Demo Move Designed to Bring Sam's Club Up to Speed

Sam's Club is taking a new approach to promoting products at its clubs, one that's designed to make the shopping experience more exciting for members and to bring Sam's into step with new moves being made in Walmart (WMT) stores.

In a letter to employees, Brian Cornell, Sam's Club president and CEO, announced that the company had decided it would no longer do its own in-store product demonstrations. Of course, it isn't abandoning demos. Warehouse club consumers eat up those events, literally, as they sample food and drink items that are new to the store or that are the product of companies trying to make an entry. Members get a chance to grab a free snack and the clubs gain an opportunity to coax an additional sale. Product trial is critical to clubs. Convincing consumers to switch from buying a quart of something every week at a supermarket to buying a gallon every month at a club can be tough. It's critical, though, if club operators want to build sales and leverage the costs associated with operating a very big building.

Sam's, Cornell asserted, has the opportunity to build on the popularity of product demonstrations. He stated in the letter:

As you know, our strategy for success at Sam's Club is built on using member insights to make the best choices for our members. We spend a lot of time talking to and listening to today's consumer and our own club members. We have found that in-club demos, or product sampling, is one of the things they love most about the club experience.

Cornell expressed a desire to enhance the effectiveness of product demonstrations, so Sam's is bringing in Shopper Events, a company backed by a couple of direct marketing firms that is headquartered on Walmart's doorstep in Rogers, Ark. Naturally, Shopper Events didn't just happen upon Rogers and later discover Walmart's headquarters was in the vicinity. The company began operations in January 2009 by developing a sampling program for Walmart dubbed Bright Ideas, Brian Pear, the company's vice president and general manager told Bnet.

Shopper Events is dedicated to the demo business and will bring professionalism and purpose to the sampling it supervises, Pear said. Demos run by Shopper Events won't be just about handing out snacks. The firm will help sell the product and the store by enhancing the overall shopping experience.

Pear asserted:

Walmart along with other retailers have recognized that sampling is a powerful marketing tactic for brands, and what Shopper Events did is work in partnership with them to enhance not only signage associated with sampling and marketing materials but also to provide necessary associate training to educate Walmart customers and now Sam's customers and to help customers make a decision to purchase.

From the Sam's perspective, Cornell explained:

The new Tastes and Tips demo program will include integrated demo stations, signage, uniforms and product selling. It will give us the opportunity to highlight our value and selection to our members in food and beverage products, personal wellness and electronics.

The demo initiatives is something that could help Sam's pick up the pace in its race with warehouse club competitors. In Walmart's last completed quarter, which ended Nov. 12, 2009, Sam's Club comparable store sales, those at locations open for a year or more, were flat. At Costco (COST), for the quarter ended Nov. 22, comps gained two percent, while at BJ's (BJ), in the quarter ended Oct. 31, they advanced by four percent. In the last completed quarter, Costco total sales were up six percent to $16.92 billion while BJ's were up two percent to $2.45 billion. Sam's were down almost one percent to $11.55 billion. Food, consumables and health and beauty aids were its strongest categories.

Although they have their own particularly attractions, the inclusion of personal wellness and electronics in the Sam's demo program hints that the decision to go with Shopper Events for sampling is more than a tactical move. The strategic implications will be subject of an upcoming post.