Loyal Sam’s Club Members Lament Store Shutdowns
Posted January 12, 2018 11:26 p.m. EST
Updated January 12, 2018 11:30 p.m. EST
The conventional wisdom is that consumers do not go to brick-and-mortar stores anymore.
Tell that to the shoppers at Sam’s Club.
Walmart’s quiet shuttering of 63 Sam’s Club stores on Thursday — hours after trumpeting its plans to raise wages — sent shock waves through the ardent customer base of the membership-only chain. Patrons protested with unusual passion not granted to the thousands of closings recently announced by other retailers.
On social media, some shoppers reminisced about sharing frozen yogurt with their great-grandmother at the local Sam’s Club, while others fretted about remote areas losing a primary source of supplies or a reliable place to pick up prescriptions.
Many criticized Walmart for leaving employees and low-income customers in the lurch, posting photos of closing notices taped to locked Sam’s Club doors.
Bethany Pope Hopp, a mother of five who works as an administrative assistant at a university, was momentarily frantic when she thought that her local Sam’s Club might be on the chopping block. (It was spared.)
Once a month, Hopp drives an hour and a half from her small Missouri town to the store to buy diapers, groceries, toilet paper and other household items in bulk.
“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 Thursday, John Furner, 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.
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 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,” 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,” Singh said.