Reimagining Retail: Why Sam’s Club is Our Must-Visit Store and What Sets It Apart from Other Warehouse Clubs

Summary

Behind the Numbers: Reimagining Retail – Why Sam’s Club is Our Must-Visit Store and What Sets It Apart from Other Warehouse Clubs

Released on February 12, 2025

Introduction

In the latest episode of EMARKETER’s “Behind the Numbers,” host Sara Lebo delves into the innovative strategies that distinguish Sam’s Club from other warehouse giants like Costco and BJ's. Joined by regular contributors Zach Stambor and Sarah Marzano, the discussion uncovers the key factors behind Sam’s Club’s recent accolades, including the Innovator of the Year and Must-Visit Store of the Year awards. This comprehensive summary captures the essence of their conversation, highlighting technological advancements, customer experience enhancements, and strategic insights that position Sam’s Club as a leader in the retail landscape.

1. What Sets Sam’s Club Apart?

The episode kicks off with an exploration of what differentiates Sam’s Club from its competitors. Zach Stambor provides a metaphorical “pie” to illustrate the distinct components:

• Technology (60%): Zach emphasizes the seamless in-store experience enabled by Sam’s Club’s robust technological infrastructure. Features like the user-friendly app and Scan & Go technology allow customers to scan items as they shop and exit through AI-driven gates without traditional receipt checks, significantly reducing checkout times. “The Sam's Club experience in the store is really smooth, easy and elegant... you can very quickly get in and out,” Zach explains (01:41).

• Convenience (20%): Beyond technology, Sam’s Club enhances convenience through curbside pickup and free delivery for Plus members, simplifying the shopping process further.

• Value (20%): Affordability is a cornerstone, with competitive membership fees and a strong private label presence under the Members Mark brand, accounting for 30% of sales. Zach notes the accessibility of membership through frequent discounts and promotions.

Sarah Marzano complements Zach’s insights by integrating these elements into her framework, combining innovative technology with consumer experience to highlight how Sam’s Club prioritizes customer needs and streamlines the shopping journey (04:35).

2. Customer Experience and Technological Innovation

Sarah Marzano delves deeper into Sam’s Club’s approach to enhancing the consumer experience through technology. She highlights initiatives like Scan & Go, AI gates, and robotic pizza makers, which not only improve efficiency but also add a layer of fun to the shopping experience. “They really put sort of customer needs at the forefront of where they are investing,” Sarah remarks (06:01).

Zach adds a personal perspective, contrasting Sam’s Club’s frictionless experience with the often cumbersome process at Costco: “Sam's Club just removed like a whole lot of those barriers and made it a lot smoother,” he observes (06:37).

3. Comparing Sam’s Club with Competitors

The discussion shifts to a comparative analysis with Costco. Sarah Marzano points out Costco’s strategy of creating a “treasure hunt” environment, which contrasts sharply with Sam’s Club’s streamlined approach. “Costco’s bet is that you're going to discover things you didn't know you needed and end up spending more,” she explains (07:30). This fundamental difference in in-store experience reflects broader trends in consumer preferences, where the ease of online shopping influences expectations in physical stores.

4. Achievements and Retail Media Opportunities

Sam’s Club’s strategic use of its Scan & Go app has garnered significant attention. With one in three members actively using the app for checkout, the platform presents a lucrative opportunity for retail media. Sara Lebo highlights how targeted advertising within the app leverages membership data to deliver personalized ads, enhancing relevance and effectiveness: “They can put ads in there... they know who you are and what you're buying,” she states (08:27).

Sarah Marzano applauds Sam’s Club for their methodical rollout of Scan & Go, ensuring customer adoption through pilot testing and continuous improvement. “They've effectively been able to set up the infrastructure that can enable bringing digital advertising into stores,” she adds (08:27).

5. Areas for Improvement

Despite its strengths, Sam’s Club has room to grow in certain areas. Sarah Marzano points out the need to bolster the Members Mark private label brand to rival Costco’s Kirkland brand. “Sam's Club has recognized that they have room to catch up when it comes to making their private label brand as sort of well known and impactful as Costco's,” she notes (12:16).

Additionally, the location strategy of Sam’s Club stores is less advantageous compared to Costco’s prime placements in affluent suburban areas. Zach observes, “Costco's real estate is pretty good. You see it in just about any somewhat affluent suburban community,” whereas Sam’s Club locations tend to be less visible and accessible (13:30).

