Big-Box Briefing: Sam’s Club targets high-retention members with new tire benefit

The Plus membership offers free shipping and delivery on orders over $50, as well as 2% cash back, early shopping hours and additional discounts in pharmacy, optical and the tire and battery center. At $120, it is typically double the price of the standard club membership, though both are currently discounted for a limited-time promotion from July through the end of September, with Plus at $55 and the standard membership at $25 for the first year.

“Our members … when they’re looking to choose where they’re going to shop and where they’re going to spend their dollar, they’re looking for convenience, and they’re looking for ways that they can best have their needs serviced and provided in almost a one-stop shop,” Schrobilgen said. “The benefit solves a real need that creates some meaningful savings for our members, and it helps them understand what the value of Plus is while driving convenience within the club as well.”

So far this year, Sam’s Club has already seen 22% year-over-year growth in members using Sam’s Garage, according to the retailer. This could help put it more on par with Costco in this area: Kantar found in a February survey that 31% of Costco members said they use its tire services, versus 24% of Sam’s Club members. Costco offers free tire installation to all members, not just those with its most premium membership. Additionally, sales growth in the tire department is accelerating faster than most other categories in the clubs, Schrobilgen said.

The value of the tire-installation benefit more than pays for the current discounted cost of a one-year Plus membership. Both the standard and Plus memberships also include emergency roadside assistance for up to four years, as well as car battery health checks and wiper blade installation.

Sam’s Club also added a dedicated service adviser for the tire and battery center last October to personalize and streamline the experience, including appointment booking and member engagement, the company said. “It’s important that we not only show value in the money that somebody can save within the club, but it’s equally as important to be able to provide … somebody that can help them answer questions about all the tire assortment that we’ve got available for the vehicle,” Schrobilgen said.

Last year, Sam’s Club focused on the pharmacy as one area where it could drive growth and retention with new services such as same-day prescription delivery for Plus members and discounted pet insurance for all members.

Anna Brennan, principal analyst for club and specialty retailers for Kantar, said Sam’s may now be focusing on auto benefits to attract members coming to the clubs for gas discounts given the rise in fuel prices. However, she questions whether the $80 value of tire installation alone is enough to convince someone to upgrade to a Plus membership, given that tires may last at least several years.

Still, she said it is important for Sam’s to add new benefits as proof points that the membership is working hard for members, especially while competing for consumers’ wallets with countless other subscription programs inside and outside the club space.

“It’s becoming more important for the clubs to routinely add something to the membership to keep it fresh,” Brennan said. “Not every member is going to appreciate nor keep track of every dollar that they save in the grocery department. … Any time you can give them that [additional] benefit, it makes those savings much more apparent or more obvious to them.”

What we’ve heard

“Her instincts were always, ‘The team gets all the credit,’ and she built a culture where learning from challenge and change was not a slogan, it was actually the way we operated. Corie taught us that leaders don’t have every answer. They create the conditions where people can do the best work of their careers. Best Buy is stronger, more resilient, more clear-eyed about who we are because of her, and every one of us who leads in the future is doing so on the foundation that she laid.”
–Jason Bonfig, incoming CEO of Best Buy, reflects on current CEO Corie Barry’s leadership in the company’s second-quarter earnings call

Numbers to know

$300 million: The gross merchandise value of Best Buy’s third-party marketplace in the second quarter; it launched about a year ago.

1.5 million square feet: Size of Walmart’s upcoming automated fulfillment center in Carnesville, Georgia.

$800 million: Sale price of Keurig Dr Pepper’s minority stake in Chobani, which it is selling back to the yogurt company.

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