Private-Label Products Are Driving Loyalty for Sam's Club

When customers can only get their favorite products exclusively at your stores, it drives brand loyalty. Chandra Holt, senior vice president and chief operating officer of Sam’s Club and SamsClub.com, discussed this and more in a session at Groceryshop on Monday. Holt was interviewed by Krystina Gustafson, vice president of content for Groceryshop.

Before Holt joined Sam's Club in 2015, the membership-only retailer had 21 private-label brands. Holt's strategy was to change that, ultimately embarking on a plan that narrowed down the number of Sam's Club's private-label brands to one.

“When I joined, Sam’s Club had a pretty traditional take on its private label,” Holt said. “It had a number of brands that really focused on the demand for products that were a national brand equivalent at a lower value. But when I came in, we did customer research and really heard from our members about what they were looking for from the private label, and we knew we needed to step it up.” With the help of a private brand team, Holt and Sam's Club migrated all those brands into one private label, Member’s Mark.

Gustafson asked Holt what her strategy is to promote Member’s Mark online vs. in-store. Holt explained the two are very different.

“In stores, you’ll see retailers have traditionally put private labels next to national brands, and as people look for national brands they see private label, it might [cost less] and they’ll purchase it,” replied Holt. “Online you have a different behavior. So, there’s not as much browse, there’s more search. Online we dedicate space on our homepage [...] to make sure customers are able to see what we have to offer.”

Since consumer behavior is to search online more rather than browse, Holt said a lot of customers will search for “Member’s Mark” on Sam’s Club's website.

“Our members, they shop in the club, and then a lot of times they might not have time to go to the club or they want to see what else we have online, and they know Member’s Mark since it’s our only brand,” Holt said. “So they’ll search for it [...] by name."

Holt explained that even when customers don't search Member’s Mark by name on the site, when they search for a product, like dog food, Member’s Mark products usually elevate to the top of the page anyways since they perform well.

While success with its private-label brand is great for Sam's Club, it’s sure to cause worry from the national brands that share in-store shelf space with Member's Mark products. Gustafson asked Holt how she responds to brand partners that are apprehensive about Member's Mark increasing influence with consumers.

“At Sam’s we’re growing, so I always remind suppliers [...] it’s not like if private label wins that national brands lose,” noted Holt. “Everyone's growing, and what we found is that if our suppliers understand our strategies, understand our priorities, understand that quality and value is what we’re looking to deliver to our members, they’re very robust in growing our business. Therefore, everyone can grow and it’s all about what our members, our customers want.”

Overall, a successful private-label brand means customers will keep coming back to Sam's Club.

“When people start buying our private label, they tend to renew [their membership] at a higher rate,” Holt said. “When you have an exclusive item, it really drives home loyalty. That private-label item has a stickiness factor that keeps people coming back over and over. It’s had a really positive effect on our overall business.”