Within the warehouse club space, there are three major players:
- Costco
- Sam’s Club
- BJ’s Wholesale
And while it’s Costco that tends to dominate in that arena, Sam’s Club may be slowly gaining ground.
Sam’s Club offers several advantages over Costco, including:
- Lower membership fees at the basic and upgraded tier
- Curbside pickup
- A more user-friendly mobile app with better checkout features
Plus, a common complaint among Costco members is that the company’s warehouse club stores are perpetually crowded. Sam’s Club members often find that their stores aren’t so packed.
And while that perhaps speaks to Costco’s popularity, it also translates into a less enjoyable shopping experience — and perhaps a more pleasant one at Sam’s Club.
But Sam’s Club isn’t content to just sit back and let Costco uphold its reign as the country’s top warehouse club chain. Sam’s Club is constantly looking for ways to best Costco.
And it may have just found a good one.
Sam’s Club makes limited-time offer on membership deal
During Costco’s most recent fiscal quarter, the company reported an uptick in membership upgrades. That means more people were willing to shell out $130 a year for an Executive membership, as opposed to just $65 for a basic Gold Star membership.
Sam’s Club has intentionally kept its membership fees below Costco’s for years. Currently, a basic club membership is $50 a year, while an upgraded Plus membership costs $110.
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But new members who join Sam’s Club very soon can snag an even better deal.
Now through October 31, new members can purchase a Club membership for just $15 or a Plus membership for $50.
Of course, it’s not unusual for Sam’s Club to run a membership promotion. The company generally offers discounted memberships to groups such as:
- Teachers
- Military members
- Health care professionals
- Seniors
- Students
But the current $15 and $60 promotions apply to all prospective new members, making it a deal that’s hard to pass up.
Costco won’t budge on membership fees
While Sam’s Club routinely makes its annual memberships available at a discount, Costco takes the opposite approach and basically never offers money off of a membership. That’s not necessarily a bad strategy, though.
Costco uses its membership fee revenue to offset its costs and keep its prices low without skimping on quality. So members are willing to pay extra if it means getting access to great deals and a fantastic assortment of products.
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“Costco almost never discounts its memberships, and it should be very careful about ever doing that. The chain offers strong value at its current pricing and makes most of its operating revenue from membership fees. There is no need to discount,” said TheStreet Co-Editor-in-Chief and retail expert Daniel Kline.
Another reason Costco doesn’t have to discount its memberships? It’s already built a certain level of trust with consumers that Sam’s Club may still be working toward.
“Costco’s strength has always been in the trust and its value, not the membership price. Once you start discounting memberships, you train customers to wait for a deal instead of appreciating the everyday value that drives loyalty. Costco’s deal is the trust, and by discounting you change that focus,” said retail expert and RTMNexus CEO Dominick Miserandino.
The fact that Costco won’t budge on membership fees, however, provides a huge opportunity for Sam’s Club to draw in customers who may be on the fence about joining a warehouse club.
Sam’s Club should continue to run promotions on memberships if its goal is to capture more of Costco’s share of the retail market. And with the holiday season approaching, there’s a good chance we’ll see more of them.
Maurie Backman owns shares of Costco.
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