More Bad Times at Sam’s Club

Walmart’s chain of warehouse-style membership clubs is the bringer of more bad news. Reports say that the company is letting go of more than 11,000 workers around the country.

The measure follows an announcement that Walmart will close 10 Sam’s Clubs across the country that are loosing money. No further closures were announced.

The retailer calls the job losses a “cost-cutting move” that will build warehouse membership and could boost sales. Sam’s Club sales are consistently outperformed lately by rivals Costco Wholesale and BJ’s Wholesale.

Will we see more closures ahead?

ALSO: Target’s Urban and International Plans Are Great, But Late

8 Responses to “More Bad Times at Sam’s Club”

  1. 1 James January 25, 2010 at 9:33 am

    Sam’s Stores are typically near a Walmart, something had to give as sales volumne dropped across the board.
    In the early 90’s I was a consultant to a Target Center developer in the Seattle area. I researched property acquisition possiblities in five key urban areas near downtown. These areas are dramatically underserved. Although the developer was willing to pursue a land assemblage program and the areas identified had great demographics, we could not find land parcels large enough to accommodate a Target Store. The largest reasonably available assemblage site was 4.5 acres! It is long past time for these stores to develop a multi floor format for urban areas. They also need to fully understand that their stores are automobile dependant, you can’t carry much in the way of goods on a city bus, so although parking structures are expensive it would be very short sighted to omit them.

  2. 2 john January 25, 2010 at 12:51 pm

    The story I heard was that Sam’s was going to outsource the jobs-sounds like union busting to me.
    As far as James comments- I agree but urban stores require different proforma with higher costs and higher shrink.

    • 3 James January 25, 2010 at 4:29 pm

      Urban stores have to be viewed as a long term proposition. The occupancy cost will be much higher compared to suburban “at grade” stores. Operators should be sure to talk to local and state government to see if there are any incentive programs available for Urban stores. Many of these areas are grossly underserved, the presence of a store in these locations actually stems retail leakage, reduces traffic to outlying areas, and provides jobs in the inner city where they are needed. If shrinkage is a problem I am sure the operators will price their goods accordingly. I also think the store operators need to fine tune their merchandising presentation, optimize their replendishment stradegy so that the store is as efficient for its location as possible. Floor space will carry a premium cost at these locations.

  3. 4 Cary Verchow January 25, 2010 at 4:50 pm

    With Walmart’s “Super Walmart” model catching on, and the fact that most Sams stores are adjacent to or very near the Walmart store, expect to see more Sams closing in the near future. The differentiation between the warehouse store and the Walmart “Super Walmart” is closing and therefore redundant. And, Costco treats their employees much better than Walmart.

  4. 5 Market Participant January 26, 2010 at 1:10 am

    Sam’s club is in trouble because the folks who shop BJ’s or Costco aren’t wal*mart shoppers. A sam’s club is just a really big wal*mart without the atmosphere. So luring shoppers from a wal*mart to a Sams club is no victory.

    Sam’s is outsourcing the jobs so the net job loss is going to be very small. It could be union busting, or perhaps a move to reduce the percentage of employee’s without benefits on the payroll. That makes the company’s HR stats look better.

  5. 6 Alan January 27, 2010 at 9:34 am

    James, It sounds like you know your stuff when it comes to locating retail sites in urban locations. When it comes to locating a wholesale club you need big houses to store all that bulk crap and lots of people in those big houses to use all that bulk crap Not the typical demographic in urban locations. For sure urbanites if given a wholesale club will join and shop there. They just do not buy in enough volumn to make the wholesale club sucessful.

    • 7 James January 28, 2010 at 10:14 am

      There is a definite connection between the size of the store, the size of the goods, and the size of the vehicle the customer has to haul it in. I spent hour upon hour trying to explain to the Portland,OR planning commission why they should approve a reasonable parking ratio for an intercity Safeway Store. A Safeway Store just cannot make it if its customers are arriving on bicycles with baskets or are using those little two wheel shopping carts. They need to have a reasonable number of SUV’s and/or large car trunks! You can’t carry ten bags of groceries on a city bus.

  1. 1 Meanwell « Highvoltagepower’s Blog Trackback on January 28, 2010 at 1:50 pm

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