Sam's Club Is Becoming More Like Costco With This Big Change for Shoppers
The two warehouse retailers will have more in common after this new policy goes into effect.
Similar to the choice between making your purchases at Walmart or Target, people tend to fall into one of two camps: Are you a Sam's Club shopper or a Costco customer? Of course, the decision could ultimately come down to something as basic as convenience and location. But both warehouse retailers have developed their own legions of devoted fans who swear by each store's ability to provide high-quality items at a great price. And while the two remain relatively distinct in how they present themselves to customers, there's one big change coming down the line that will make Sam's Club a little bit more like Costco. Read on to see what will soon be different for shoppers.
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Both Sam's Club and Costco have made recent changes that affect their customers.
As major retailers, Costco and Sam's Club have no choice but to grow with the times to ensure they're meeting their bottoms lines and giving their customers what they want. In fact, both companies have recently made changes that shoppers will likely have noticed.
In April, Sam's Club announced it would overhaul its in-house Member's Mark brand to make products more sustainable. In a press release, the company said customers could expect to see a new logo and a "subtle checkmark" making its way onto packaging. But the most significant changes have to do with what's inside the products, with the retailer saying it planned to remove certain ingredients such as high fructose corn syrup and aspartame.
And despite remaining steadfast on the pricing of certain beloved items, Costco has also made some moves of its own. During a Dec. 2021 earnings call, Richard Galanti, executive vice president and chief financial officer for Costco, went public with the company's plans to install e-commerce lockers at more than 224 locations across the U.S. The expansion would "more than double" the existing 112 lockers over the course of 2022, which allow customers to conveniently shop from home for specific eligible products they can then grab a passcode-protected pickup, Kiplinger reported.
But while these two developments are quite different, a new move will make the two competitors more similar.
Sam's Club just announced a big change that will make it more similar to Costco for shoppers.
On Aug. 31, Sam's Club executives announced that the warehouse retailer would be raising the fee for its annual membership for the first time in nine years, CNBC reports. The increase will bring the yearly price tag up to $50 from $45 for club members while also raising the price of "Plus" membership from $100 to $110, marking the first time the premium tier has ever seen a cost surge since the retailer began offering it in 1999. The new pricing will take effect as of Oct. 17.
Shoppers may notice that the membership fee increase will bring Sam's Club's yearly dues closer to rival Costco's. Customers currently pay $60 annually to shop at the warehouse retailer, while the store's premium "Gold" membership goes for $120 per year.
Sam's Club says members won't feel the membership fee increase for the first year.
According to Sam's Club executives, the company decided to raise membership fees to help offset some of the investments its made in recent years that have improved merchandise quality and made the shopping experience more convenient, CNBC reports. Besides its Member's Mark overhaul, the store also added coveted retail brands such as Eddie Bauer and Banana Republic to its shelves, upgraded its baked goods section with more gourmet options, and added the Scan & Go smartphone app that allows shoppers to ring up their items while they peruse the store.
However, executives also said they were sensitive to the current economic climate and had decided to offset the extra cost of shopping at Sam's Club that members will now face for at least the first year.
"We are mindful of the financial pressure on wallets right now. So, this year's renewal is on us," Kath McLay, chief executive officer of Sam's Club, said in a statement, per Axios. "We're giving back $5 in Sam's Cash to Club members and $10 in Sam's Cash to Plus members shortly after renewal."
Costco has also recently acknowledged its own membership pricing plans.
Meanwhile, Costco has recently addressed public speculation about the cost of its own memberships. During an earnings call in May, executives with the company acknowledged that its annual fees typically saw increases every five to six years, with the last happening in 2017, Axios reported. But citing unprecedented membership retention in the U.S. and Canada over the past year, the retailer said it would likely be holding off on the price hike.
"I can tell you that we think about it every year, but right now, in terms of the membership fee, it's not on the table right at the moment," Craig Jelinek, CEO of Costco, told CNBC's Squawk on the Street in July. "I've made it very clear. I don't think it's the right time."