Sam’s Club, which is owned by Walmart, announced on Wednesday that it will increase its yearly fees this fall as the warehouse club’s membership continues to remain at a record high and consumers scrimping for discounts on bulk purchases.
Club members’ dues will rise from $45 to $50, while “Plus” members, who have access to more benefits, would pay $110 rather than $100. Oct. 17 marks the implementation of the modifications.
It is the first fee increase for the basic membership in nine years. Since its introduction in 1999, Sam’s Club has not increased the cost of the “Plus” membership.
Sam’s is now more competitively priced with Costco, which charges $120 for its premium “Gold” membership and $60 for its entry-level “Basic” membership.
Warehouse clubs are profiting from clients who are on a tight budget, therefore Sam’s Club is raising annual fees. During the early stages of the Covid epidemic, customers flocked to Costco, BJ’s Wholesale Club, and Sam’s Club to stock up on enormous packs of toilet paper, home cleansers, and soup cans. These consumers have been looking for big volume discounts and cheaper gas in recent months in an effort to combat inflation.
The rise can hurt more due to inflation at the same time. Sam’s Club CEO Kath McLay wrote to members on Wednesday afternoon to let them know that the business is “mindful of the financial pressure on wallets right now.”
She explained that in light of this, Sam’s Club will cover the expense this year by compensating the fee increase with Sam’s Cash that is redeemable at its locations.
Investors have made predictions about a possible increase in Costco’s fees. The club last increased its membership cost in June 2017, and considering that it typically does so every 512 years, this year’s increase would be on schedule.
On CNBC’s “Squawk on the Street” in July, Costco CEO Craig Jelinek rejected speculation about a price increase. “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.”
Nearly 600 Sam’s Club locations can be found in the United States and Puerto Rico. The number of members is not made public, but it was reported in the most recent quarter that it had reached an all-time high. In the three months that ended on July 31, membership revenue rose 8.9%.
Other areas of Walmart’s company are growing less quickly than its sales. In the most recent quarter, Sam’s Club’s same-store sales increased by 9.5% compared to Walmart U.S.’s 6.5%.
Chief Member and Marketing Officer Ciara Anfield claimed that Sam’s Club made the decision due to investments made in recent years, including raising the caliber of the goods on its shelves and introducing innovative and practical ways to shop.
It has updated its Member’s Mark private brand, added curbside pickup at stores, provided same-day home delivery, added same-day curbside pickup, and introduced Scan & Go, a smartphone app that enables customers to ring up products as they move down an aisle. It has just begun to stock names including Eddie Bauer, La Mer, and Banana Republic. Even some of the bakery’s sweets have been given a gourmet makeover, such the cinnamon buns created using a French baking method.
She compared the introduction of those new benefits to constructing a home or investing money in remodeling tasks.
“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.”