Why Sam's Club Will Have Its First Membership Price Hike In Nearly A Decade
Rising food costs are a fact of life in 2022. According to the most recent Consumer Price Index from the U.S. Bureau of Labor Statistics, the food at home index spiked a dramatic 13.1% over the past year. That's the biggest yearly bump since 1979, and it marks a significant uptick in the average grocery store expenditures for American consumers. Of course, there are good reasons for these inflationary price increases: most notably, higher energy costs, and supply chain disruptions that were initially caused by the coronavirus pandemic, then further exacerbated by the War in Ukraine, per The New York Times.
The New York Times reports that rising food costs have absolutely had an impact on shoppers' decision-making at supermarkets and grocery stores, causing many to cut back on perceived luxury items and seek out better prices at other outlets. This increased emphasis on cost-cutting measures has actually proved beneficial for warehouse-style shopping clubs like Sam's Club and Costco, both of which have built a reputation for selling bulk items at discount prices to their members, notes Busines Insider.
Costco and Sam's Club have each seen jumps in sales and membership income in 2022, per Business Insider. Sam's Club improved over 10% in each category relative to the same quarter in 2021, while Costco saw a 16.3% sales spike relative to the same timeframe in 2021, while also achieving a record 90% in membership renewals. Perhaps not coincidentally, Sam's Club has recently announced that it's raising its membership fees.
Sam's Club memberships are now worth more, company explains
Why is Sam's Club raising its membership fees now? The reason, according to CNBC, is not directly related to inflation or increased demand; although it should be noted that Sam's Club memberships are at a record high, with a nearly 9% income increase during the last quarter alone. Rather, as Chief Member and Marketing Officer Ciara Anfield relates, the company has heavily invested in upgrades in recent years, from better products and better technology to improved pickup and delivery services. As such, the membership is simply worth more now.
Seeking Alpha notes that when Sam's Club officially raises its membership fees on October 17, it will be the first time in nine years the company has done so. Somewhat surprisingly, given the long wait, the actual increases are quite modest. Basic memberships will cost a mere $5 more per year – climbing from $45 to $50 annually – while Plus memberships will increase by $10 per year, rising from $100 to $110 annually. As CNBC observes, that's the first Plus membership fee hike since it was first offered in 1999. Given the inflationary pressures, however, the Walmart-owned Sam's Club has announced that it will reimburse members' $5 and $10 fee bumps via Sam's Cash usable for in-store purchases.
Sam's Club will probably not be alone for long in its membership fee hikes. The Street reports that Costco will likely do the same, although no announcement has been made yet.