Sam’s club stores tar­get as­pi­ra­tional shop­pers, with high price items

China Daily (USA) - - BUSINESS - By BLOOMBERG

In the United States, Wal­mart Stores’ mem­bers-only Sam’s Club ware­house chain of­fers a wide range of prod­ucts from bulk gro­ceries to pa­tio fur­ni­ture at dis­counted prices in cav­ernous, no-frills stores, where goods are stacked on me­tal shelves. Wal­mart is do­ing the same thing in China but with some pricey twists, in­clud­ing $3,200 rice cook­ers and $295,000 di­a­mond rings.

Over the past two years, the re­tailer has repo­si­tioned the 14 Sam’s Clubs in the coun­try to of­fer more ex­pen­sive prod­ucts. Shop­pers can pick up $500 hair dry­ers, $1,700 bot­tles of 1995 Chateau Lafite Roth­schild red wine and $7,000 high-tech mas­sage chairs, in ad­di­tion to im­ported pis­ta­chios and desserts con­jured up by Miche­lin-rated chefs.

There’s even a $4,100 Lauras­tar iron­ing sys­tem that comes with four hours of in-home in­struc­tion. Un­like its small busi­ness fo­cus in Amer­ica, Sam’s Club on the main­land is all about cater­ing to the whims and pref­er­ences of emerg­ing rich peo­ple will­ing to spend more for pre­mium items.

“Our mem­ber is a very as­pi­ra­tional shop­per,” says An­drewMiles, chief op­er­at­ing of­fi­cer of Sam’s Club in China. “Their de­sire is for a bet­ter life and to show their wealth to their fam­ily and friends, to show that they are a smart, savvy shop­per. That’s the am­bi­tion we want to fill.”

Wal­mart sees big po­ten­tial in China: its Sam’s Club in Shen­zhen, a fast-grow­ing ur­ban cen­ter in the south­east, is the chain’s best-performing out­let glob­ally. Wal­mart, which posted $482 billion in rev­enue for its fis­cal year ended Jan 31, doesn’t re­veal a break­down its China sales, but says the growth of clubs there is among its fastest glob­ally. Chi­nese mem­ber­ships now num­ber 1.8 mil­lion and are grow­ing 10 per­cent to 12 per­cent an­nu­ally.

In ad­di­tion to rolling out a pre­mium prod­uct lineup, the re­tailer al­most dou­bled its an­nual mem­ber­ship fee in April to 260 yuan ($40), to at­tract more up­scale shop­pers, those earn­ing at least $25,000 in yearly house­hold in­come, roughly three times the na­tion’s av­er­age in 2014. Miles says mem­bers re­main­ing after the fee in­crease spent 8 per­cent more on av­er­age per visit.

“Sam’s Club’s po­ten­tial in China is greater than any­where,” says Wal­mart Chief Ex­ec­u­tive Of­fi­cer Doug McMil­lon. “Mem­bers want a fine bot­tle of wine, they want a great fresh-food ex­pe­ri­ence, they want a 4k tele­vi­sion,” he said, re­fer­ring to the lat­est high-res­o­lu­tion TV tech­nol­ogy. “Even a $15,000 price point can be a great value for what you are get­ting.”

That up­mar­ket tack— from a curved TV for $26,000 to a 61-bot­tle col­lec­tion of Me­doc wines, com­plete with its own cooler, for $14,472 — cap­i­tal­izes on a Chi­nese bias to­ward im­ports.

LU JUNYUE / FOR CHINA DAILY

A man works at the plant of Shimge Pump In­dus­try Group Co Ltd in Wen­ling, Zhe­jiang prov­ince.

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