In the warehouse club space, Costco and Sam’s Club have long been rivals. And there are things each one does a little better.
Sam’s Club tends to do a better job of embracing technology. Its Scan & Go mobile checkout feature helps get members out the door quickly, whereas at Costco, the checkout aisles are known for being jam-packed and slow-moving.
Sam’s Club is also more competitive on membership fees. A regular Club membership costs $50 per year, while a Plus membership costs $110.
At Costco, a regular Gold Star membership costs $65 per year, and an Executive membership costs $130.
Costco, on the other hand, is able to rely on the strength of its Kirkland brand to drive sales and retain members. Even though it costs more to shop at Costco, the store’s reputation makes members more than willing to pay the higher fees.
Costco and Sam’s Club compete for business
Even though Costco and Sam’s Club aren’t the only players in the warehouse club space, it’s fair to say that they’re each other’s main competition.
This doesn’t mean they always follow each other’s lead, though.
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Sam’s Club, for example, commonly runs promotions on its memberships, allowing new members to join at a lower price point.
Costco rarely discounts memberships because it wants the revenue — and because it doesn’t have to.
Renewal rates are high enough at Costco that the company doesn’t have to offer the same discounts as Sam’s Club.
Costco also won’t offer curbside pickup like Sam’s Club because it wants members coming in to shop. Roaming the aisles increases the chances of members making extra purchases, which is a core part of Costco’s strategy.
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Sam’s Club makes key store closure decision
Anytime a store like Costco or Sam’s Club closes its doors for the day, it gives up revenue.
Costco is willing to forgo that revenue seven times a year.
Sam’s Club, on the other hand, only closes its doors to members four times a year on the following holidays:
- New Year’s Day
- Easter
- Thanksgiving
- Christmas
Costco is closed on July 4. It’s also closed on Memorial Day and Labor Day, while Sam’s Club is open to members on those holidays.
And while members may be looking at modified store hours, they can at least count on Sam’s Club if they need burgers, hot dogs, beverages, snacks, or other essentials for their holiday get-togethers.
Why Sam’s Club takes a different approach to holiday closures
There’s a reason Costco closes entirely for certain holidays on which Sam’s Club remains open.
Costco has built an exceptionally loyal membership base that’s willing to plan around the company’s holiday closures. The retailer’s membership renewal rate in the U.S. and Canada recently stood at 92.2%, underscoring the strength of its customer loyalty.
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Sam’s Club has spent the past few years adding new member perks, expanding digital services, and improving delivery options in an effort to make membership more valuable.
Remaining open on July 4 fits that strategy.
Convenience can be a deciding factor when choosing to join a warehouse club, particularly on major holidays when forgotten items often send people back to the store.
Costco, on the other hand, can afford to ask members to visit the store a day early because decades of customer loyalty have conditioned shoppers to expect its limited holiday schedule.
Sam’s Club, which competes aggressively for new members, has generally taken the opposite approach by making itself available when many consumers still want to shop.
And at a time when both companies are hoping to grow their membership base, that decision gives Sam’s Club an edge.
Maurie Backman owns shares of Costco.
Related: Aldi follows Sam’s Club lead to win over shoppers
