When Sam Walton established Sam’s Club in 1983, he said he wanted it to have a separate culture from Walmart. But recent moves hint at the parent company moving away from this original ethos.
Sam’s Club’s corporate supply chain team is merging with its parent company Walmart’s supply chain team. That’s according to an email to staff from Walmart’s head of supply chain operations, David Guggina, obtained by Business Insider. In the email, Guggina said the change will enable the companies to move faster and better leverage enterprise systems and infrastructure, the outlet reported.
“This is a big step in our growth journey, bringing together a supply chain that is future-ready to serve both Sam’s Club and Walmart for the long-term,” the email said.
A Sam’s Club spokesperson told Business Insider the plan gives Sam’s Club supply chain employees more seamless access to Walmart’s enterprise resources and provides clearer career paths within the company. Job cuts are not expected. “We don’t have anything else to share other than what’s already been reported,” a Sam’s Club representative told Modern Retail.
This move signals that Walmart may want to bring the largely independent wholesale retailer closer together with the rest of its business at a time when the massive retailer is focusing more on its digital business and its own membership program, Walmart+, creating an Amazon-like flywheel of services. However, it remains unclear how much the merger will change how Sam’s Club will operate moving forward. Experts think the move is smart because it could save costs and streamline operations. A former employee, however, warns that the move could risk Sam’s Club losing the company culture that it has become so well known for.
“Overall, this is a pretty big deal for Sam’s Club; it signifies a lot of confidence in Walmart U.S.’s view of Sam’s and its contribution to the overall business,” said Gina Logan, principal retail analyst for Kantar.
She added that Sam’s Club is in a less shaky boat than in fiscal 2018 when it closed dozens of locations. Full-year net sales at Sam’s have increased from $59 million to $86 million, or 46%, since the 2018 fiscal year when it closed the stores. This past quarter, Sam’s Club membership income grew 14.4% year over year, per a financial filing.
“This integration signifies to me that they’re confident in the success they’ve seen the last few years and think that they can build on it,” Logan said.
Breaking down the silos
Being a member-only wholesale retailer, Sam’s Club was built on a completely different foundation from Walmart and is a much smaller business. Sam’s has about 600 locations — a similar footprint to competitor Costco — while Walmart has 4,600 stores across the country.
Sam’s Club has long operated largely independently, with its own inventory and purchase-management systems, its own engineers, warehouses and product managers, a former Sam’s Club employee involved in the supply chain told Modern Retail. Though Sam’s Club shares some resources with Walmart, the former employee, who requested anonymity, said that Sam’s Club has maintained its own independence and systems.
“It’s a massive, massive change,” the former employee told Modern Retail. “These are two very distinct groups, and technology wise, operationally, physically, they’re completely separated, so it’s going to be a huge change to bring them together.”
Walmart distribution centers already deliver some items to Sam’s Club, though Sam’s has 30 distribution facilities of its own throughout the U.S., according to its 2024 annual report. It’s unclear to what extent Sam’s Club is using Walmart’s distribution centers. “This is just kind of the next logical step, breaking down those silos between the two companies and finally finding a way to make it more profitable for both,” Kantar’s Logan said.
The timing could also be linked to disruption in the global supply chain, with a potential port strike looming, Logan said. “Retailers are trying to take more control of this because of things like that, so I think this is a very good moment for them to do it,” she said. “Will it help with the port strike? Probably not, but it will help with disruption internally.”
It’s unclear how a more unified Walmart and Sam’s Club could impact the wholesaler’s reputation as a “microcosm of innovation,” as Logan calls it. Many of Walmart’s new retail technologies, such as Scan & Go, were born out of Sam’s Club; Sam’s Club just opened its own retail design studio for employees to pitch ideas, test products and collaborate on projects. “Breaking down these barriers bit by bit is going to help them move faster to get those innovations into Walmart, especially to support Walmart+ because it is also a membership program,” Logan said.
The former employee, however, noted that Sam’s Club being a smaller organization made it more nimble. Being folded into Walmart could change that culture. “I think there has just been a little bit more of an appetite and a tendency to experiment and try new things over there,” they said.
Rethinking the supply chain
The change also comes as Walmart and Sam’s Club have both made big investments in modernizing their supply chain capabilities.
Four of Walmart’s five new “next-generation” fulfillment centers equipped with new technology and more capacity are now operational. In July, Reuters reported that Walmart would potentially buy hundreds of self-driving forklifts from Texas company Fox Robotics through a $200 million deal. In early 2023, Sam’s Club said it would invest to expand its use of automation in its distribution and fulfillment centers ahead of 30 new store openings over the next several years.
At the same time, Sam’s Club competitors Costco and BJ’s have also been making major investments in their logistics capabilities. In 2020, Costco acquired Innovel — which was a logistics subsidiary of Sears and Kmart operator Transform Holdco LLC with 11 distribution/fulfillment centers — for $1 billion in cash. BJ’s similarly bought 4 refrigerated distribution centers from Burris Logistics in 2022. With a denser logistics network, “I think it’s going to help [Sam’s Club] achieve e-commerce profitability faster than their competitors,” Logan said. “It should lower costs for members on those deliveries and should benefit them overall and getting ahead.”
Chris Walton, a former Target vp and co-CEO of retail blog Omni Talk, said he expects the change to be noticeable for consumers, improving shipping costs and delivery speed. He said it could also bring more of a club-like experience to Walmart or promote bulk products from Sam’s Club to Walmart customers on its digital channels.
“I think it’s a really smart move — especially in the digital commerce age, the customer doesn’t really see what happens on the back end of a logistics operation, and so it makes sense that Walmart would try to consolidate these efforts,” Walton said. “In a lot of ways, you kind of say, why didn’t this happen before?”