6. Lessons for Other Retailers

The episode concludes with actionable insights for other retailers based on Sam’s Club’s success:

• Leverage Technology to Enhance Experience: Sarah Marzano cites Nike’s effective use of its app in stores as a parallel, emphasizing the importance of integrating technology to provide value without disrupting the shopping experience (16:10).

• Offer Unique Value Propositions: Zach stresses the significance of differentiating from competitors by offering distinct benefits rather than emulating what others are doing. “It makes sense to not replicate what your chief competitor is doing, but offer something different and distinct,” he advises (16:57).

• Focus on Customer Data Utilization: Understanding customer behavior and preferences through app interactions can inform targeted marketing and inventory decisions, enhancing overall store performance.

Sara Lebo reinforces these points by advising retailers to find innovative ways to use their apps without adding friction to the customer experience: “Retailers should keep Sam's Club in mind and find ways the apps can provide value and delight and retarget and not prevent a good customer experience,” she concludes (16:54).

Conclusion

Sam’s Club’s innovative blend of technology, convenience, and value has not only elevated its standing among warehouse clubs but also offers a blueprint for success in the evolving retail landscape. By prioritizing seamless in-store experiences, leveraging membership data for targeted retail media, and continuously refining their private label offerings, Sam’s Club sets a high standard for competitors. This episode of “Behind the Numbers” underscores the importance of customer-centric innovation and strategic differentiation in achieving retail excellence.

Notable Quotes

• Zach Stambor (01:41): “The Sam's Club experience in the store is really smooth, easy and elegant... you can very quickly get in and out.”

• Sarah Marzano (06:01): “They really put sort of customer needs at the forefront of where they are investing.”

• Sara Lebo (07:30): “Sam's Club beat out Costco and everyone else to take the top spot in the American Customer Satisfaction Index earlier this year.”

• Zach Stambor (16:57): “It makes sense to not replicate what your chief competitor is doing, but offer something different and distinct.”

Timestamp Reference

For ease of reference, timestamps are included in brackets next to each notable quote. These correspond to the minutes and seconds in the original podcast transcript where the quotes occurred.

Transcript

[Sara Lebo]

Did you know 70% of CMOs are now responsible for steering their company's AI initiatives? Find out what it takes to be a successful CMO in this new AI powered era of marketing. Download the new Playbook Driving Growth in the AI era exclusively from Zeta Global. Find out more at the link in our show. Notes. Hello listeners. Today is Wednesday, February 12th. Welcome to behind the Reimagining Retail, an E marketer podcast made possible by Zeta Global. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sara Lebo. Today's episode topic is Sam's Club. Let's meet today's guests. Before we get into that, joining me for today's episode we have podcast regular Zach Stambor. Hey Zach.

[Zach Stambor]

Hey Sarah.

[Sara Lebo]

Also with us is another podcast regular, Sarah Marzano. Hey Sarah.

[Sarah Marzano]

Hey Sarah. Thanks for having me.

[Sara Lebo]

Thanks for being here. Today we are focused on Sam's Club, which is Walmart's membership only warehouse store. We decided to do this episode after a bunch of us individually realized how much innovation Sam's Club had done in the past year. In fact, it won both our Innovator of the Year award and our must visit Store of the Year award on our retail Podcast Awards show in December. Give that a listen if you haven't yet. So let's start off with like, what makes Sam's Club different from its competitors? So, Zach, why don't you go first. If Sam's Club were like a pie, what would make it different?

[Zach Stambor]

Okay, I have three slices to my pie. The first one, the biggest one, is technology and that's 60%. Sam's club experience in the store is really smooth, easy and elegant. Thanks to technology, they have a great app that's very easy to use. Within the app is Scan and go technology, which enables you to just walk through the store, scan the barcode and throw it in your cart and then you can walk right out with the AI gate without having to have your receipt checked. So it's like you can very quickly get in and out, which is very unusual for a warehouse club where it's usually like a pretty cumbersome process. Convenience would be my second slice of pie. They've leaned in both with the scan and go sort of stuff, but also they've got curbside pickup. They have free delivery for plus members. So it just again, making it simple. And then the third slice, which is also 20%, is value. This is, you know, something that is true for all membership clubs, but it's particularly true For Sam's Club, they've got their members, Mark private label, which accounts for 30% of sales. They've got their cheap gas, but it also carries over to just like the actual membership, which is pretty inexpensive. It's just $50, $110 for plus members. But quite often you can find it for a discount. Like I just joined and it was $25 because I had a coupon, I think last fall they had a $15 promotion. So it's really inexpensive to join.

