Sam's Club hires regional buyers, sees 'local' food as key in upscale shift

Tue Mar 1, 2016 7:07am EST
 
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By Nathan Layne

(Reuters) - Sam's Club, the warehouse club unit of Wal-Mart Stores Inc, is building a team of regional U.S. buyers to bring in more local and organic groceries, a strategy used by rival Costco Wholesale Corp to drive loyalty and attract wealthier customers.

Attracting and keeping customers has taken on a new importance for Sam's Club after a 0.5-percent fall in sales at existing stores in the quarter ending in January, the first drop since early 2014. Costco, by comparison, posted rises in each month of the quarter and has outgrown Sam's for years.   

Sam's Club has hired a handful of buyers in Dallas and is considering putting teams in up to five other markets, John Furner, chief merchandising officer at Sam's Club, told Reuters. Until now, all of its buyers have worked out of company headquarters in Bentonville, Arkansas.

Buyers find and purchase the products that end up on the shelf. Having them closer to local markets will make it easier to forge ties with up-and-coming suppliers of organic, healthy and premium foods, as well as products catering to local tastes, Furner said.

"(Such items) end up by default being local products and regional products," Furner said in an interview, citing organics, craft beer and "unique salsas" as examples of the types of product buyers would look to bring into the club.

People familiar with the matter said Sam's Club was considering having regional buyers handle 30 percent of its food items. Furner said he did not yet have a unit target and that his first priority was to make the Dallas operation successful before setting further plans.

Furner said a stronger pipeline of organic and premium foods would help attract wealthier shoppers, a key plank of Sam's growth strategy and increasingly the target demographic for warehouse clubs.

Costco has a location advantage when it comes to upscale shoppers, with many of its stores in wealthier regions near cities and along the coasts. Sam's Club stores are often located in less well-to-do areas; more than a quarter of its roughly 650 stores are next to a Walmart, which tends to attract a lower-income shopper.   Continued...

 
The sign outside the Sam's Club is seen in Bentonville, Arkansas June 5, 2014.  REUTERS/Rick Wilking