June 28, 2016
Sam's Club is firing shots at Costco after the credit card swap disaster
On Saturday, Sam's Club announced that, until July 4, Costco Membership Cards could serve as free Sam's Club Cards — noting that Sam's Club accepts all major credit cards, unlike Costco. Typically, only members can shop at Sam's Club, with an annual membership costing at least $45 a year.
Simce we have memberships at both chains, I thought I'd offer a few personal comments about the Costco credit card debacle.
I think Sam's Club is the one desperately in trouble, at least in my area. Here's why.
1. The Sam's Club parking lot is never full. Their store is never full. Their checkout lanes are never full. As a customer, this is clearly a desirable situation. To an investor, not so much though.
2. The Costco parking lot is always packed. Their store is always packed. Their checkout lanes are always packed. As a customer, this is clearly not a desirable situation. To an investor, it is ideal.
3. Since Costco is always packed and Sam's Club never is, Costco can afford to offer us better deals. I think they do. When I see something priced at Costco, I don't try to second guess if it is a good deal. I generally know it is.
4. When I see something priced at Sam's Club, I do second guess it. Why? There is a particular bag of chips that Walmart also sold. It wasn't exactly the same size bag. Sam's Club's bag was slightly bigger. It has always bothered me that the cost per ounce was higher at Sam's Club, a place where I pay a membership fee. I therefore never trust a Sam's Club price to be fair, nor will I ever.
5. We spend more money at Costco than we do at Sam's Club even though Sam's Club is closer to us. That is not a good sign for Sam's Club over the long-term. It's the more pleasant store to shop in, because it isn't packed. You'd therefore think we'd buy more there. We shop there more often, for the convenience, but we actually buy less. Why? I can give you one reason. Since Sam's Club has fewer customers buying their bulk goods, I suspect their products don't turn over as fast. This leads to expiration date problems from time to time. If you are buying bulk goods, you need to see excellent expiration dates. We sometimes don't at Sam's Club.
6. I have never owned an American Express card and never will, perhaps somewhat out of stubbornness. I prefer a thin wallet. I use one and only one credit card. It's a Visa. I am so pleased that I will never need to take my checkbook to Costco again. Such a pain it has been. Yeah, first world problem. I know! More times than not, a supervisor needed to verify my check. So there I would wait, like a suspected terrorist needing a background check. The nightmare is finally over! Hurray! Thanks Costco!
7. Sam's Club took my Visa. Now Costco does too. Not good for Sam's Club. If I could choose only one store, it would be Costco. Sam's Club would get dropped in a heartbeat.
8. So why do we shop at Sam's Club? They had fantastic prices on some generic medicines, both for us and our pets. The key word being had. Makes me wonder if some weren't just incompetently mispriced. There are things they sell that Costco doesn't. We're particularly fond of Hershey's dark chocolate, for example. Since the store is mostly free of other customers and closer to our house, many of the refrigerated perishables are often bought there. The milk is especially good. Instead of buying a two gallon pack at Costco, we can buy a gallon of skim and a gallon of 2% at Sam's. And for whatever reason, I prefer the taste of Darigold. They used to sell bulk Cracker Jack. I love that stuff. Don't now though. Do we still buy enough there to justify the membership fee? I ask myself that every month. It's a close call, at best. Would not take much for us to drop the membership. Let's just put it that way. That's especially true since one of our dogs no longer gets her medication there. We'll see what happens at renewal time. They should not be optimistic.
9. We don't get too attached to our local Sam's Club, mainly because we wonder how long it will be there. They are losing the race with the nearby Costco, by a wide margin, and what could possibly change that? Costco's credit card debacle? Don't make me laugh. At least for me, I welcome the change. Big time. Does it seriously annoy many customers who are forced to make a change? I'm sure it does. Will anyone care five years from now? I could be wrong, but I doubt it. I really don't think my local Sam's Club knows how to cater to the needs of fast-moving disgruntled American Express card holders. It's a very laid back environment. Time moves slower in a Sam's Club. Everything is so leisurely. We'll see!
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