Sam’s Club Doing Worse Than Costco, Will Try More Organic Food Maybe

(Ryan)

If you’d like to study the uneven economic recovery of the last few years, just compare warehouse chains Costco and Sam’s Club. While both warehouse chains serve people who like to buy their granola bars 48 at a time, Walmart-owned Sam’s serves customers who are less affluent than the more urban customer base of Costco.

Overall revenue is down at Sam’s, and their same-store sales have increased only a tiny bit over last quarter. Discounted gas is an important member benefit, and overall lower gas prices may mean that the middle class customers of Sam’s simply aren’t bothering to make the drive over to the store for gas, picking up a box of 40 Bagel Bites while they’re at it. Yet Costco also offers gas discounts, and their customers are spending more at the warehouse store. Their revenue is up 8%.

One stock analyst told Bloomberg Business that the problem is very simple: the products at Sam’s Club simply aren’t as good as the ones offered at Costco.

Another issue might be that lower-income and middle-income Americans simply haven’t recovered from the most recent recession as well as their wealthier counterparts. That would have a direct effect on their spending at warehouse clubs, and even on the decision of whether to join or not. A card that gives someone the right to buy massive packages of toilet paper is not a necessity, even if toilet paper itself is.

Sam’s Club Losing to Costco in Battle for 30-Pack Toilet Paper [Bloomberg News]

by Laura Northrup via Consumerist