Sam's Club Just Reported Its Highest Member Count Ever
Federal regulations, social distancing, a reduction in the workforce, and an increase in infections due to COVID-19 forced businesses to shutter over the past two years. Small businesses were hit particularly hard, losing a number of employees every month, making it difficult for companies to open when it was safer to do so successfully. Even small business owners with a healthy understanding of their company's financial situation couldn't have predicted what they would face, nor how to survive (per Statista).
Not everyone faced impending doom, however. Companies that fared well during the pandemic were ones the government deemed 'essential.' Big box warehouse clubs that require an annual membership fee to join, like Costco, Sam's Club, and BJ's, were able to stay open, offering Americans groceries and household 'essentials,' like toilet paper.
Before the pandemic, Amazon's growth into household delivery was eating away at the market, making some speculate whether a "retail apocalypse" was on the horizon. In 2018, Sam's Club closed 63 of its stores 63 of its stores nationwide, begging the question of whether the market is large enough for everyone to stay alive.
Then COVID hit. The limited supply and increasing demand for household essentials, fueled by the toilet paper walls erected in homes, helped boost sales over the past 24 months. As Americans got used to the 'new normal,' they continued to shop in warehouse clubs, buying everything else the store offers in bulk.
Membership sales are still growing
Buying in bulk appealed to the masses as it limited the number of times people went to the grocery store. KSLTV reports that millions of Americans joined warehouse clubs for the first time during the pandemic and held onto those memberships a year later. IRI, a market research firm, reports that club stores gained .5% of the grocery market share in 2020 and 2021, the fastest sales growth in 2021 of any retail channel, equaling an additional $16 billion in sales.
Sam's Club, the second biggest warehouse club after Costco and a Walmart subsidiary, has grown faster than Walmart in 2021. In a second-quarter Q23 Earning's Report, Walmart reported that Sam's Club saw an increase in U.S. comp sales of 9.5%, compared to Walmart's comp sales of 6.5% and an increase of 17.2% on a two-year stack. Although the company doesn't release membership numbers, they report an increase of 8.9% in membership income which is an all-time high. As the workforce model led to people working from home, this contributed to high grocery sales and an increase in home office supplies. Curb-side pickup and delivery options helped the success, with e-commerce sales growing by 32%.
Now that we seem to be moving past the pandemic, whether Americans will continue to pay for another membership is unclear.