Sam's Club Plan -- Pay More for Memberships While We Cut Our Staff

Last Updated May 7, 2010 6:30 AM EDT

Sam's Club has a plan to get its stagnant sales and unit growth back on track. As Walmart (WMT) division president and CEO Brian Cornell explained at a recent Barclays Capital presentation, two key elements of the plan are getting customers to pay more for memberships, and cutting store staff up to 8 percent over the next five years.

That's right -- they're hoping you'll pay $100 instead of $40 for the right to shop at Sam's, and in return they aim to have 8 percent fewer people at the store to help you. See slide 17 of the Barclay's presentation for a handy diagram of how Sam's plans to pull this off.

The plan to squeeze the labor cost down include redesigning stores so fewer eyes are needed to patrol the place -- 14 prototype stores currently being tested, with nearly 50 more on the way -- and implementing better scheduling software. Also "workload-driven staffing" changes (translation: if you shop in the off-hours you'll be able to shoot a cannon down the aisles and not hit a salesperson).

On the membership side, Sam's has been making some progress talking customers into paying the higher membership fee for its "Plus" membership, which includes extra discounts preloaded onto their eValues reward card. There's a minimum of $300 in eValues offers included in the Plus level, which depending on how frequently you shop could mean you come out ahead paying the higher price. Cornell reported Plus memberships are up 43 percent in the past year. Whether members will re-up at this price as staff levels shrink remains to be seen.

In a move that upset many shoppers, Sam's has already cut more than 11,000 workers in January, in a move that outsourced its entire food-sampling operation to an outside company and lightened Sam's employee-benefits load. In the Barclays presentation, Cornell praised the new "Tastes and Tips" food-demo program the outsourcer now provides.

With its audience flat, expect more moves from Sam's to squeeze existing customers for more money, while trying to wring more costs out of the system. Right now, it's their best option for growing profits, but it may have a backlash down the line in dissatisfied customers.

Photo via Flickr user Brad.L.Owens

  • Carol Tice

    Carol Tice is a longtime business reporter whose work has appeared in Entrepreneur, The Seattle Times, and Nation's Restaurant News, among others. Online sites she's written for include Allbusiness.com and Yahoo!Hotjobs. She blogs about the business of writing at Make a Living Writing.