A banner hangs outside a Sam’s Club store on January 12, 2018 in Streamwood, Illinois.
Scott Olson | Getty Images
WalmartOwned Sam’s Club said Wednesday it will raise its annual fee this fall, as warehouse club membership hovers at a record high and inflation-stricken shoppers seek deals on bulk merchandise.
The fee will increase to $50 from $45 for club members and to $110 from $100 for top tier members, “Plus,” which includes some additional perks. Changes take effect on October 17.
It represents the first fee increase in nine years for the entry-level membership. Sam’s Club has not raised the price of the “Plus” membership since its debut in 1999.
This brings Sam’s price closer to the competition costcowhich charges $60 annually for its basic membership and $120 for its top-tier “gold” membership.
Sam’s Club increases the annual fee as warehouse clubs benefit budget-conscious clients. Shoppers turned to Costco, BJ’s Wholesale and Sam’s Club during the early months of the Covid pandemic to stock up on giant packets of toilet paper, household cleaners and soup cans. In recent months, these shoppers have sought to mitigate inflation by looking for cheaper gas and bulk discounts.
At the same time, inflation may increase the sting. In a note to members on Wednesday afternoon, Sam’s Club CEO Cath McClay said the company is “aware of the financial pressures on portfolios at this time.”
With that in mind, she said, Sam’s Club will pick up the tab this year by offsetting the fee increase in Sam’s Cash that can be used in its stores.
Investors have speculated about a possible costco fee hike as well. The club last raised their fees in June 2017, and historically they have raised them every 5½ years, which should put them on the right track for this year.
Costco CEO Craig Jelinek has shaken up talk of an increase in CNBC’sWhoop in the street“In July. I can tell you we think about it every year, but right now, in terms of membership fees, it’s not on the table right now.” I don’t think this is the right time.”
Sam’s Club has nearly 600 stores throughout the United States and in Puerto Rico. She did not reveal the number of its members, but said in the last quarter that it reached an all-time high. Membership income increased 8.9% in the quarter 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 last reported quarter versus 6.5% at Walmart US
Ciara Anfield, principal member and chief marketing officer, said Sam’s Club decided to take the step because of the investments it’s made in recent years, from raising the quality of merchandise on its shelves to adding new, convenient ways to shop.
In recent years, it has added curbside delivery in stores, introduced same-day home delivery, renewed its member brand Mark’s, and launched Scan & Go, a smartphone app that people can use to ring on items as they walk down the aisle. She started carrying brands like Eddie Bauer, La Mer, and Banana Republic. And even some of his pastries have taken on a gourmet twist, like cinnamon rolls made using the French baking technique.
I compared putting up with these new franchises building a house or spending money on renovation projects.
“There is an expectation that after you invest in this home, it will be worth even more,” Anfield said. “We’ve made investments and believe our proposal, our membership now is worth more.”