When people join Costco or Sam’s Club, most consider the membership fee relatively irrelevant. If you buy regularly at either chain, you certainly get that money back in savings over time, and one big-ticket purchase can more than fully pay back the cost of joining.
Costco (COST) sells two memberships. A Gold Star membership costs $65 and gets you access to the company’s warehouses, gas stations and its website.
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Nearly half of its members, however, opt for an Executive Membership, which costs twice as much ($130) but comes with 2% cash back up to $1,250 annually. At the end of the second quarter, Costco (COST) had 36.9 million paid Executive Memberships, up 9.1% versus a year earlier.
“Executive Members now represent 47.1% of paid members and 73.8% of worldwide sales,” according to Chief Financial Officer Gary Millerchip.
Sam’s Club offers a similar structure. A Club Membership costs $50 per year and gets you access to the chain’s warehouse clubs, gas stations and website.
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For $110, Sam’s Club sells Plus memberships, which include includes 2% “Sam’s Cash” back but up to only $500 per year. Plus members also get some other benefits.
“Plus membership includes early shopping and early Curbside Pickup, so you can get in before the crowds,” the chain’s website notes.
Sam’s Club and Costco have fairly similar merchandise.
Image source: John Moore/Getty Images
Sam’s Club has one more membership class
It’s very rare, if not impossible, to find a deal on a Costco membership. If it happens, it’s almost always being subsidized by a third party.
Sam’s Club deals, where you pay a reduced first-year fee and get a gift card, too, pop up from time to time. The warehouse club also offers one regular discount membership.
The chain shared the details on its website.
“Sam’s Club wants to give back to seniors, 50 years or older by offering seniors a special membership offer,” the company says. “Qualified seniors who join Sam’s Club online as a new member will receive a 60% discount on a Club membership or $50 off a Sam’s Club Plus membership.
“Join as a Plus member and get free Curbside Pickup, free Delivery from Club on eligible orders of $50 or more, free shipping on eligible orders of $50 or more, and early shopping at select locations.”
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Most 50-year-olds likely do not consider themselves seniors. AARP, however, an association that markets to “seniors,” considers 50 its entry-level age (although anyone over 18 can join).
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Sam’s Club has been strong
Walmart (WMT) has committed to expand and improve the Sam’s Club brand. The company has also been delivering strong results for its parent company.
“Sam’s Club U.S. [comparable sales excluding fuel] increased nearly 7%, with strong growth in transactions, including strength in Member’s Mark,” Walmart CFO John David Rainey said during the first-quarter earnings call. “ECommerce grew 27%, led by triple-digit growth in club-fulfilled delivery and double-digit growth in pickup.”
Rainey touted in-store and online improvements Sam’s Club has made.
“Members value the convenience of Scan & Go and their usage of this tool continues to grow, with penetration increasing 600 basis points [6 percentage points] versus last year,” he added. “Over 50% of our members now transact digitally in some form with Sam’s, online or using digital solutions in club.”
Sam’s Club does not provide as much information on membership numbers as Costco does. Still, the numbers were strong.
“In the US, Sam’s Club continued to see steady growth in member counts, renewal rates and increased penetration of Plus members, resulting in membership income growth of 9.6%, ” the CFO said.
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Costco had strong overall membership growth as well.
“We ended Q2 with 78.4 million paid household members, up 6.8% versus last year, and 140.6 million cardholders, up 6.6% year over year,” according to Millerchip.