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Sam’s Club Aims High: Rethinking Member’s Mark to Compete with Costco’s Kirkland

During the Covid-19 pandemic, many found solace in the small joys of home life—like Megan Crozier, who discovered the limits of a quickly purchased inflatable pool from Sam’s Club. For Crozier, not just a customer but also the Chief Merchant at Sam’s Club, this was more than a minor inconvenience; it was a catalyst. This experience highlighted the urgent need for improvement in their private label, Member’s Mark, setting off a crucial initiative to elevate the brand and make it competitive with Costco’s highly successful Kirkland Signature.

The Challenge Ahead

Sam’s Club, a subsidiary of Walmart, finds itself in a relentless competition with Costco, which not only leads in the number of U.S. locations but also significantly outpaces in revenue. Costco’s private label, Kirkland Signature, is a big part of its success, offering everything from groceries to golf balls, and is a key driver of customer loyalty and membership renewal. Recognizing the power of a strong private label, Sam’s Club has embarked on a transformative journey to enhance its Member’s Mark brand.

Revamping Member’s Mark

Under the leadership of Chris Nicholas, Sam’s Club CEO, the company has been inspired by Costco’s achievements with Kirkland. Nicholas notes that the success of a membership club heavily relies on high-quality products that can stand out in the market. With plans to open more than 30 new stores in the next four years, the stakes are high for Sam’s Club to sharpen its competitive edge, particularly in regions dominated by Costco and other rivals.

To reinvent Member’s Mark, Sam’s Club has streamlined its private label offerings, consolidating over 20 different brands under one umbrella. The focus is now on achieving higher standards in both food and merchandise by 2025, with commitments like using antibiotic-free poultry and fair trade certified coffee beans.

Moreover, Sam’s Club has introduced a unique program inviting customers to co-create products. This initiative allows for direct feedback on product aspects such as flavors and design before finalizing them for store shelves. This level of customer involvement is crucial in fine-tuning the offerings to better meet consumer expectations and preferences.

Customer Engagement and Feedback

Nicholas underscores the importance of customer feedback in refining products, from stitching details in clothing to the quantity of lobster in their lobster mac and cheese. Myron Frazier, Sam’s Club Senior Vice President of Private Brands and Sourcing, aims to elevate Member’s Mark into a respected lifestyle brand, expanding into home categories and launching its own line of small appliances.

These efforts are already showing signs of success. Sam’s Club has reported a record number of members for consecutive quarters, with significant growth in transactions and a slight decrease in average ticket sales, hinting at a customer shift towards more affordably priced Member’s Mark items. Rainey, Walmart’s finance chief, attributes recent growth to the strengthening of the Member’s Mark brand, which increasingly influences why members join and renew.

Learning from Past Mistakes

The journey has not been without its learning curves. Reflecting on the initial failure of the inflatable pool, Crozier shared that since the unfortunate incident, the product has been reformulated and improved, aligning with the broader goal of enhancing product reliability and customer satisfaction.

Looking Ahead

As Sam’s Club continues to innovate and push for higher quality in its private label offerings, the challenge remains significant. The legacy of Kirkland Signature sets a high bar, but with a strategic focus on customer feedback, quality improvement, and innovative product development, Sam’s Club is positioning Member’s Mark as a formidable contender in the private label wars.

In the world of retail, where customer loyalty and product quality play pivotal roles, Sam’s Club’s revitalized approach to Member’s Mark might just be the key to narrowing the gap with Costco, promising an intriguing battle of the brands as each strives to win over more members with their unique offerings.