Sams Club - In Trouble? No way.

Miscellaneous and Personal Stuff I Must Share
1

Sams Club is cutting 11,200 jobs.

http://www.msnbc.msn.com/id/35046668/ns/business-retail/

This doesn’t make sense. Every Sams Club I’ve visited is packed with customers. A lot of times you can’t even find a parking space within a reasonable walking distance. My mom has a professional membership and goes at 7:30AM just to avoid crowds. I rarely go to Sams Club because I dislike crowds and long lines.

I can’t understand how Sams Club could be in trouble. What the heck does it take for a company to succeed? People are buying bulk to save money in tough economic times. It seems like Sams Club has to be making crap loads of money.

2

Well customers have to translate into sales. More importantly they have to translate into the correct items.

I’ll give you an example. In Chicago, where I live, I can always find milk for $1.99/gallon or eggs for 99¢ a dozen. One week it’ll be Walgreens, the next CVS, the next a grocer, or even 7-11.

The point is these stores expect you to come in for the cheap milk or eggs and buy something else while you’re there.

If every customer was like me, go into the store and by only the milk, the stores would be very upset.

I really think in this case Walmart is simply using the weak economy to weed out the dead wood.

Think of your own company and ask yourself, who in your company could you get along without? Then ask yourself, why don’t they fire them?

Usually companies want a good excuse to fire people. This economy makes a good opportunity to do the weeding.

If you look at the article you see the following

Then you see:

Then you see

Now let’s do the math:

In a horrible economy that isn’t getting any better do you really need 1,200 people to RECRUIT someone? I would guess not. Walmart probaly has thousands of applicatons on file already and more coming in daily. You see people are coming to Walmart, they don’t need to go to them.

So yeah that’s weeding out deadwood from a time when Walmart had to go after talent.

Now 10,000 workers who showcase products? Offer food samples?

Since these are partime workers mostly it makes sense to let them go. In tough times people are less likely to be persuaded so why bother trying.

Why keep deadwood on? I never understood this about companies.

3

I can see the need to trim unneeded workers. Walmart and Sams Club seem to be the most successful of all the big chains. I prefer KMart but they’ve closed nearly all their stores in Arkansas. We’ve only got one left in Little Rock.

Sams Club does seem to be drifting from their original sales model. It grew and prospered as a bulk food and office supply location. They have added a lot of items and have those sales demo people handing out samples.

4

The ripple effect - parking lot may be full - but maybe buying very little or maybe applying for job. Many retailers are cutting peoples hours to the barebones - and you have to do the work of 10 people in 10 hours a week. Walk into a store - see 1 cashier on a Friday or Saturday night (peak shopping times in my area). I think alot of people are fooling themselves thinking that the economy won’t be biting them in the butt.

5

I agree with all of your post, so this is mainly a nitpick: the “members” they are talking about here are “customers” not “members of their workforce”

I seriously doubt Sam’s is sitting on any applications for “membership” on file anywhere.

(i’m basing this on the fact that customers are called “members” and the fact that it is, as you point out, stupid to have 1200 people to recruit workers for minimum wage jobs)

6

oh, and this quote from the article too:

7

The last time I was in Sam Club Iwas struck by all the high dollare stuff - big screen TV’s, electronics, other big ticket items. They are probably cheaper than at another store, but they aren’t cheap and they took up a lot of the store’s square footage.

I shopped there for a few weeks, but stopped because I couldn’t count on items being on the shelf - sometimes they were but sometimes they were not. Also, since I have a small family, it didn’t make sense to get those huge bulk amounts they offer.

8

Is borrowing member cards allowed, by the way? Can I give my card to a friend to let them go?

Also, do you hav to consent to giving your receipt and having your stuff searched at the exit?

9

you can shop without being a member - you are assessed a 10% surcharge. Assuming they still do this, it stands to reason that you can’t borrow a member’s card - but then again the pictures on the back are so bad that if you’re paying with cash or something, you can probably do it.

Your second question ventures too far into “things that internet libertarians like to bitch about” (like “legal tender”) so I’m doing to not address it.

10

This is in the wake of their recent closure of a number of underperfoming Sam’s Club locations.

My husband and I used to have memberships to both Sam’s Club and Costco, but dropped the Sam’s Club a few years ago. Costco costs a little more, but the products seem to be better quality overall, and I like their corporate practices.

11

Costco has done a lot of expansion into areas where Sam’s Club was. That adds competition. Additionally, Target has started to move into the “large quantity, low price” space a little.

The other thing is that when your margins are as low as they have to be at a membership warehouse store on everything, a lot of sales does not translate to a lot of profit. Profit margins at warehouse clubs are slim - that’s why people join them. So if you have too much labor in your store, or too big a heating bill, or have to plow the parking lot too often, you can go from a profitable store to an unprofitable one fast.

(ETA: The ‘sell at a loss, make it up in volume’ theory was proven not to work during the dot com bust.)

12

According to an article about this in this morning’s Philadelphia Inquirer (and it’s sort of mentioned indirectly in the article originally linked to, but not stated explicitly) those 10,000 part-time product showcase jobs are going to be outsourced to other companies.

13

It’s a condition of membership - you gave consent by purchasing a membership.

As for loaning out your card, that is forbidden by your membership agreement. At a quick glance of their rules, anyone who borrows your card would have to pay with cash as they otherwise require checks or credit cards to match the name on the membership card.

14

So, no more free samples? That’s the best part of shopping there!

15

They’re just outsourcing the free samples work to a contract agency.

16

I know that our rate of visitation hasn’t changed much but the amount we spend there has. That might account for the crowds but still the trouble.

We now stay away from the book & DVD section, which I suspect are high margin items, and focus more on food, soap & such.

17

It’s kind of a gobsmackish thought, that Sam’s Club hasn’t always been contracting that function out. Costco always has (which is why I’ve always known better than to ask a free-sample-demo person where to find anything other than what they’re handing out).

18

That’s what we did.

I’m seriously considering reversing that decision, if Costco doesn’t stop doing stupid shit like discontinuing the tiramisu cake.

19

The Sam’s Club near me closed on Friday, a few years after a Costco opened about a mile away. This is a pretty upscale area, and Costco just seems to be a nicer store with higher quality things.

The Costco is in a shopping area that has a Panera Bread, Whole Foods Market, and a Target. The Sam’s Club area has an Albertson’s, a McDonalds, and a Post Office.

20

Us too, except I felt that Sam’s Club was more expensive. Might have been cheaper for a given name brand item, but Costco has a house branded alternative that is MUCH cheaper for many of the items we buy.

A few months ago the local SC had an open house day. We stopped in to see if they had changed their ways. The place was a disaster due to remodeling in progress. Why you’d have an open house event with the place in such a state is beyond me. So there you have it, the usual suspect in a layoff: Braindead management. Also, maybe they need to cut payroll to pay for the makeover.