Five tips for building effective strategic partnerships with the channel’s two largest retailers.
The warehouse club channel has been on a roll lately.
Although 2023 sales growth at the channel’s two leading players, Costco (62% market share) and Sam’s Club (31%), has been sluggish after reaching double digits last year, both retailers continue to enjoy increases in memberships and store traffic.
That signals ongoing interest in the channel among consumers looking for the price advantages that club stores provide through everyday lower prices, bulk-packaging options, and quality store brands like Costco’s Kirkland Signature and Sam’s Club’s Member’s Mark, according to CFRA Research analyst Arun Sundaram.
Costco and Sam’s Club each have aggressive footprint growth plans: Costco will open 14 clubs in the U.S. and 10 internationally over the next year; Sam’s Club will roll out 30 stores in the next five years in its first expansion since 2017. Both retailers are also now making significant strides toward becoming complete omnichannel retailers.
That means there has never been a more important — and perhaps more opportune — time for brands to find ways to excel in the club channel. The following are 5 “must do’s” for brands looking to build strategic partnerships with Costco and Sam’s Club by developing winning engagement strategies for their members.
Winning at Costco
1. Center on the Member Experience. Providing member value is critical. Focus on product, pricing and quality messaging that communicates the value of buying at Costco.
2. Prioritize the Buyer Relationship. All marketing activations are developed and executed through the category merchant leads. Take every opportunity to communicate and collaborate with them to drive successful outcomes.
3. Plan Around Print Vehicles. Costco’s monthly MVM (multi-vendor mailer) and seasonal publications (for Holiday, Super Bowl, etc.) are the centerpieces of the retailer’s marketing efforts. Develop strong value offers that will secure inclusion, then support with additional digital activations during key drive times.
4. Sample. Product sampling has long been the No. 1 crowd pleaser among Costco members. Conduct in-club sampling events and parking lot road shows to let members experience your products directly.
5. Leverage ecommerce and social media. Invest in ecommerce and social media vehicles to drive member awareness and engagement.
Winning at Sam’s Club
1. Improve the Member Experience. Focus on delivering competitive pricing, product quality and flexible, omnichannel shopping experiences.
2. Bring Innovation. Enhance the experience for Plus members and help the retailer increase renewal rates by offering exclusive products.
3. Integrate with Mobile and Apps. Seek opportunities to engage with the warehouse club’s mobile-equipped shoppers.
4. Win in Ecommerce. Integrate with the Sam’s Club mobile app to support what has become an expanding fulfillment network.
5. Get on the MAP. Reach members directly through the Sam’s Club Member Access Platform and execute test & learns as the retail media network continues expanding its capabilities.
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The Mars Agency’s Customer Development practice is an unrivaled team of in-market commerce experts who simplify the complexity of retail. Located in Bentonville, Minneapolis, Cincinnati and the “backyards” of other key retailers, they provide deep knowledge of the retailer, expertise in key business areas (like strategy, media and creative), and door-opening personal relationships with key executives to deliver an unmatched level of business success for clients across accounts, channels and shopper engagement platforms. For more information, contact SVP-GM Kandi Arrington.
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