Sam’s Club comparable-store sales increases continue to grow at 3x the rate of Costco on a 1-year basis (below). Some of the gains are the result of different comparative bases as the 2-year and 3-year CAGRs are similar. However, it also reflects visitation share gains that Sam’s is making in some of Costco’s large markets like Los Angeles due to its investments in curbside pickup and delivery capabilities, modernizing its digital stack, and upgrading its merchandise to appeal to a younger, more affluent, family (compared its legacy focus on the smaller business customer and the more moderate-income household and a story that we have written about before).
As shown by the visitation trends in the Los Angeles market on a 1- and 4-year basis below, Sam’s has produced consistent gains to Costco.
The table below shows how Costco club members in the market have meaningfully begun to try Sam’s Club over the past year. On a 1-year basis (Q2 2023 compared to Q2 2022), the number of Costco households are flat year-over-year; by contrast, Sam’s households are up +30%. Such a large increase suggests that Sam’s has a significant marketing campaign on going to get new households to try their offering.
Prior to the pandemic, Sam’s was closing clubs and losing members. Post-pandemic, Sam’s is now opening new clubs, including 30 planned thus far with the first slated to open in Florida in 2024. For the quarter, U.S. member counts increased by a mid-single-digit rate with strong Plus membership growth in renewals (up 130 basis points year-over-year). Sam’s CEO Kathryn McLay stated, “We feel strong about the health of our membership and the growth that we've seen.”
In terms of a modernized offering for consumers, utilization of Scan & Go (a mobile app that allows members to scan items themselves as they place them in the shopping cart) increased 570 basis points and curbside pickup saw double-digit growth. These offerings give Sam’s the data to drive stronger advertising growth because they can better measure attribution. Management noted that, “Sam's advertising business grew 33%. The in-club sales attribution feature for search and sponsored ads has generated strong interest from advertisers. On average, advertisers are seeing a nearly 30% improvement on the returns of digital ad spend as they gain full visibility to the member journey from intent to purchase, both online and in clubs.” On merchandise quality, McLay shared, “From a Member's Mark perspective, we have seen our metrics around value for money and NPS and quality, our Member's Mark has continued to improve. And we're seeing members choose it because of the quality of the item, because of innovation into those products and also because the great value that they get out of the Member's Mark, price/quality combination.”