Sam's to Test Hispanic Format

MARK HAMSTRA

BENTONVILLE, Ark. — Sam's Club is preparing to test a new club store format targeting Hispanic shoppers and carrying product from Mexico, executives said at a recent investor conference hosted by parent Wal-Mart Stores, based here.

Dubbed Mas Club — “mas” means “more” in Spanish — the new store will carry meat, produce and other food items, such as spices, targeted to Hispanic consumers. It will also have a cafe offering fresh-made tortillas.

The 143,000-square-foot store, which will require a special membership separate from regular Sam's Club memberships, is scheduled to open in the first half of 2009 in Houston.

“Our objective is to create an additional shopping choice that provides currently unavailable value for families, restaurant owners, convenience stores and more,” said Doug McMillon, president and chief executive officer of Sam's Club, during a presentation at Wal-Mart's annual analyst and investor conference.

In addition, Sam's Club is testing a smaller, 100,000-square-foot warehouse prototype in Garden City, Kan., that it said it could use in smaller markets.

The two new tests follow the opening earlier this year, also in Houston, of a new prototype geared exclusively to small businesses. The Sam's Club Business Center does not offer some of the personal departments, such as pharmacy and jewelry, that traditional Sam's Clubs offer, and instead has expanded offerings for small businesses.

In their presentation at the conference, Sam's Club executives also said they have been seeing strong sales in perishables and other consumables categories, while general merchandise sales have slowed.

“What is encouraging for us is that there are some nice margins associated with that fresh food, so it's not all a negative story as far as the margin mix,” McMillon said. “Our meat business, our produce business — which has led the way — and our bakery have all been strong in recent months, and that's helping from a mix perspective.

“If they want to buy fresh food from us, we are going to sell them as much fresh food as we can sell them, and then manage our inventory in other areas.”

Sam's has also been adapting a marketing strategy to reach consumers that it has long used to communicate with small businesses. It is attempting to demonstrate how much customers can save by shopping at Sam's Club by comparing prices on many of its products with those of supermarkets, pharmacies and other outlets.

In the chain's fall holiday mailer, the company promoted its rotisserie chicken — which Sam's said already sells significantly better than similar supermarket offerings — by touting its $4.97 price as just $1.24 per person for a family of four.

“We have to put it in terms that moms understand,” said Cindy Davis, who recently was named executive vice president of membership, marketing and e-commerce at Sam's Club.

Sam's also has been focusing quite a bit on the quality of its food offerings and seeking more exclusive product, executives said.

For example, after last year's summer selling season, the company worked with universities, including the University of California, and with its suppliers to develop some higher-quality varieties of stone fruit. This year, the chain rolled out those new varieties to stores with strict specifications, and the fruit was screened by quality control specialists at the chain's distribution centers.

“What happened was our members responded very favorably to it this past summer season,” said Charles Redfield, vice president at Sam's Club.

He went on to describe a similar process that the chain went through to develop an improved blackberry offering and an improved pumpkin.

Sam's Club is also introducing a new, exclusive Fair Trade wine offering within the next few weeks that it has sourced from Argentina. The product uses only handpicked grapes and can only be produced in limited quantities — 5,500 cases per year. It will offer the product at “under $10” per bottle.