Walmart-owned Sam’s Club raises annual membership fee for the first time in nine years

Business

In this article

A sign hangs outside a Sam’s Club store on January 12, 2018 in Streamwood, Illinois.
Scott Olson |Getty Images

Walmart-owned Sam’s Club said Wednesday it will raise its annual fees this fall, as the warehouse club’s membership hovers at a record high and inflation-pinched shoppers seek deals on bulk items.

Fees will increase to $50 from $45 for club members and to $110 from $100 for members of its higher-tier level, “Plus,” which includes some additional perks. The changes take effect Oct. 17.

It marks the first fee hike in nine years for the entry-level membership. Sam’s Club has not raised the price of the “Plus” membership since it debuted in 1999.

That brings Sam’s closer in price to rival Costco, which charges $60 a year for its basic membership and $120 for its higher-tier “Gold” membership.

Sam’s Club is hiking annual fees as warehouse clubs benefit from budget-conscious customers. Shoppers turned to Costco, BJ’s Wholesale Club and Sam’s Club during the early months of the Covid pandemic to stock up on huge packs of toilet paper, household cleaners and cans of soup. In recent months, those shoppers have sought relief from inflation by seeking out cheaper gas and high volume discounts.

At the same time, inflation may make the increase sting. In a note to members Wednesday afternoon, Sam’s Club CEO Kath McLay said the company is “mindful of the financial pressure on wallets right now.”

With that in mind, she said, Sam’s Club will pick up the tab this year by reimbursing the fee increase in Sam’s Cash that can be used at its stores.

Investors have speculated about a potential hike in Costco’s fees, too. The club last raised its fee in June 2017 and has historically bumped it up every 5½ years, which would put it on track for this year.

Costco CEO Craig Jelinek shook off talk of an increase on CNBC’s “Squawk on the Street” in July. “I can tell you that we think about it every year, but right now, in terms of the membership fee it’s not on the table right at the moment,” he said. “I’ve made it very clear. I don’t think it’s the right time.”

Sam’s Club has almost 600 stores across the U.S. and in Puerto Rico. It does not disclose its membership count, but said in the most recent quarter that it is at an all-time high. Membership income increased 8.9% in the quarter that ended July 31.

Its sales growth is outpacing other parts of Walmart’s business. Same-store sales at Sam’s Club grew 9.5% in the most recently reported quarter versus 6.5% at Walmart U.S.

Chief Member and Marketing Officer Ciara Anfield said Sam’s Club decided to make the move because of investments in recent years, from elevating the quality of merchandise on its shelves to adding new and convenient ways to shop.

In recent years, it has added curbside pickup at stores, offered same-day home delivery, refreshed its Member’s Mark private brand and launched Scan & Go, a smartphone app that people can use to ring up items as they walk through aisle. It has started carrying brands such as Eddie Bauer, La Mer and Banana Republic. And even some of its bakery treats have gotten a gourmet spin, such as cinnamon rolls made with a French baking technique.

She compared the rollout of those new perks to building a house or spending money on renovation projects.

“There’s an expectation that after you invest in this home, it will be worth more,” Anfield said. “We’ve made investments and we believe our proposition, our membership is now worth more.”

Articles You May Like

HSBC warns investors to avoid European stocks
Convertibles drive into the sunset as automakers invest in electric vehicles
Read the highlights of the new lawsuit against Donald Trump by New York Attorney General Letitia James
3 steps to take now to get ready for student loan forgiveness, so you can apply ASAP
After the UK Super-Deduction: Assessing Proposals for the Reform of Capital Allowances