Sam’s Club
Turning Around Sam’s Club:
Learn how the big-box retailer leveraged the Good Jobs Strategy to transform its operations and workforce for a new era of retail.
Problem
When John Furner became Sam’s Club CEO in 2017, the warehouse retailer was struggling. Member satisfaction and same-store-sales growth were low, and some locations were operating at a loss. Low wages, unstable schedules, and high operational complexity resulted in 60% employee turnover, which fueled inventory and customer service problems.
Approach
To turn the company around, Furner focused on becoming the most loved membership retailer by combining low prices and high-quality products with a seamless omnichannel experience. This vision required operating with an experienced and motivated workforce that’s set up for success. To get there Sam’s Club leveraged the Good Jobs Strategy to overhaul operations and workforce practices through a series of interconnected changes intended to support their customer experience.
Investment in people to stabilize teams and strengthen the customer experience. Sam’s Club increased pay $5-$7 per hour for nearly 20,000 key employees across the chain who had a large impact on member experience within the club, enabling some of these associates to have one job, not two. They also established block schedules for all employees, increasing the proportion of full-time employees and ensuring that every person knew when and how much they would be working each week, improving work-life balance.
Operational changes to drive productivity, support wage investments, and improve customer experience. In addition to making substantial, strategic investments in frontline teams, Sam’s Club made a series of operational changes that drove productivity and improved delivery of their customer experience.
- Merchandise Reset: Reduced SKUs, replaced shelves with pallets for faster restocking, and introduced planograms to reduce workload and enhance the member experience.
- Next-Generation Staffing: Simplified work groups (from 27 to 4), increased cross-training, and eliminated the overnight shift to improve productivity, align labor with peak traffic periods, and improve associate satisfaction.
- Air-Traffic Control System: Introduced a corporate process to prioritize and stage initiatives, smoothing top-down requests and enabling clubs to focus on critical member-serving tasks.
- Investment in Technology: Developed apps for inventory management, scheduling, and member services, streamlining operations and boosting efficiency.
- Simplification and Standardization: Eliminated more than 5,000 legacy tasks, enabling associates to focus more attention on work that directly enhanced member experience and productivity.
Outcomes
“I can confirm there hasn’t been a time in at least 19 years when Sam’s has had this much momentum.” -Walmart CEO Doug McMillon, 2021
Within a few years, Sam’s Club achieved significant improvements across key performance areas:
Customer Experience:
- Net Promoter Scores increased by 7%, supported by better inventory management and enhanced member assistance.
- Net sales grew by over 40%, including 12 consecutive quarters of double-digit comparable sales growth.
Business Performance:
- Labor productivity rose by over 15%, driven by higher sales and reduced labor demands for tasks like stocking.
Employee Experience:
- More stable, predictable schedules
- Higher wages for key roles
- Turnover dropped by ~25% for hourly employees and ~30% for managers.
- The average time-to-fill open manager positions decreased by nearly 50%.
Sam’s continued strong performance since then has enabled them to continue investing in their frontline teams. They have instituted additional pay increases for associates across the chain, going from a facility start rate of $11 in 2018 to $16 in 2024. They have also invested in career paths, announcing in 2024 that associate hourly wages will progress faster in their pay range, expanding the increase to between 3% and 6% based on years of service, setting predictable pay increase milestones to give associates a longer-term perspective on their financial futures. All told, Sam’s average hourly pay rose 30% from 2019 to 2024.
“A stubborn stigma persists around retail work: that it’s both temporary and transactional – roles defined by dollar-per-hour rates. It’s a tired narrative we’re eager to rewrite at Sam’s Club. Why? Because I’m a firm believer that providing good jobs translates to good business.” – Sam’s Club CEO Chris Nicholas, September 2024
Read more about Sam’s Club’s transformation effort: