How Sam’s Club plans to use its membership model to compete for increasingly competitive ad dollars

“In those cases, it’s just a retailer selling real estate,” he said, adding that he believes this year and next year, brands are going to more heavily scrutinize retailers’ ad businesses, having more to choose from and a finite budget they can only stretch so thin. “Rightfully so, because for a CMO, this budget’s not net new — they’re just shifting it from one pocket to the other.”

In an exclusive interview with Modern Retail at Shoptalk, Ma said Sam’s Club imagines it instead as a way to reinvest in clubs and improve the member experience through remodels or by raising employee wages. That means more growth in memberships and, in turn, more growth for suppliers and Sam’s Club, he said.

“Retail media has become a very blanket term for a lot of things. Unfortunately, those lots of things, to a brand, signal, ‘You want my money, and you’re trying to get it in a different way,’” he said. “Sam’s Club is building a very unique model where that mutual value proposition between a supplier and Sam’s Club is really about creating more memberships, more loyalty, more engagement and, ultimately, more growth for everybody.”

Sam’s Club’s unique approach to retail media innovation

Having a membership model with 40 years of data, Sam’s Club has unique advantages in building its retail media network over other retailers and even its sibling business Walmart Connect. And within the club space, Sam’s Club — which launched Sam’s Club MAP as a rebrand of its existing ad business in 2022 — is ahead of competitor Costco, which only just announced its retail media network last year. That all gives Sam’s Club its own vision for where it wants to take retail media.

“A retail media network should really reflect and emulate the look and feel and the ethos of that brand,” Ma said. “The way that a club behaves in a warehouse model, or membership-based model, is very different than a mass-retailer model, a grocery model or a drug model. And for those reasons, a lot of the things we talk about, which are things like audience targeting, measure of performance, member expectations and even just customer experience, are quite different.”

Ma said Sam’s Club emulated some of the Walmart Connect business to fit its club model, but now, the warehouse retailer has its own programs it plans to launch that it created from scratch, though he couldn’t yet share specifics. The existing data from the membership model helps his team move faster, he said.

“We are launching several brand-new pilots that our big brothers and sisters across the street are looking at and saying, ‘Wow, Harvey, how did you get that launched so quickly? How are you doing that so fast?” he said. “We can actually turn things on much faster, given our size, nimbleness and speed.”

Inside the stores, Ma said customers should expect fewer physical signs in the aisles and more advertising in the Sam’s Club app. Last summer, Sam’s Club launched display ads within the Scan and Go experience, in which customers scan an item in the club with their phone and pay for it in the app. The company is adding new capabilities to this app experience, Ma said.

Right now, when customers scan an item, the app shows an ad for another similar item. Ma said by the end of this fiscal year, the app will evolve to not just display banner ads, but also immersive videos or carousels of items from multiple categories that customers can browse through for inspiration — like a selection of items a shopper would need for a Cinco de Mayo party.

“Think of it more as a shopping assistant than a static display banner; that’s some of the technology that is actually coming right now, soon this year,” Ma said. “Static ads are fine, but that one click doesn’t drive any kind of inspiration or basket build outside of that specific unit.”

Experiential partnerships with brands

Another big focus for Sam’s Club is working with brands on in-person events like road shows or taste tests, such as a tailgating event it did in Kansas City last year.

“What better way to experience Sam’s Club than to physically kick a football with your favorite NFL player in front of a Sam’s Club, and then have them sign an autograph for your child?” Ma said. “That experience is not something that any other — what I would call traditional retail media — experience can emulate. That drives inspiration, and it also helps promote brands in a way that’s different than just having a static display banner or a video.”

He said the company is doing a food truck event at a store soon where, if a customer likes the food from one of the food trucks, the recipe is served up on display for them to purchase the ingredients in the store. “If you didn’t think about shopping or buying food when you were coming in before, we think that creating that all-around cart or that basket build through an experience is going to be how we win,” Ma said.

A unique opportunity Sam’s Club has is that customers need to scan their membership IDs to get into such events, so then, the company can tell if customers indeed end up making purchases or can help brands understand why customers didn’t end up purchasing a promoted product.

“It’s not just a conversion moment, which is why we don’t tout [return on ad spend],” Ma said. “A lot of that’s just how we make you a smarter marketer. I think those are the signals that advertisers are looking for right now that retail media has not done in the past.”

This aspect of the business is growing quickly. According to Ma, Sam’s Club piloted five events last year around seasons such as back-to-school or sports events. This year, it plans to do 25.

“If a brand can dream it, and they want us to activate on that, we can pretty much do anything they want us to do,” Ma said. “Our goal is to measure that and figure out how we bring it to life within a Sam’s Club environment.”