[Sara Lebo]

Zach, I did not know that you just joined Sam's Club. What put you over the edge to make that call?

[Zach Stambor]

I did just join because I. So I went to Sam's Club on a lunchtime field trip yesterday.

[Sara Lebo]

Preparation, in preparation for this episode specifically.

[Zach Stambor]

And I snuck in. I just walked right in, right past the guy who is supposed to check your cart. And then I.

[Sara Lebo]

They wouldn't let you out unless you got a membership.

[Zach Stambor]

And then I just started walking around and I. There is a bunch of stuff that I need for various reasons, for carpools, we need snacks and that sort of stuff. And so I saw some stuff.

[Sara Lebo]

Sorry, keep going.

[Zach Stambor]

I can go down a whole sidetrack with that, but I will not. I just saw a bunch of stuff that I was like, well, this is pretty cheap. And I was playing around with the app and, you know, it was compelling. And so I figured I might as well.

[Sara Lebo]

It really was those three factors, technology, convenience, and value, that put you over.

[Zach Stambor]

Yep.

[Sara Lebo]

Sarah, do you have any recipe edits you would make to Zach's pie? And what sets Sam's Club apart from competitors like Costco and BJ's?

[Sarah Marzano]

Yeah, I'll mention that the ingredients to my pie are quite similar. I think Zach really nailed it in terms of what set Sam's Club apart. The way I split things up is a little bit different. I put sort of the innovative technology bucket kind of hand in hand with what I called consumer experience. But I think convenience also makes sense there. What I like about how Sam's Club uses technology to improve their in store experience experience is that they really put sort of customer needs at the forefront of where they are investing. So a lot of their innovations have to do with making shopping trips faster, more convenient, more efficient. So things like scan and go that let customers skip the line. The new AI gates that they have in some stores that enable customers to leave the store without an employee actually checking the receipt. And there's also things that are sort of fun, like robots that make pizzas really quickly or ways that they have improved their cake ordering system because they were getting a lot of customer sort of feedback that that process was really inefficient. So I think they do a really good job sort of listening to customers and innovating. Whether that's customers saying that we're having trouble with this particular part of the experience, or maybe there's an emerging need like Zach mentioned, but the curbside pick up emerging quite quickly during COVID And then I had value as my last slice of pie at 20%.

[Zach Stambor]

I totally agree. I think, like, there is a lot of friction within the warehouse club experience. It's what I hate about it. It's like what I find annoying about going to Costco is that it starts in the parking lot where you have to park a mile away, then you wait to get your card checked, then you navigate the store. You forgot something, you have to walk to town 10 miles back to go grab it, and then you have to go to the checkout. And the checkout line is forever. And then once you do that, you stand in another line. And so Sam's Club just removed like a whole lot of those barriers and made it a lot smoother.

[Sarah Marzano]

I think what gets really fascinating is that if you dig into Costco's strategy, it sort of is to create a chaotic in store environment. Like, it's not meant to be easy to find what you're looking for. Because they're hoping that they can create what they call a treasure hunt experience. Zach, you might call it a nightmare. Yeah, right. But their bet is that you're going to discover things you didn't know you needed and end up spending more. And I think what that sort of gets at is this sort of inherent friction between how in store shopping differs from online shopping. And I think that as consumers have gotten a lot more used to sort of the ease and convenience of navigating an online product catalog, there's this decision that brick and mortar retailers need to make around how much of that online experience do we want to emulate and how much do we want to ensure that we're creating opportunities for discovery? So I think it's fascinating that Costco and Sam's Club take this really different approach to the in store experience.

