In our previous blog, we did a complete SWOT analysis of Costco, the fifth-largest retailer in the world as of 2020. Here we will be doing a comprehensive SWOT Analysis of Sam’s Club.
Since 1983, Sam’s Club has been one of the US leading operators of members-only warehouse stores. Have you ever wondered what makes a company so big? Studying the business environment and reacting to dynamic changes are the keys.
Furthermore, Sam’s Club has been putting money into effective marketing methods. The current global situation is pushing towards digitalization, and if you’re interested in learning more, check out our Free MasterClass on Digital Marketing 101 by Karan Shah, CEO, and Founder of IIDE.
Do you know how a firm evaluates its environment? SWOT Analysis is one of the most often used approaches. In this blog, we’ll take a closer look at the SWOT Analysis of Sam’s Club.
Before we get started with the SWOT Analysis of Sam’s Club, let’s learn a little bit about the firm, its products and services, and its competitors.
About Sam’s Club
(Source: Investopedia)
In the United States, Sam’s Club is a membership-only retail warehouse club. It is a subsidiary of Walmart Inc., the largest retailer in the world. Since its inception on April 7, 1983, the club has grown to over 600 membership warehouse clubs across the United States.
From the United States, the organization has expanded to China, Brazil, and Mexico. Every year, over 20,000 Sam’s Club associates are promoted to positions with more responsibility and income. It also provides full-time associates with paid parental leave, additional support for adoptive families, savings, health plans, associate stock purchase plans, and associate discounts, among other benefits.
Quick Stats About Sam’s Club
| Founder | Sam Walton |
|---|---|
| Year Founded | 1983 |
| Origin | United States |
| No. of Employees | 36000+ |
| Company Type | Retailer |
| Market Cap | $ 11 Billion (2021) |
| Annual Revenue | $ 64 Billion (2021) |
| Net Income/ Profit | $ 63.9 Billion (2021) |
Product & Services By Sam’s Club
With unique savings on the items you need, love, and all sorts of unexpected things, a Sam’s Club membership more than pays for itself. some of the benefits are listed below:
- Travel & entertainment
- Home services
- Auto services
- Club services
- Membership
- Payment options and store credit products
Competitors of Sam’s Club
The marketplace is a fast-paced, competitive environment. Businesses have to compete with other autonomous entities in the marketplace that provide similar services or goods. The growing popularity of warehouse clubs has perplexed the competitors. The leading competitors of Sam’s Club are:
- Costco
- ALDI
- Amazon
- Kohls
- eBay
SWOT Analysis of Sam’s Club
SWOT Analysis of Sam’s Club is a basic method that can help a company examine what it does best right now and develop a successful future strategy. It exposes the areas where people are holding back or how competitors may profit.
With the growing neck-and-neck rivalry in membership warehouses, it is critical for organizations like Sam’s Club to examine the business environment.
Now first let’s begin with the strengths of the company from the SWOT analysis of Sam’s Club.
Strengths of Sam’s Club
Sam’s club’s strengths enable it to perform very well and stand out from the competition. These form an important aspect of the company’s structure.
- Brand Name: Walmart owns and operates Sam’s Club, which serves 40 million people and has a strong brand identity.
- Sales Volume: It has approximately 600 warehouse clubs and is the second-largest warehouse club in the United States in terms of sales volume.
- Automation: At several levels of production, Sam’s Club has implemented automation. This resulted in more efficient resource utilization, lowering costs, and assisting in the maintenance of quality standards.
- Distribution Channels: It has a robust and stable distribution system that ensures that its products are easily accessible on time and allows it to operate in many locations of the United States.
- Financial Condition: Last year, Sam’s Club had a $64 billion annual revenue, and it has been profitable for several years in a row, allowing it to invest in future operations.
- Development of Workforce: Sam’s Club makes significant investments in employee training and development, resulting in a trained and motivated team.
- Social Media: Sam’s Club has a strong presence on social media, with a large number of individuals engaged, which helps them draw customers from all over the world.
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Weakness of Sam’s Club
Every organization has its own set of flaws. A SWOT analysis is only useful if you collect all of the information about the areas where you need to improve.
- Limited Presence: Sam’s Club has a strong presence in the United States but only a limited global presence in China, Brazil, and Mexico.
- Employee Turnover: Despite spending a lot of money on employee training and development, there has been a high employee turnover compared to comparable companies.
- Research and Development: The club has not spent wisely on research and development, resulting in demand forecasting gaps and possibilities being missed.
- Rented Assets: Sam’s Club operates mostly through rented stores, resulting in higher costs and the majority of sales going to pay rents.
- Organizational Structure: Sam’s Club has an organizational structure that places the majority of decision-making at the top, limiting innovation at lower levels.
Opportunities for Sam’s Club
Openings or chances for something good to happen are referred to as opportunities. These are the results of events that occur outside of the organization.
- Developing Economies: The entire economy is open, and sam’s club has a rising opportunity to access burgeoning developing economies.
- Identity Advantage: It has the potential to capitalize on its brand identity and diversify its product offerings.
- First Mover Advantage: Customers are becoming more aware of current trends, and by analyzing them, it is possible to gain a competitive advantage in the marketplace.
- Skilled Workforce: With so many advancements in the education industry in terms of specialized courses, the club now has a greater potential to hire competent workers. As a result, costs are being reduced.
- Online Platform: The number of people who use the internet is steadily increasing. Sam’s Club can improve its web platform even more to enhance client traffic. You must also train yourself in e-commerce management for a better understanding of how to sell on marketplaces.
- Growth Potential: Sam’s Club aspires to be the world’s most valuable membership club for its members. They can take this as a motivation to grow more in the market.
Threats to Sam’s Club
Anything that can harm your firm from the outside is considered a threat. A company must anticipate threats.
- Growing Trends: Customers are becoming more aware of current trends and the brands they use, putting pressure on businesses to alter regularly.
- Skilled Labour Worldwide: With the development of the company into worldwide markets, there is a risk of missing out on competent labour.
- Competitors: For organizations working on comparable product lines, competition is always a threat and Sam’s Club has been facing huge competition from its rivals.
- New Entrants: There is a significant risk of losing market share when there are little or no restrictions on new enterprises entering the market. Sam’s Club must devise new methods to preserve its place in the industry.
- Business Environment: The nature of the corporate environment is dynamic. If a company fails to adequately analyze it, the odds of failure are high.
- Government Policies: There is a continuous change in government policies across different countries. Moreover, Political unrest in the country can impede business, resulting in lower performance and higher costs.
This ends our comprehensive SWOT analysis of Sam’s Club. Let us conclude our learnings below.
To Conclude
In a comprehensive SWOT analysis of Sam’s Club, we discovered that the company has a strong brand and web presence. However, it overlooks adequate research and development, resulting in squandered possibilities.
With the changing market, Sam’s Club can take advantage of the opportunities and spend wisely in R&D to get a competitive advantage. Sam’s club still has some challenges to overcome, but there are many prospects for growth. We are certain that Sam’s Club will overcome these challenges and continue to be one of the world’s leading firms.
Companies are left to fight it out by winning over their customers with greater marketing efforts as competition grows in a saturated industry. Being well-versed in digital marketing is a requirement for all marketing enthusiasts in today’s shifting scene, which is vital. If you want to learn more and improve your skills, check out IIDE’s 3 Month Advanced Online Digital Marketing Course.
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