efficiency and sustainability, which a growing number of young shoppers value highly, enhancing its supply chain, which will cut down on shortages and lag-times for product placement, and rolling out more/enhanced shopping features, like health centers, sushi bars, and floral centers.
"The new clubs will be approximately 160,000 square feet, larger than most current locations. Most new clubs will feature a seafood / sushi island, full-service floral, and walk-in dairy and fresh coolers. Additionally, members will benefit from a larger healthcare space inclusive of a patient waiting area, health services suites, private consultation rooms, and dedicated hearing and optical centers. Many of the new locations will also include fuel stations and liquor offerings," the company said.
Currently, select Costco locations offer healthcare services for members, including full-service pharmacies, low-cost prescriptions, and specialty pharmacy care.
Wholesalers aren't alone in their foray into healthcare. Dollar General recently announced it would begin providing select wellness services at participating locations in 2023.