[Sara Lebo]

And all of this contributes to the fact that Sam's Club beat out Costco and everyone else to take the top spot in the American Customer Satisfaction Index earlier this year. Sam's Club also has a really good business model when it comes to retail media by taking advantage of that Scan and Go app, which they have now Placed ads in. According to data from about a year ago, one in three Sam's Club members use that Scan and Go app for checkout. That's massive adoption. Like when you think about just the age range, the demographic range of people who might be shopping in a Sam's Club, one in three people is huge. And then they can put ads in there. And not only can they put ads in there, but those are logged in users because it's a membership club. Because unless you're Zach and snuck into the club, they know who you are and what you're buying and what you might buy next. And so that's a huge retail media opportunity.

[Sarah Marzano]

Yeah. I think there's so many things that are interesting about Sam's Club's Scan and Go technology. The first sort of being that it's was first introduced by the company, I read in 2016. And I think Sam's Club takes a really thoughtful approach to overhauling their in store experiences where they will use pilot stores to sort of test and learn on technology and sort of think through what does the learning curve look like for customers. How do we really reinforce the value of this new technology in order to scale up the adoption? So they famously quote the 1 in 3. You might have just said that shoppers use the scan and go while they're in store. But in doing this sort of, not only have they been able to reinforce this thing that customers see as a great value add, this makes my shopping trip more efficient, but they've effectively been able to set up the infrastructure that can enable bringing digital advertising into stores with technology that's provided by their customers. Right. When you think about the hardware being provided and the screen being provided by.

[Sara Lebo]

The customers, and this is something we've talked about on the pod a bunch of times, but I really see the future of in store retail media as being on the mobile phone where you have your customers bringing that hardware and themselves if the hardware malfunctions in some way, the onus is on the consumer and not as much on the shopping experience. And so I think Sam's Club is a real leader in that space.

[Zach Stambor]

And if done well, it's not cumbersome and it's not so in your face. I mean, obviously it's in your face because you're looking at your phone, but it, it doesn't have quite the same effect as like a giant screen blaring at you in a store.

[Sarah Marzano]

Well, I think it's a screen that shoppers are used to looking at while they're in a physical Store. Right. I love looking at my phone. It's not a digital screen that just sort of appears and is interrupting what you're doing. It's sort of integrating into your experience. And again, Sam's Club has sort of ensured that by saying, like, we've got a great reason for you to have your phone out and be consistently looking at it while you're in store. And we've made it not creepy that we know that you just added cereal and there's a sale on, you know you're logged in.

[Zach Stambor]

Right.

[Sara Lebo]

I do think there's a reason that we did Costco episode. You can go back and listen to that before we did a Sam's Club episode. I think that Sam's Club lacks some of the brand enthusiasm that Costco has. And to me, that is a place where it hasn't really caught up with Costco yet. Do you guys have other things that come to mind of places? Sam's Club still has room to improve?

[Sarah Marzano]

I think the private label piece really stands out to me. Right. Costco's Kirkland brand is basically a household name. I dug a little bit into the history of Sam's Club's private labels, and I think it was about six years ago that they consolidated 20 store brands under one label, which is members. Mark. And then they also have an initiative they've been touting during 2024, where they launched this sort of focus group of customers specifically to give feedback about their private label products. So I think Sam's Club has sort of recognized that they have room to catch up when it comes to making their private label brand as sort of well known and impactful as Costco's. And I think this is something that's quite important. We know that private label is important in retail generally because it generally comes with richer margins. But when it comes to something like a warehouse club where you have to pay to shop there, the exclusivity is really important as well. When you think about giving customers a reason to pay for your membership.

[Sara Lebo]

Yeah. And for Costco, some of those reasons are that Kirkland brand, the hot dogs, Sam's Club doesn't, as far as I'm aware, have this.

[Zach Stambor]

They do have hot dogs.

[Sara Lebo]

They do, but they don't have the same enthusia. Okay. They do have hot dogs. Sorry, sorry.

[Sarah Marzano]

Sam's Club, they probably also have rotisserie chickens, but we're not talking about them.

[Sara Lebo]

Well, what I just did, rotisserie chicken is so good.

[Sarah Marzano]

Sometimes the Costco rotisserie chicken is like, famous. Yeah.

[Sara Lebo]

Costco also has this brand enthusiasm with these two creators that have gotten a bunch of attention recently, the Costco guys, which is a father son duo. The father's a pro wrestler and they're making videos. Walking around Costco, it sounds ridiculous, but it's been hugely popular and Sam's Club doesn't have that kind of social media organic content.

