You can always find it down at Sam's place
Updated: 2012-03-24 07:45
By Yao Jing (China Daily)
At the Sam's Club store in Beijing, customers are not waiting in line at the cashier counters.
The high shelves are filled with packing goods. The corridors are wide enough for three shopping carts to pass through side by side, and the latest audio equipment is on display.
But these advantages are not to be enjoyed by everyone. Shopping for most items at the 12,000-square-meter Sam's Club, part of a chain of stores owned and operated by Wal-Mart Stores Inc, can usually be done only by those who have memberships there.
Established in 1983 and named after Sam Walton, the founder of Wal-Mart, Sam's Clubs sell most of the products on their shelves in bulk and at a discount.
Sam's opened its biggest outlet in Beijing in the Beijing Economic and Technological Development Area, in the southeastern suburb of Yizhuang, in November. It was the fifth Sam's Club to be in China and the second in Beijing.
Du Limin, vice-president of Sam's Operations, China, said finding the best location for expansion in Beijing was difficult.
Du said the presence of Coca-Cola Co, Nokia Corp and other multinational companies in the area gave Sam's confidence. Such companies, he explained, tend to buy office supplies and other business gifts in bulk, as do many middle-class professionals working in the high-tech industry. What's more, there was virtually "no competition" in the area, he said.
In the less than six months since it opened, the Sam's Club has attracted more than 100,000 members, a quarter of them being business members.
"Most of our customers come from Yizhuang," Du said. "But with more people traveling abroad and becoming aware of Sam's Club, we have been getting more membership enquiries. Many of the prospective members want to drive to the club on the weekend, and some of them come from as far away as Tangshan in Hebei province."
Stephen Montgomery Smith, Walmart China's chief marketing officer and senior vice-president of Sam's Club, New Formats, said the retailer is looking to expand much more quickly in China in the next few years to take advantage of a rapid increase in the country's middle-class population and urbanization.
Sam's Club plans to open a new outlet in Dalian, Northeast China's Liaoning province, later this year, Smith said.
According to the National Bureau of Statistics, the value of retail sales in China increased by 17.1 percent year-on-year to 18.12 trillion yuan ($2.87 trillion) in 2011.
But Sam's Club seems to be proceeding cautiously in its plans to expand in China. It has only had five stores in the country in the past 16 years and took seven years to open a second outlet in Beijing.
"Sam's needs its own facilities, instead of leasing space in a large retail shopping mall like other companies," Smith said. "This type of building takes more time and capital, and the opportunities are more limited than the current retail center dynamics that exist in China today."
He said Sam's strictly adheres to standards governing the size of its stores, their locations, their access to main roads, their need for ample parking and the demographic composition of the places they are opened in.
The Yizhuang outlet, with its 1,200 parking lots, is the biggest single-deck Sam's Club in the country. Even though it stands in the suburbs, many consider it to be more convenient and comfortable than various other supermarkets in Beijing, which often have crowded parking lots and long lines at their checkout counters.
Seeking to attract affluent family shoppers and small business owners, the club charges a membership fee of 150 yuan every year. That business model helps the club to keep the margins on its merchandise low and to instill loyalty among its members.
"Our price is 8 percent lower on average compared with other hypermarkets," Du said.
Nearly 18 percent of its products are imported, and 4 percent are from the club's own brand.
Sam's business model, though, has had to be modified somewhat to suit Chinese shoppers.
"Our format and commitment to members is the same in all countries," Smith said. "But the content of what we provide, and how we provide it, is always country-culturally correct."
Almost all of the managers and operators of Sam's Clubs in China are Chinese.
"Since Chinese consumers like to pick out favorites from among various items and are used to wandering in supermarkets to find something new when they have free time, we are offering more choices in China," Du said.
And because many families in China consist of only three members, the club has changed the size of the products it offers. In the United States, the soy sauce sold at the stores often comes in packages containing five bottles; in China, only three bottles are bundled together.
The Chinese, moreover, are not in the habit of storing supplies and prefer from time to time to change the brands that they use.
When the Sam's stores first opened in China, many shoppers were not accustomed to the idea that they would have to pay membership fees to shop there. An increasing number, though, have come to see membership as a status symbol.
As trade in China becomes more modern and as disposable incomes increase, an emphasis has been placed on having clean, well-organized stores that sell high-quality merchandise, fresh foods and imported products, Smith said.
To better inform Chinese customers about new products, Sam's Club will hold various events. Business members are also invited to attend wine tastings, and there are activities for mothers and children. All these help inspire loyalty in customers and improve the club's reputation in the community, Du said.
Though the company is faced with competition from both local and foreign rivals, Smith said he is excited about the opportunities in China.
Realizing that online retail is becoming increasingly popular among Chinese shoppers, Sam's has also set up SamsClub.cn. The online shopping service can now be used by Sam's Club members in Beijing and Shenzhen.