2 Reasons Why Costco is Hammering Sam’s Club

What's Hot

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

Report: Walmart to Begin Selling CarsCars

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

This Free Software Brings Old Laptops Back to LifeMore

10 Overlooked Expenses That Ruin Your BudgetFamily

Protecting Trump Will Cost Taxpayers $35 MillionFamily

8 Creative Ways to Clear ClutterAround The House

8 Tuition-Free U.S. CollegesCollege

Study: People Who Curse Are More HonestFamily

Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax BreaksTaxes

The 3 Golden Rules of Lending to Friends and FamilyBorrow

Porta-Potties for Presidential Inauguration Cause a StinkFamily

12 Surprising Ways to Wreck Your Credit ScoreBorrow

These Are the 25 Best Jobs in the U.S.Jobs & Work

Walmart-owned Sam’s Club has been struggling recently, but Costco is doing fine.

When it comes to membership warehouse stores, it appears Costco is king.

After laying off 2,300 workers in January, Walmart-owned Sam’s Club recently reported dismal first-quarter earnings, while Costco netted $463 million in profits. Costco’s latest numbers trailed Wall Street expectations, but they were a far cry from Sam’s Club’s 0.5 percent drop in sales.

The Huffington Post said:

“The divergence from Costco is striking, because they’re basically in the same business — but apparently they’re not in the same business,” said Faye Landes, a senior research analyst at the Cowen Group, a financial services company. Sam’s Club, said Landes, doesn’t “seem to have it quite right.”

According to HuffPo, there are two big reasons Costco is crushing its competition:

  • Knowing your customer base. Sam’s Club reported that its recent earnings suffered as a result of declining public assistance for poor customers. If Sam’s Club is banking on sales to customers who need food assistance, Landes said, “it’s not clear if they have the right merchandise for that consumer.” Costco targets consumers with more income, HuffPo said.
  • Customer loyalty. While it appears that Sam’s Club is losing customers to Amazon and even Walmart, Costco customers are loyal, with a nearly 90 percent membership renewal rate. In addition, HuffPo said Costco’s Kirkland brand is a pull for customers.

Cleveland’s WEWS TV recently reported that Costco beat Sam’s Club on the price of more than 20 common items, including detergent, food and baby products. Costco never marks anything up more than 15 percent, HuffPo said.

Costco is also the clear winner when it comes to employee wages. As we discussed here, Costco pays its workers an average of $20.89 per hour, compared with $12.67 at Walmart.

I live 90 minutes from a Sam’s Club and three hours from the nearest Costco. While I shop as often as possible at Costco without making a special trip to do so, I’ve only been to Sam’s Club once. Not only do I prefer the quality of Costco’s goods, I’ve also enjoyed unrivaled customer service at Costco.

In addition, I’m more willing to support a business – like Costco – that treats its employees well.

Do you shop Sam’s Club or Costco? Share your comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 6 Presidents Day Sales You Should Know About

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,838 more deals!