Sam's Demo Move Steps with Larger Strategy

Last Updated Nov 30, 2010 6:57 PM EST

Tactically, the Sam's Club decision to enlist Shopper Events to do its in-store product demonstrations should improve the retailer's performance on sampling initiatives, as discussed in a blog post here yesterday, but, strategic considerations certainly entered into the retailer's thinking.

Acting on that decision entailed more than retooling a marketing function. Sam's will layoff 10,000 employees who conducted its demos. Brian Cornell, Sam's Club president and CEO, said in announcing the layoffs that Shopper Events would hire about that number of workers, and he added that workers could apply for other Sam's Club jobs or qualify for severance and outplacement programs, at least in some cases.

So, Walmart (WMT) faced getting pilloried over the layoffs. The overwhelming majority of newspaper stories about the Sam's move headlined the layoff figures. Yet, beyond being villiainzed, Walmart knew it could shift employees off Sam's books, lowering costs.

Money saved is money that can be reinvested. Of course, Walmart lately has been involved with initiatives such as Project Impact and high-efficiency supercenter development in the stores that hang the founder's last name over the door. Much of the motivation that has driven those initiatives comes from a desire to simplify store operations. In doing that, Walmart wants to improve the customer experience while cutting costs, reinvesting money saved in lower prices to drive sales that become more profitable in more efficient store environments.

Now, Sam's has adopted the demo operator that has been working with Walmart stores. The sampling programs as they play out in Sam's and Walmart locations may have different goals, which a company spokesperson insisted they do, even if she wouldn't provide details. Yet, when Sam's adopted Shopper Events, it moved a little more into cadence with Walmart stores, particularly as regards steps to improve the customer experience. Further, the labor savings that leaves cash ready for investment looks like another recalibration to the Walmart stores' march.

Finally, consider that Cornell announced that Shopper Events would place an emphasis on demos in areas beyond food to include personal care, home and electronics. Home and electronics are two departments Walmart has targeted in its Project Impact efforts.

So, at least part of the strategic purpose behind the Sam's move appears to be emerging. Sam's, it seems, will be applying what's working for Walmart.