Sam's club stores target aspirational shoppers, with high price items

Customers look at a packaged food item in a fresh produce section of a Wal-Mart Stores owned and operated Sam's Club store during its opening day in Tianjin, China, on Sept 28, 2016. [Photo/VCG]

In the United States, Walmart Stores' members-only Sam's Club warehouse chain offers a wide range of products from bulk groceries to patio furniture at discounted prices in cavernous, no-frills stores, where goods are stacked on metal shelves. Walmart is doing the same thing in China but with some pricey twists, including $3,200 rice cookers and $295,000 diamond rings.

Over the past two years, the retailer has repositioned the 14 Sam's Clubs in the country to offer more expensive products. Shoppers can pick up $500 hair dryers, $1,700 bottles of 1995 Chateau Lafite Rothschild red wine and $7,000 high-tech massage chairs, in addition to imported pistachios and desserts conjured up by Michelin-rated chefs.

There's even a $4,100 Laura-star ironing system that comes with four hours of in-home instruction. Unlike its small business focus in America, Sam's Club on the mainland is all about catering to the whims and preferences of emerging rich people willing to spend more for premium items.

"Our member is a very aspirational shopper," says Andrew Miles, chief operating officer of Sam's Club in China. "Their desire is for a better life and to show their wealth to their family and friends, to show that they are a smart, savvy shopper. That's the ambition we want to fill."

Walmart sees big potential in China: its Sam's Club in Shenzhen, a fast-growing urban center in the southeast, is the chain's best-performing outlet globally. Walmart, which posted $482 billion in revenue for its fiscal year ended Jan 31, doesn't reveal a breakdown its China sales, but says the growth of clubs there is among its fastest globally. Chinese memberships now number 1.8 million and are growing 10 percent to 12 percent annually.

In addition to rolling out a premium product lineup, the retailer almost doubled its annual membership fee in April to 260 yuan ($40), to attract more upscale shoppers, those earning at least $25,000 in yearly household income, roughly three times the nation's average in 2014. Miles says members remaining after the fee increase spent 8 percent more on average per visit.

"Sam's Club's potential in China is greater than anywhere," says Walmart Chief Executive Officer Doug McMillon. "Members want a fine bottle of wine, they want a great fresh-food experience, they want a 4k television," he said, referring to the latest high-resolution TV technology. "Even a $15,000 price point can be a great value for what you are getting."

That upmarket tack－from a curved TV for $26,000 to a 61-bottle collection of Medoc wines, complete with its own cooler, for $14,472－capitalizes on a Chinese bias toward imports.

Bloomberg