Professional focus transforms Sam’s Club prototype into all business, all the time
HOUSTON —Sam’s Club is experimenting with a new format that leverages its strength in serving business customers, but appears to have limited expansion potential.
A grand opening of the first-ever Sam’s Club Business Center is scheduled for later this month to formally introduce the concept to Houston’s small business owners, many of whom have already experienced the club as the 15-year-old facility never closed during a six-month transformation process. Many changes are obvious and related to the elimination of departments such as optical, pharmacy, jewelry, apparel, automotive and entertainment that do not comprise small business owners’ core daily needs.
“We are always looking for new things to do and how we can be more relevant to our business members and serve them better,” explained Kenny Folk, Sam’s Club senior vp of new business development. “As we looked at the product mix in our clubs, [we found that] we serve our business members pretty well, but we don’t serve all of their needs.”
The elimination of departments that have become staples of club shopping enables Sam’s to expand assortments in other product categories such as food, consumables, office products and cleaning products that appeal to restaurants, convenience stores, hotels, motels, day care centers, apartment complexes and office managers. New services have also been added such as a copy, print and ship center and mailbox rentals accessible 24 hours a day. A walk-in cooler and freezer added at the rear of the club houses cases of meat, produce, cheeses and other dairy items.
The unit’s merchandising philosophy is to “help small businesses save big,” and there is an abundance of small businesses near the club, located west of Houston’s central business district. For those who aren’t close to the facility, Sam’s offers delivery service within a 25-mile radius for a minimum order of $250.
The move by Sam’s Club is the first new format from the retailer in its 25-year history and comes nearly 12 years after Costco opened its first business center in the northern Seattle suburb of Lynnwood in September 1996. A second location was added in San Francisco in 1997, and in November 2001, a third store opened in Phoenix. Costco’s fourth unit was added in November 2003, a second Seattle store in Fife, about 45 miles south of Lynwood. Costco also operates two delivery-only warehouses focused on business members in San Diego and Los Angeles.
If Costco’s slow pace of expansion is any indication, don’t look for Sam’s Club to open a wave of new business centers. The company has not disclosed any additional locations, but a logical expansion pattern could involve urban areas like Houston that have large numbers of small businesses and heavy concentrations of existing Sam’s Clubs. Fitting the bill are Chicago, 21 clubs; the Dallas/Fort Worth market, 20 clubs; and Atlanta, 13 clubs.
Even if no additional units are added, the experimental concept is expected to yield other benefits. “This club is going to teach us a lot more about the items we need to carry for our business members,” said gm Tony Puente. “You have to listen to and understand business members’ needs and then…give them what they want. Once you establish that trust, they will come back over and over again.”