January 23, 2018

Loyal Sam’s Club Members Lament the Loss of a Trusted Friend

Loyal Sam’s Club Members Lament the Loss of a Trusted Friend


“Having a store like Sam’s Club is absolutely a necessity for some of us rural, smaller communities,” she said. “That and Walmart are all we have — we don’t live in an area where there’s a Costco or a Target on every corner.”

Sam’s Club, which first opened in 1983 in Oklahoma but has since expanded across the country and abroad, is a chain of warehouses operated as clubs offering memberships. Shoppers can buy huge quantities of merchandise, including products not found at Walmart, as well as fill up on gasoline.

The 63 store shutdowns will leave Walmart with 597 Sam’s Clubs. Out of necessity or protest, many customers quickly jumped ship to competitors like Costco.

BJ’s Wholesale Club, another rival, encouraged Sam’s Club customers to join its program, noting in a statement that there was “an immediate increase” in new memberships after the Sam’s Club closings. BJ’s, which has 215 clubs in 16 states, also said that it has “had numerous inquiries from Sam’s Club employees” about obtaining jobs.

On Thursday morning, Walmart said it would raise its minimum starting wage to $11 an hour from $9 while also expanding maternity and family leave benefits and offering bonuses of up to $1,000. But the glow of that announcement faded just hours later, when the Sam’s Club closings were revealed not by an announcement from Walmart but rather through social media posts from confused and increasingly irate customers and employees.

Walmart was accused of using its pay announcement as a shield to cover up the shutdowns.

The abruptness of the closings contributed to consumer frustration. Typically, companies warn investors and shoppers — and employees — that they will be closing stores far in advance. In an interview on Thursday, John Furner, the chief executive of Sam’s Club, did not go into detail about the reasons for the unusually sudden move.

“There were a few locations where we felt there was no easy way to keep them open,” he said, adding that some of the stores will remain open for a few weeks.

Mr. Furner said that Sam’s Club wanted to inform its employees of the closures before notifying the public. But many of the thousands of workers who will be affected were unaware when they showed up to locked stores on Thursday.

Not all employees at the affected stores will be out of a job. Walmart hopes to find positions for displaced workers at other Sam’s Club locations. Up to a dozen stores will be retrofitted into e-commerce fulfillment centers.

“We made a deliberate decision to prioritize employees,” Mr. Furner said. “I am not going to second-guess and change my mind at this point.”

Despite the loyalty it engenders from members, Sam’s Club has “underperformed peers” financially, according to Oliver Chen, an analyst with Cowen.

Sam’s Club, he wrote in a note to investors Friday, is “taking prudent steps to prepare for the next generation of retail warfare, one in which speed will be king and delivery will be judged by hours and not days.”

That’s small consolation to people like Dharmendra Singh, a software engineer who so liked the feeling of exclusivity he enjoyed while shopping at Sam’s Club that he never used his membership at BJ’s.

The Sam’s Club he shopped at in North Carolina, the closest one in a 25-mile radius, is closing. He and other members were shocked.

“It’s like a long-term girlfriend leaving you and not even giving you a call,” Mr. Singh said.



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