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Wal-Mart’s Weak Link: Sam’s Club Refocuses To Close Costco Gap

Sam’s Club is strategizing to stay in the race with such rivals as Costco and its own sibling, Wal-Mart Supercenters.

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Ceiling signs trumpet "We are in Business for Small Business."

The push to make the assortment more compelling to families is subtler. Buyers will be working harder to land novelty product and prestigious brands, said DuBose, catching customers pleasantly off-guard.

"We want consumers to go to a Sam’s Club and be surprised about the things we turn up — Waterford crystal, Levi’s jeans, designer bags or fragrances, or the latest gadget," DuBose said. "That’s why we all love shopping. That’s the fun in it."

In April, Sam’s Club will launch Regal jewelry, an exclusive fine-jewelry brand that will get redesigned fixtures in new Sam’s Club stores. Older stores feature small, centrally located and often unstaffed jewelry counters where consumers fill out purchase tickets to request pieces. Last year, the company started tagging its jewelry point-of-service displays with the slogan "Be Dazzled."

A 15-year Wal-Mart veteran, DuBose’s experience lies in the consumer product mix. He worked his way up from a men’s wear buyer to vice president and general merchandise manager of men’s and boys’ apparel before moving to similar roles over women’s apparel and then health, beauty and pharmaceuticals.

He’s also one in a long list of talent reassigned from Wal-Mart to spruce up Sam’s Club. Kevin Turner, the 37-year-old ceo who started as a vest-wearing Wal-Mart hourly associate and became the company’s youngest corporate officer at age 29, has led the division since August 2002. Wal-Mart Stores president and ceo Tom Coughlin also carries the ceo and president titles for Sam’s Club — an indication that the division is being monitored from on high by senior Wal-Mart executives.

DuBose said he’ll also be recruiting outsiders to supplement the internal team. He’s bringing on Peggy McCarthy Hildreth, a 14-year Stein Mart veteran, as vice president, divisional merchandise manager for apparel, for example.

And there’s no doubt that the need for Sam’s Club to find a vision — and management — that sticks are crucial. Especially since Costco, under increasing pressure from the tough economy and other issues, has shown its first cracks. Profits slipped 5 percent in the second quarter ending Feb. 16, causing the company to miss its estimates. Costco cfo Richard Galanti cited spiraling costs of worker’s compensation in California for the miss and said the issue would continue to dampen earnings.
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