Walmart-owned Sam's Club is way behind Costco in sales; here's how they're looking to close the gap
When looking at how to compete with Costco, Sam's Club is looking toward its private label products to compete with its rival's Kirkland Signature.
Walmart-owned Sam's Club is looking to labels when it comes to competing with Costco.
Private labels, that is. Such as the quality, quantity and type of items from its private brand Member's Mark in order to take on Costco's Kirkland Signature.
The war between name and store-brand products has gone on for decades. Some would argue that household items like toilet paper, trash bags and paper towels are nearly identical, but what about specialty foods and clothing?
Sam's Club and Costco have about the same number of clubs across the U.S., yet Costco makes about twice as much annual revenue, according to CNBC.
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"The club model survives because you have brilliant merchants focusing on creating or buying exceptional items," Sam's Club CEO Cris Nicholas told the media outlet. "Costco did such a great job of that over the years with Kirkland, and we saw that be successful."
A catalog detailing the benefits of a Costco membership shows some of the most popular Kirkland Signature products, such as dish detergent, laundry detergent and vitamins, adding that the line began in 1995.
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"Our mission was simple: Create an item of the same – or better – quality than the leading brand at a lower price, and do so by controlling every element of the item’s creation, including packaging and transportation," the catalog reads, challenging any consumer to compare Kirkland Signature products with its brand-name counterpart.
For shoppers wanting either Kirkland Signature or Member's Mark items, they both come at the cost of club memberships first. Costco memberships are $60 a year for gold star and $120 a year for executive. Sam's Club charges $50 a year for club-level membership, and $110 for plus.
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Member's Mark sales account for about 30% of Sam's Club annual sales, while Kirkland Signature accounts for 28% of Costco's, according to CNBC.
"Member's Mark products are exclusive designs that use top-of-the-line materials and the highest quality ingredients to make sure they have the best quality and value at members-only prices," the Sam's Club company facts website states.