[Zach Stambor]

So all that is totally true. That said, it is starting to resonate with Gen Z consumers. Gen Z membership is up 68% over the past couple years. And you know, this moment makes sense as a moment for warehouse clubs to thrive. As you know, inflation and rising prices have made a whole lot of people, particularly gen zers, focused on value and inclined to try and purchase private label products. And so Sam's Club is making inroads with this customer base that's pretty notable.

[Sara Lebo]

Anywhere else. Sam's Club could improve.

[Zach Stambor]

Yeah, I think one of the things that separates Costco from Sam's Club is just like where they're located. Costco's real estate is pretty good. You see it in just about like any somewhat affluent suburban community often has Costco relatively nearby, whereas Sam's Club's locations are a little bit further flung. Not quite as like a list, more like B. Even the Sam's Club by me is kind of in like a weird location that if you did not know it was there, you would just drive right by it. Whereas the Costco that's near me is very visible in a more affluent community. And I think that's true. By and large that makes sense.

[Sara Lebo]

The last thing I wanted to touch on is just what can other retailers learn from Sam's Club's model? I mean, not everyone is a membership model, not everyone is a warehouse model. Are there lessons that other retailers can take away from Sam's Club?

[Sarah Marzano]

I think something that stands out to me, if we come back to the power of having an infrastructure like a really compelling app that your customers are sort of trained to use, is thinking through how other brands or retailers can reimagine their in store experience to do something similar. Because I think even for retailers who don't have a media network, there's a lot of value in understanding exactly who's coming into your store, what they're interacting with, whether or not they buy something, and just being able to sort of identify those customers. And what I always come back to, my favorite example of a brand who's done this quite well is Nike. If you go shopping in one of Nike's branded stores, that store is sort of fortified with messaging around the benefit of shopping with the aid of your Nike app. Right. Whether that's being able to indicate that you'd like a shoe in a specific size brought out to you without flagging down a physical human being getting access to exclusive offers or promotions or even products. It's very clear as you're shopping through a Nike store that there's a benefit to having the app. And then I've actually gone into that store and left without buying anything and been targeted with an exclusive promotion that wasn't otherwise available. If I hadn't sort of authenticated myself when I'd gone into the store and been a Nike loyalty program member. And so I think there's, you know, that couldn't be a sort of different retail experience than Sam's Club, but similarly just really reinforcing that value and being able to bolster your customer data by doing so.

[Sara Lebo]

And that's something you need to get right. On the other side of that coin, we have cvs, and this is recency bias to bring up, but CVS recently announced that they were going to allow app holders, members of its reward program, to unlock those locked up products that deodorant that's under lock and key using their app on their phone. That's the other side of that coin of maybe going too far with the creative thinking where you're using the app not to unlock deals, but to literally unlock products. So I just think that retailers should keep Sam's Club in mind and find ways the apps can provide value and delight and retarget and not prevent a good customer experience.

[Sarah Marzano]

Don't take something that's already full of friction and add more friction to it.

[Sara Lebo]

Yes.

[Zach Stambor]

The other thing I would say is just as we talked about how the Costco experience is very different from the Sam's Club experience, it's because Sam's Club zigged when Costco was zagging. Like, it makes sense to not replicate what your chief competitor is doing, but offer something different and distinct because you'll appeal to a different segment of consumers.

[Sara Lebo]

Yeah, that goes back to, like, I think one of the biggest lessons we've been repeating on this podcast for probably the last, like six months, which is like, don't race to the bottom when it comes to pricing. Find value for your consumers. That's not just being the cheapest product available because you're never going to win that race and you're never going to protect your margins.

[Zach Stambor]

Yeah, exactly. I mean, give consumers a compelling reason to shop at your store and trust your brand.

[Sara Lebo]

Okay, well, that is all we have time for today. Thank you, Zach, for being here.

[Zach Stambor]

Yeah, thanks for having me.

[Sara Lebo]

Thank you, Sarah.

[Sarah Marzano]

Thank you for having me.

[Sara Lebo]

Thank you to our listeners and to our team who edits the podcast. We'll be back next Wednesday with another episode of Reimagining Retail, an E marketer podcast made possible by Zeta Global. And on Friday, join Marcus for another episode of behind the Numbers Cup.