The shift in business model comes as Sam's Club looks to stem the bleeding caused by the rise on online retailers.
Other initiatives have been geared toward that core customer as well, and Furner believes the efforts are gaining traction after Sam's Club reported a net sales increase of 4.4 percent during the third quarter of the fiscal year that ended January 26, while same-store sales increased for the seventh-straight quarter. Additionally, any member will now be able to give a Club level membership to friends, family or employees as an add-on to their own membership for the new lower fee of $40. In general, we are optimizing our network and part of why we are making the changes with our warehouses is to get the items closer to our members to speed up the shipping.
Sam's Club is reducing its membership categories in to a Club level for $45 a year and a Plus level for $100.
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When asked on Tuesday why Sam's Club carried out the closures in that manner, the company's CEO, John Furner, said he wanted to make sure employees heard the news from Sam's Club rather than the media.
"We've taken the past year to make sure we are making really clear, deliberate choices in a way that adds value for that core consumer", Furner said.
The Walmart-owned warehouse club said in a news release that it's committed to providing "irresistible value, wonderful items, real convenience and simple choices" to its customers. "Whether it works or not, your guess is as good as mine".
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These new distribution centers will be augmented by up to 12 of the closed locations that will be converted into regional e-commerce fulfillment centers. Sam's Club is renovating itself to offer more free shipping.
During January, Sam's Club announced abruptly that it was closing 63 clubs, as its stores are called, which equals nearly 10% of its overall count, transforming some into centers for distribution to better support its e-commerce push. Furner said Tuesday that the center should be ready to ship items by the end of March.
"With free shipping for Plus [members], we're more aggressive on direct to home e-commerce than we've ever been", Furner said.
The Club Pickup Service has also "proven to be a hit with members" Iannone said, adding that Sam's is targeting to get wait times down to five minutes. Others are planned for Texas, central Florida, mid-Atlantic, Chicagoland, Southern California and the Northeast, with specific locations to be announced in the upcoming weeks.
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The move by Sam's Club is focused on creating an increase in memberships, which now stand at approximately 47 million, at a time that such types of fees account for the bulk of its operating profits.