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Sam’s Club CEO Explains Why Super Bowl Ad Made Sense

Sam’s Club president and CEO Kathryn McLay characterized the past two years for the membership warehouse club as an “extraordinary ride.”

The discount retailer, part of Walmart Inc., saw its membership surge to a new record last year, aided by an increased focus on nabbing the attention of digitally savvy and millennial customers interested in what convenience proposition the retailer could offer.

McLay spoke Sunday about the company’s strategy to grow through its membership base as the opening keynote at the annual Shoptalk retail and technology conference, the first to be held in person since 2019.

Sam’s Club’s digital efforts have paid off in a big way.

Same-store sales rose 9.8 percent in fiscal year 2022, which ended Jan. 28, with net sales for the year totaling $73.6 billion. Meanwhile, income generated from members grew 11.3 percent for that same period.

The retailer was able to woo more customers by touting its digital tools’ convenience and safety during the pandemic when social distancing and contactless payments were top of mind.

That included its Concierge service allowing seniors to have their orders fulfilled by store associates and brought to their cars. There’s also the company’s Scan & Go app feature, which has been available at all of its stores since 2016 and was played up during the pandemic as a safe way to shop.

Scan & Go lets customers scan the barcodes on products they want to buy. A store associate then verifies their digital receipt once they’re done shopping.

The feature is an important one for Sam’s Club, so much so parent Walmart filed a lawsuit last week against BJ’s Wholesale Club alleging patent infringement. The retailer is arguing BJ’s copied Scan & Go with its ExpressPay feature, which launched late last year.

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“I would say we don’t take these things lightly,” McLay said of the case during her Shoptalk keynote, before declining further comment on the matter.

The self-checkout technology and other attempts to expand the digital suite of services have been a competitive advantage for Sam’s Club as it looks to come out ahead of the pack among warehouse chains.

That’s one of the reasons the retailer made the decision to enter the Super Bowl advertising fray earlier this year with Sam’s Club’s first ever TV spot during the big game.

The spot featured actor and comedian Kevin Hart and promoting Scan & Go.

Advertising during the big game has long been viewed as a sport in and of itself, with companies paying a premium for brand exposure. Thirty-second spots for this year’s game reportedly went for $6.5 million.

“It’s interesting for a retail brand, the thing we decided to really focus on was Scan & Go in our Super Bowl Ad,” McLay said.

Last year the company began testing a new iteration of Scan & Go called Scan & Ship that offers a logistical solution for larger items, such as furniture and TVs, that consumers may have a harder time fitting in their vehicles. Those items, through the program, can be delivered directly to customers’ homes with delivery times between three and five days. The feature makes it easier to buy bulkier items, but also addresses the challenge of how much inventory can be kept in stock at a store.

Not everything in Sam’s strategy has been about digital, however.

Sam’s Club has also invested money into its existing stores over the past two years. McLay called the redesign’s aesthetic “bold and blue” with better lighting and navigational markers on the walls.

The more contemporary look has been rolled out to half of Sam’s Club stores and is expected to be at all of its nearly 600 stores by the end of the year.

“It’s rejuvenating the brand and it’s opening up so much avenue for growth,” McLay said.

A new view on the merchandise assortment also helped. Part of that new outlook was brought on by the supply chain issues that have hampered companies across industries the past couple years. For Sam’s Club, the challenged forced a supplier diversification strategy that’s worked out well so far.

La Mer and Gap, along with more boutique suppliers, are examples of brands the company has added to its store shelves.

Sam’s Club also capitalized on consumer interest in the “treasure hunt” aspect of shopping with its Member’s Mark private-label brand, which is focused on bringing in more niche brands putting quality first.

The infusion of new lines, mixed with the company’s digital infrastructure, could put it in a favorable position now as consumers grapple with inflation.

Said McLay of the future for Sam’s Club: “I think what you can see is a supply chain that is ready to grow. I would just say, keep watching.”