2 Reasons Why Costco is Hammering Sam’s Club

Photo (cc) by David McKelvey

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.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
25 Things You Should Never Buy — and What to Buy Instead
25 Things You Should Never Buy — and What to Buy Instead

If you really want to save money, become a more intentional shopper.

Replace These 8 Things — for Your Health and Your Budget
Replace These 8 Things — for Your Health and Your Budget

Being frugal isn’t smart if you put off replacing these things. Waiting too long can cost money or even endanger your health.

11 Home Upgrades With the Best Payback in 2020
11 Home Upgrades With the Best Payback in 2020

The home remodeling projects that deliver the best bang for the buck tend to have one thing in common.

How to Buy a Refrigerator, Step by Step
How to Buy a Refrigerator, Step by Step

Here’s how I got the perfect appliance at the perfect price.

11 Secret Uses for Everyday Items That Will Save You Money
11 Secret Uses for Everyday Items That Will Save You Money

These are simple solutions for life’s irritations.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

10 Things the Pandemic Is Making Obsolete
10 Things the Pandemic Is Making Obsolete

Even if a COVID-19 vaccine is discovered tomorrow, it’s unlikely we will ever return to these ways of life.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.