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Sam’s Club eyes more collaboration with suppliers

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Sam's Club has invited its suppliers to enter into a more collaborative relationship.

The warehouse club chain, a subsidiary of Walmart, is developing new tools and processes to support a joint business planning process with its top suppliers. Plans call for the process — unveiled at an event attended by more than 350 representatives of the retailer's key suppliers — to be fully implemented by September.

BENTONVILLE, Ark. — Sam’s Club has invited its suppliers to enter into a more collaborative relationship.

Sam’s Club has invited its suppliers to enter into a more collaborative relationship.

The warehouse club operator’s new joint business planning approach was announced at a special event, which was attended by more than 350 representatives of some of the club’s top supplier companies. The event was held at the new Sam’s Club headquarters building here.

“We believe really strongly that the biggest and best growth opportunities for your companies are to help us serve the Sam’s Club member better,” executive vice president for merchandising Linda Hefner told the suppliers in attendance.“We’ve learned a lot about our members — both our business and consumer members — in recent months, and we’re going to share some of that understanding with you about how we’re going to serve them. And then we’re going to invite you to work more collaboratively with us than ever before, to deliver great quality, innovation and brands at amazing prices.”

Sam’s Club is developing new tools and processes to support the joint business planning process, which it expects to fully implement by September 2010.

Besides working more closely to develop products and offers designed specifically to meet the needs of Sam’s Club members, suppliers will have the opportunity to participate in targeted marketing vehicles, including the eValues digital couponing program that was introduced last fall.

Sam’s Club is a good company for suppliers to partner with, asserted president and chief executive officer Brian Cornell, who pointed out that the warehouse club division of Walmart is by itself the nation’s ninth-largest retailer and one of the few that has positive comparable-store sales gains in the current difficult economic environment.

“We start off in a pretty good position,” Cornell said. “But we’re not satisfied with where we are today. And this meeting is really about how we raise the bar.”

Sam’s Club posted strong gains in both its average ticket and its club traffic in the fourth quarter, and Cornell said that the goal now is to focus on ways to leverage that traffic, and increase its “share of wallet” with those members.

To that end the wholesale club retailer has surveyed its membership, talking to about 9,000 people over the course of the last year. One insight that emerged from that research is the idea that Sam’s Club actually serves three types of members, rather than just the two it has traditionally thought about.

Sam’s has its consumer members, who are shopping for their homes and families, and it also has business members, who shop for the needs of their workplaces. But the club operator also sees a third customer — the business members who come back to the club on the weekend to buy for themselves.

Cornell said Sam’s Club does not intend to adjust its strategy to cater more to the business or the consumer member, but rather will look for ways to get all of its members to do more of their total shopping in the club.

“We’re going to continue to ensure that we’re focused on making the best choices for our members, and to make sure that we’re really leveraging the insights, and leveraging the new understanding we have about our members, to make smart product choices in the key categories we service,” Cornell stated.

“We’re going to continue to make sure that we build a special relationship with our members, through eValues and other targeted programs. We’re trying to make sure we understand our members, and that they know we’re focused on their needs. And at the same time we want to make sure that we’re driving efficiency, but that we’re also changing the in-club experience. We want to make sure we’re matching up great products and great membership services with an in-club experience that continues to bring our members back more often, and allows us to continue to service more of their needs, category by category, throughout the year.”

Cornell and Hefner emphasized that Sam’s Club sees product as the star of its new strategy, and added that the aim of the joint business planning approach with suppliers is to ensure that the clubs are stocked with the best-possible products at the best prices.

Among the suppliers welcoming the announcement of the new approach was Kellogg Co.

“This collaboration will lead to sustainable growth for both Kellogg and Sam’s Club by better meeting the needs of Sam’s Club members, who are also our consumers,” said Kathy Casey, vice president of customer development at Kellogg’s specialty retail group.
“With a greater lead time for planning, we’ll also be able to capitalize on bigger ideas and move more quickly to bring these solutions to the marketplace.”

Casey said that Kellogg, working with Sam’s Club, will evaluate its entire marketing mix and supply chain, and added that the process could prompt evolutions in packaging or promotions, as well as other value-added improvements.

“Working together, we will identify ways to grow our mutual businesses by better serving the member’s needs,” she said. “Joint business planning will support our efforts to evaluate how to drive demand and promote efficiencies, thus enabling both Kellogg and Sam’s Club to reinvest back in growth.”


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