BENTONVILLE, Ark. -- Sam's Clubs here said it is gearing for a major rollout of expanded perishables and grocery offerings following the successful launch of a new prototype geared to metropolitan markets.
The company said most of the 10 to 15 Sam's Clubs and some of the 140 remodelings planned for this year will feature elements of the company's new strategy, which features more upscale and more localized merchandising.
Although Sam's has been experimenting with elements of the new merchandising program for several months, the 127,000-square-foot club that opened in March in Chandler, Ariz., is the first that combines most elements of the new strategy, the company told SN.
Expanded bakery items, including a line of specialty breads, a quarter-pound cookie, and "bruffins" -- a bread muffin created exclusively for Sam's that has proven so popular at the Chandler store that it's been expanded to a handful of other club locations.
Expanded seafood, featuring a new line of frozen items that includes king crab legs, large lobsters and scallops.
The new Sam's prototype is the fruition of the company's "Millennium Project" -- an internal designation for stores of approximately 128,000 square feet that focus on regionally sensitive products and expanded assortments of high-quality merchandise, Elda Scott, a Sam's spokeswoman, told SN.
"This is the format we're testing in metropolitan areas," she said. "Our commitment is to offer members in each market the specific kinds of merchandise they are looking for.
"Chandler, as the newest unit, incorporates many of the elements of the process we're testing, including more branded, high-end quality merchandise and member services. It offers a mixture of popular sellers and items we felt the members in that area may need, based on our experience operating several club stores in the Phoenix area."
The Sam's Club in Chandler is the first in the chain with bulk produce -- 30 items, all premium grade, including a basic assortment of tomatoes, bell peppers, apples and oranges, plus items geared to more local tastes, such as jalapeno peppers and tomatillos, Scott said.
The store also has the chain's only weigh stations to accommodate bulk produce purchases, she added.
Questioned less than a month after the store opened, Scott told SN, "We're pleased with the results [of the bulk produce section], and we are continuing to learn how our members feel and if it is a convenience for them to be able to buy the exact amount they need."
Scott said the store's fresh bakery features new packaging, substituting boxes for bags "to protect the product better, reduce handling costs and increase convenience for business members."
The Chandler store also offers locally made grocery items, including a popular barbecue sauce, plus groceries geared to local tastes, including salsas and Mexican-style products. Scott said the company's buyers will seek out locally made and regionalized selections at each new Sam's as it opens.
The newer clubs will also be offering big-ticket items, Scott said, such as the Phillips flat-screen television set with free DVD available at the Chandler store and priced at $15,000. "The key for offering that product is that the flat-screen TV is a new item in the mainstream market and it's a brand-name item," she explained.
The selection of big-ticket items is likely to vary from club to club, she added, depending on the interests of shoppers at a given location.
Don Spindel, a securities analyst with A.G. Edwards & Sons, St. Louis, told SN the upscale nature of the store's merchandise is "a test to see what members are looking for. Sam's is definitely trying to be more upscale within the club format. Obviously, with that Phillips TV, it's trying for a Neiman Marcus-like approach, where you feature a handful of extraordinary items."
Wayne Hood, a securities analyst for Prudential Securities, Atlanta, said he believes the millennium club format will help Sam's continue to improve its financial results. "Over the past two years the company has taken a more focused approach in its strategy, and that has paid off in improvements in margins, profits and same-store sales," he told SN.
"Instead of changing its approach too often, it's gotten back to basics and stuck with what works, and the new millennium club is the next evolution. Those clubs will have a more contemporary look than we've seen before, and they should produce higher margins."