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RETAIL — College Grove Sam’s Club a Boost to Local Firms

Retail: Second Outlet Of Big Box Chain Carries Several Local Brands

The opening last month of a new Sam’s Club here is expected to benefit small businesses in the area , some of which will be buying from the new store, while others will be selling their merchandise there.

The March 16 opening of the College Grove location marks the second Sam’s Club in San Diego County. The first store, in Vista, opened in October.

Sam’s Club takes an idea originally started in San Diego , the “club” concept pioneered by the Price Club , and has aggressively opened 468 stores throughout the nation.

Celia Swanson, senior vice president for marketing at Sam’s Club, estimated prices are typically 25 percent lower than the competition , including Wal-Mart, which is owned by the same company.

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The concept at each Sam’s Club is the same. Customers pay a yearly membership fee allowing them to shop at the store. The memberships pay for the store’s overhead costs up front, which allows the store to charge lower prices for its merchandise, Swanson said.

There are several other ways Sam’s Club is able to keep its costs down. The store is largely a “warehouse” operation , with merchandise offloaded from trucks on pallets that are then moved straight into the store with little or no handling by employees.

Lower Overhead

That reduces the number of people needed to run the store , 220, as opposed to 325 in a typical Wal-Mart. That further lowers overhead costs, said Henry Martinez, general manager for the College Grove store.

Also, Sam’s Club carries the economy sizes , gallon jugs of items such as mayonnaise and tomato sauce, and so forth. The price per volume is much lower than the same item in a grocery store, Swanson said.

Sam’s Club also is able to charge a lower price by carrying a much smaller selection than other stores , only 4,000 items in the whole store, compared to about 80,000 in a Wal-Mart or Target.

Since Sam’s Club has a tremendous stock in those items it does carry, it allows the store to give customers further discounts, she said.

Swanson held up a package of ballpoint pens as an example. Other stores might carry pens from dozens of manufacturers , Bic, Papermate, Pentel and so forth.

But Sam’s Club will stock up only on a few such items from one or two manufacturers, buying in tremendous quantity. The added volume and exclusivity of the purchase allows Sam’s Club to negotiate a better price from the manufacturer, Swanson said.

Business Membership

Sam’s Club also has a business membership, with some added benefits for small business owners. For example, the economy sizes are well-suited to businesses buying office supplies or restaurants buying food items, while the early morning hours allows store owners to shop early, Swanson said.

The store also has a unique “fax-and-pull” service for time-conscious shoppers. A businessman can fax his order to the store, come by a few hours later and find the items he requested waiting at the front desk. The store will even help load the merchandise into his car, Swanson said.

Sam’s Club produces a quarterly business newsletter offering suggestions to members on how to improve their business, she said.

In addition, each Sam’s Club carries items from local merchants, giving them greater visibility and broader sales, Martinez said.

He pointed to the selection of cut flowers from Carlsbad and a table of gift baskets, which were all made locally. Milton Bread, made fresh in San Diego, is sold in Sam’s Clubs throughout Southern California. It may go across the country, he said.


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