There’s a longstanding rivalry between Costco and Sam’s Club in the warehouse club world, and for good reason.
While BJ’s Wholesale is a solid contender in its own right, Costco and Sam’s Club tend to dominate the market. And each chain has its own competitive advantage.
Costco’s shining star is its Kirkland Signature brand. Customers have come to recognize Kirkland not just for its low prices, but also its high quality and engaging selection.
Sam’s Club may not win on store brand quality or recognition. But it trumps Costco on technology and convenient checkout options.
In fact, Costco refuses to offer curbside pickup as part of its model, while Sam’s Club not only offers curbside pickup, but doesn’t charge extra for it. Sam’s Club was also first to offer better technology at checkout to speed up the process.
And the differences between the two don’t end there.
Sam’s Club wants more of Costco’s business
During its last quarter, Costco reported that it had 82.9 million paid members. Its renewal rate among U.S. and Canada was 92.2%.
Sam’s Club does not publicly disclose exact membership numbers. However, during parent company Walmart’s most recent earnings call, CEO John Furner said, “Membership fee revenue was at an all-time high on growth of 17%.”
Related: Target takes big step to be more like Costco
The company specifically enjoyed 6% growth at Sam’s Club U.S.
Still, Sam’s Club is clearly on the hunt for more members. And its current $25 Club membership promotion proves it.
Costco, on the other hand, does not offer discounted memberships as a matter of course.
The company firmly believes that its memberships can sell themselves through exciting inventory, fantastic deals, and a strong customer experience overall.
Sam’s Club may not win on store brand quality or recognition. But it trumps Costco on technology and convenient checkout options.JJBers, CC BY 2.0 via Flickr; Walmart, CC BY 2.0 via Flickr
Sam’s Club offers members more holiday store access
Closing down for holidays isn’t an easy business decision for companies like Costco and Walmart to make. Any day the store isn’t open to customers is a day of lost revenue.
But Costco is willing to give up that revenue more often.
Costco has seven holidays it closes for during the year:
New Year’s Day
Easter
Memorial Day
July 4
Labor Day
Thanksgiving
ChristmasSource: Costco
Sam’s Club, on the other hand, only closes four times a year:
New Year’s Day
Easter
Thanksgiving
ChristmasSource: Sam’sClub
So while Costco won’t be open to members during the upcoming Labor Day holiday, Sam’s Club will.
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Of course, the decision to open on Labor Day may not, by itself, drive an uptick in membership rates. But these strategic decisions are part of Walmart’s broader plan to grow Sam’s Club into the same warehouse club giant Costco is.
And if Sam’s Club keeps offering up perks such as discounted memberships and other incentives, those efforts, combined with fewer closures, could help the company take business from Costco and grow its own customer base.
Maurie Backman owns shares of Costco and Walmart.
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