Marketing Overhaul At Sam’s Club
Posted on February 15, 2007 by webteam
From the Wall Street Journal:
Sam’s Club, the warehouse-club division of Wal-Mart Stores Inc., aims to boost sales this year by courting more individual shoppers in addition to the small businesses that comprise the foundation of its customer base.
“If we are to expand Sam’s Club at the rate we expect, we are going to have to broaden our appeal beyond small business owners,” Greg Spragg, Sam’s Club’s executive vice president of merchandise and replenishment, said Wednesday at an investor conference hosted by Citigroup in Orlando.
More specifically, Sam’s Club, which operates 575 clubs in the U.S., will expand its marketing to target affluent shoppers and mothers. The latter account for 80% of household shopping, Mr. Spragg said. The change of course is significant for Sam’s marketing efforts, which for years signaled the division’s priority by flogging its “in business for small business” slogan.
In tandem with the marketing shift, Sam’s Club recently promoted Matt Kistler to senior vice president of merchandising from vice president of packaging. “His job is to make sure we are beginning to tailor the messages and communications to the (club) members who are receiving them,” Mr. Spragg said.
Mr. Kistler will report to Sam’s Club Chief Executive Officer Doug McMillon. Sam’s Club still is seeking to hire an executive vice president of marketing to replace Mark Goodman, who left the retailer abruptly in December after 14 months in the job.
Working with Mr. Kistler to tailor marketing messages for affluent shoppers, mothers and small-business owners will be advertising agency StrawberryFrog. Sam’s Club hired the New York boutique advertising agency in August, replacing long-time agency GSD&M, in part due to its experience with such multifaceted campaigns.
Sam’s Club needs the new marketing strategy to bolster its sales, which have been steady but not spectacular in recent months. Since Mr. McMillon took over as CEO in August 2005, Sam’s Club has posted same-store sales gains—or sales increases at stores open for at least a year—that outpaced the rest of Wal-Mart’s U.S. operations in 16 of 18 months. In January, Sam’s Club posted a 3.4% increase. While better than the 1.9% increase at U.S. Wal-Mart stores, “that is not a number that we’re happy with,” Mr. Spragg said.
Sam’s Club has more difficulty beating Costco Wholesale Corp., the Issaquah, Wash.-based warehouse-club chain that often draws more affluent shoppers than does Sam’s Club. In the past 18 months, Sam’s Club has matched or exceeded Costco’s same-store sales gains only three times.
Sam’s Club posted sales of $30.5 billion in the first nine months of its latest fiscal year, which ended Jan. 31. Wal-Mart will report its full-year and fourth-quarter results on Tuesday.
