Wal-Mart Stores Inc.âs makeover of its Samâs Club stores, adding fruits, vegetables and other fresh foods, scores âgood marksâ so far, retail industry analyst Bruce Peterson said.
Samâs Club has been effective with its fresh food program, Peterson said Sept. 16. The company has been âvery carefulâ not to have too many fresh food stock-keeping units â and has done a good job with seasonal promotions of products such as raspberries, he said.
The Bentonville, Ark., based retailer last October announced plans to remodel about a fourth of its nearly 600 U.S. Samâs Clubs locations, increasing space for fresh produce and meat as well as beauty and health products and over-the-counter drugs.
As of last month, Wal-Mart had completed remodeling projects on 33 stores and another 16 were under construction, Brian Cornell, chief executive officer of Samâs Club, said during an Aug. 17 conference call. There were another 70 Samâs Club stores scheduled for remodeling.
The goal of the remodeling projects is to âincrease the assortment of highly productive merchandise categories, such as fresh foods,â Cornell said.
âWe continue to be pleasedâ with the effort, Cornell said. âOverall, our members are pleased with the key changes.â
For the fresh produce industry, club stores, which charge annual membership fees for access to bulk, discounted goods, are an expanding market as traditional grocery chains and restaurants struggle with stagnant sales amid a weak economy.
But club stores typically offer fewer varieties of fruits and vegetables than a traditional supermarket, said Peterson, who is president of Fayetteville, Ark.-based Peterson Insights and formerly head of Wal-Martâs perishables operations. While a supermarket may offer 600 fresh produce SKUs, a club store may have about a third of that, he said.
Fresh produce growers will sell more âif youâre in the categories Samâs is going to carry,â Peterson said. âThey might carry two varieties of tomatoes instead of 10. They might have six varieties of apples, not 15.â
While Samâs Club has more U.S. stores than any other club store operator, it still lags Costco Wholesale Corp. in sales. In Costcoâs fiscal 2010 third quarter, sales rose 12% to $17.4 billion. Samâs Club sales rose 2.2% to $12.5 billion in the companyâs most recent quarter.
âCostco is probably doing it better than anybodyâ among club store operators, Peterson said. âBut Samâs is really making strides.â