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发帖数: 3530 | 13 Why Costco Is Crushing Walmart-Owned Sam's Club
http://www.huffingtonpost.com/2014/05/16/sams-club-vs-costco_n_
Sam’s Club, the Walmart-owned purveyor of bulk toilet paper and ketchup,
had a terrible last few months, the company announced Thursday. Meanwhile
its competitor Costco is doing just fine.
Sales at Sam's Club stores open for a year or more fell 0.5 percent from a
year ago in the just-ended fiscal first quarter, the company announced
Thursday. The poor results come a few months after the chain laid off 2,300
workers.
Costco, in comparison, recently took home $457 million in profits, even as
its quarterly results disappointed Wall Street expectations.
"The divergence from Costco is striking, because they're basically in the
same business -- but apparently they're not in the same business," said Faye
Landes, a senior research analyst at the Cowen Group, a financial services
company. Sam's Club, said Landes, doesn't "seem to have it quite right."
Here are a few reasons why:
Sam's Club may be targeting a suffering consumer. Sam's Club CEO Rosalind
Brewer noted in an earnings call that the chain suffered this past quarter
from a decline in public assistance for poor customers. With the economic
recovery tepid and the government safety net getting smaller, poor consumers
are cutting back on their spending, even at the cheapest-of-the-cheap
outlets like dollar stores and Walmart.
And Sam's Club is not a cheapest-of-the-cheap outlet. You need a membership
to shop there, a privilege that comes with a $45 yearly membership fee. That
's cheaper than Costco's $55 a year, but it's still an expense.
sams club
If it's true that Sam's Club is relying on customers who need food
assistance, Landes said, then "it's not clear if they have the right
merchandise for that consumer. The stores are relatively upscale compared to
that of Walmart."
Costco, on the other hand, explicitly targets customers with more money, who
haven't been hit quite as hard by the downturn.
Costco shoppers "are probably a little more resilient in times of economic
uncertainty, and my sense is they are a little less price-sensitive," Sara
Altukhaim, an analyst at Kantar Retail, told HuffPost in an email.
The map below from Morgan Stanley shows the states with the most Costcos.
costco map
You'll notice that the state where the chain has the most stores, California
, is also the state with the most high-net-worth individuals, according to a
recent report from the research group Wealth-X. That seems to be a pattern:
States with more Costcos tend to be relatively wealthier states.
states
Sam's Club may be losing customers to the Internet, or even to its own big
brother, Walmart.
Brick-and-mortar retailers everywhere are struggling to adjust to the rise
of Amazon, but Sam's Club may be particularly vulnerable. Altukhaim noted
that Sam's Club shoppers may be more predisposed to use Amazon than typical
shoppers. That's because services like Amazon Prime operate on a similar
model to club warehouses -- you pay a premium to get certain discounts and
benefits.
Sam's Club is fighting its customers' urge to turn to Amazon with an online
service called "My Subscriptions," which launched earlier this year and
offers services similar to Amazon's.
"The competitive landscape is shifting," Brewer said at an analyst
conference earlier this year, according to The Wall Street Journal. "It's
spanning from Amazon Prime, an online membership community, to the
traditional warehouse clubs."
The Internet isn't the only threat to Sam's Club, though. The chain has also
been losing business to Walmart, which offers many of the same products at
competitive prices.
Costco customers are incredibly loyal, thanks in part to the chain's
commitment to signature offerings.
Given that about 75 percent of Costco's operating profit comes from
membership fees alone, "literally every decision Costco makes comes down to
what the member wants," Altukhaim wrote. And members are evidently happy:
The warehouse chain has a renewal rate of nearly 90 percent.
Costco's Kirkland brand, which accounts for about 20 percent of the company'
s sales, according to Landes, is evidently one of the things customers want.
In 2002, Costco started selling a line of Bumble Bee tuna under the
Kirkland name that was of better quality than the original Bumble Bee,
according to CNNMoney. By using the Kirkland brand to sell quality products
at an affordable price, Costco has convinced consumers to trust Kirkland,
and Costco by extension.
costco kirkland
Costco probably also has better leverage than Sam's with its suppliers, in
part because Costco can always sell its own version of a product if
suppliers don't meet its demands, according to Landes.
"Costco uses their private label very artfully, while Sam's is not quite
there," said Landes.
Nevertheless, Brewer said on the analyst call that Sam's is shifting its
focus more to signature brands.
Costco also attracts and keeps customers with things like a commitment to
low prices -- the retailer never marks anything up more than 15 percent --
and a relatively happy workforce.
Thanks to these tactics, the company known for its deluge of free samples
and its $1.50 hot-dog-and-soda combo doesn't even have to advertise.
MORE: Wal Mart Sams Club Costco Walmart Sales Sams Club vs Costco Walmart vs
Costco Sams Club Earnings Walmart Earnings
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