strategic-management

Sam’s Clubs
Sam’s Clubs are membership only, cash-and-carry operations. A financial service creditcard
program (Discover Card) is available in all clubs. In addition to Discover Card, Sam’s
have also recently started accepting MasterCards for payments. As of February 2009,
business members paid an annual membership fee of $35 for the primary membership
card, with a spouse card available at no additional cost. The annual membership fee for an
individual member is $40 for the primary membership card, with a spouse card available at
no additional cost. The Advantage Plus Program offers additional benefits and services
such as automotive extended service contracts, roadside assistance, home improvement,
auto brokering, and pharmacy discounts. The annual membership fee for an Advantage
Plus Member is $100.
Sam’s offers bulk displays of name-brand merchandise, some soft goods, and
institutional-size grocery items. Sam’s Clubs usually offer over 3,500 items, which are
used most often by the consumers they serve. Each Sam’s also carries jewelry, sporting
goods, toys, tires, stationery, and books. Most clubs have fresh-food departments, such as
bakery, meat, and produce sections.
Sam’s is a $46.8 billion business that is starting to grow again. The clubs were never
designed to sell merchandise categories, but rather items. Furthermore, because the
number of items is limited to around 2,000 for the wholesale part of the business and
between 1,000 and 1,500 for personal and individual use, it is very important for the items
to be appropriate for the location. Also, the items have to come and go seasonally, so
continuity by category is not appropriate. Thus, there is a problem for buyers who are item
merchants and compete for space in the clubs.
At the end of fiscal 2009, Wal-Mart had a total of 602 domestic Sam’s Clubs in operation.
Sales for the Wal-Mart’s Sam’s Clubs segment increased by 5.6 percent in fiscal
2009, compared to fiscal 2008.
Supercenters
Wal-Mart’s Supercenters combine groceries with general merchandise, giving customers
one-stop shopping. As shown in Exhibit 3, Wal-Mart operated 2,612 domestic and
436 international Supercenters in fiscal 2009.
Supercenters constitute the company’s fastest growing division, and management
is extremely pleased with them. Currently, the limitation is distribution, and Wal-Mart
is working hard to expand its food distribution capabilities. Most of the Supercenters
replace Wal-Mart stores, so they have a jump-start on the general merchandise side of
the store, whereas food has tended to build slowly. However, the company has gained
market share more quickly than planned. Wal-Mart likes to locate Supercenters near the
strongest food retailers so their facilities will “either get better or be run out of town.”
The Wal-Mart Supercenter is one of the most important retail concepts on the landscape
at this time. As with the discount stores, their real competitive impact comes not in
the year they open but in the third year because they have a maturation curve that’s more
like a Wal-Mart store than a food store. Also, the one-stop convenience aspect of the stores
has such broad appeal that it is drawing a larger customer audience on a regular basis.
Supercenters are continuing to get better in many categories and are attracting a higherincome
audience, in addition to their traditional customers. Supercenters provide mart
carts and are all one-story buildings, making the stores handicapped accessible.
Wal-Mart’s Supercenters average 186,000 square feet of retail space. They usually employ
between 200 and 550 associates, contingent on store size and consumer needs. The company’s
broad assortments and everyday low prices are very compelling; extensive advertising
is not needed. This represents an enormous saving over the competition. Furthermore,
as Supercenters move more into food distribution, they gain a major cost advantage over
Super Kmart and Super Target.
The Supercenters are designed with wider aisles, directory signs, departmental
directories, and 24-hour service. They are usually equipped with a customer service desk
and scanning registers to provide more efficient checkout procedures.
CASE 6 • WAL-MART STORES, INC. — 2009 67