A sign hangs outside a Sam’s Club store on January 12, 2018 in Streamwood, Illinois.
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Walmart-owned Sam’s Club said Wednesday it will increase its annual membership fee this fall as its warehouse club membership soars at an all-time high and inflation-pinched buyers seek deals on bulk items.
The cost increases to $50 from $45 for club members and to $110 from $100 for the higher tier, “Plus” members, which includes some additional benefits. The changes will take effect on October 17.
It marks the first rate increase in nine years for the entry-level membership. Sam’s Club has not increased the price of its “Plus” membership since it debuted in 1999.
That brings Sam’s price closer to competitor Costco, which charges $60 a year for its basic membership and $120 for its higher-end “Gold” membership.
Sam’s Club increases annual fees as warehouse clubs take advantage of budget-conscious customers. Shoppers turned to Costco, BJ’s Wholesale and Sam’s Club during the early months of the Covid pandemic to stock up on huge packs of toilet paper, household cleaners and cans of soup. In recent months, those shoppers have sought relief from inflation by seeking cheaper gas and high volume discounts.
At the same time, inflation may sting the increase. In a note to members Wednesday afternoon, Sam’s Club CEO Kath McLay said the company “is aware of the financial strain on wallets at the moment”.
With that in mind, she said, Sam’s Club will kick the bill this year by refunding the increase in the fee in Sam’s Cash that can be used in its stores.
Investors have also speculated about a possible increase in Costco’s costs. The club last increased its membership fee in June 2017 and has historically increased it every 5½ years, putting it on track for this year.
Costco CEO Craig Jelinek shook off rumors of an increase in CNBC’s “Squawk on the Street” in July. “I can tell you that we think about it every year, but right now it’s not on the table in terms of dues,” he said. ‘I made it very clear. I don’t think this is the right time.’
Sam’s Club has nearly 600 stores in the US and Puerto Rico. It is not disclosing its membership, but said in its most recent quarter it is at an all-time high. Membership income increased 8.9% in the quarter ended July 31.
Revenue growth outpaces other parts of Walmart’s business. Same-store sales at Sam’s Club grew 9.5% in the most recently reported quarter versus 6.5% at Walmart US
Chief Member and Marketing Officer Ciara Anfield said Sam’s Club decided to make the move because of the investments it has made in recent years, from increasing the quality of the merchandise on its shelves to adding new and convenient ways to shop. .
In recent years, it has added in-store pickup, offered same-day home delivery, revamped its Member’s Mark private label and launched Scan & Go, a smartphone app that people can use to call up items as they walk down the aisle. It has started carrying brands such as Eddie Bauer, La Mer and Banana Republic. And even some of the bakery treats have been given a gourmet twist, such as cinnamon rolls made with a French baking technique.
She compared rolling out those new benefits to building a house or spending money on renovation projects.
“There is an expectation that after you invest in this house it will be worth more,” Anfield said. “We have made investments and we believe in our proposition, our membership is now worth more.”