Generation Z and Millennials drive membership growth at Sam’s Club

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Sam’s Club is seeing the highest growth rates among Generation Z and Millennials, Walmart CFO John David Rainey said Wednesday at Bank of America’s London investor conference.

Over a two-year period, Generation Z membership increased by 63% and Millennial membership increased by 14%.

One reason Gen Z in particular is frequenting Sam’s Club may be because, as a group, they are extremely cost-conscious, says Hana Ben-Shabat, founder of Gen Z Planet. “As children of the Great Recession and graduates of a global pandemic, they have learned that financial security is vital,” she said via email.

Overall, the retailer saw “record” membership growth at its U.S. stores in the first quarter, leading to a more than 13% increase in membership revenue. Sam’s Club also reported 11 consecutive quarters of double-digit comparable sales growth and said its U.S. e-commerce channel was profitable.

The digital experience in the club store resonates well with this younger customer base, Rainey said. Sam’s Club has found that one in three members regularly uses the Scan & Go technology, and the company has seen a 50% increase in usage over the past three years.

“I would argue this is one of the highest levels of in-person digital penetration there is,” Rainey said. The technology, which launched in 2016, allows shoppers to select items, pay and skip checkout lines. The retailer is also rolling out receipt verification technology that will be available in all stores by the end of the year.

“We don’t use technology for technology’s sake,” wrote Todd Garner, chief product officer at Sam’s Club, in a company blog post earlier this year. “We’re constantly thinking about our members’ problems, and it’s about aligning technology with our members’ needs and enabling unprecedented convenience and connection.”

These technological advances are particularly piqued the interest of Gen Z, according to Ben-Shabat. “What really sets Sam’s apart from other clubs is the seamless integration of online and offline stores,” she said. “In-store technology provides convenience and speed, and the overall in-store shopping experience are all aspects that are extremely important to Gen Z’s ‘digital’ shoppers.”

The club retailer is also expanding its brick-and-mortar presence and expects to expand its branch network by 30 stores over the next five years.

There are opportunities internationally, too, particularly in China, where Sam’s Club operates two of its most successful stores worldwide. The club format “resonates very well with the Chinese consumer,” says Rainey. The retailer’s membership in China rose 25% in the first quarter.

The company also leverages its members in another way – namely, to help with testing. Sam’s Club recently announced a program where members can collaborate to develop products for its private label, Member’s Mark. Participants can test products and provide feedback on the private label before they’re available in stores, allowing the retailer to better personalize items and improve the member experience.

“Our approach goes far beyond traditional focus groups and surveys. We’re banking on real engagement that will shape the future of retail by providing more personalized experiences for our members,” said Megan Crozier, chief buyer at Sam’s Club, in a statement at the time of the announcement. “We see the opportunity to include all members in the future.”

According to a recent Statista report, warehouse clubs and supercenters generated over $626 billion in sales in the U.S. in 2022. Last year, Sam’s Club’s total sales were $84.3 billion.