Sam's Club sees boost in premium memberships as it keys in on tech innovation

At a time when companies are fiercely competing to increase paid membership numbers, Walmart's Sam's Club reported experiencing a notable surge in its most premium tier, as it boosted digital offerings.

"We're seeing a much bigger uptick in the Plus membership because we offer them a lot of value," CEO Chris Sam's Club CEO Chris Nicholas told FOX Business, crediting its commerce value proposition.

The warehouse club has a base membership that costs $50 annually and the Plus membership that costs $110 per year. 

SAM'S CLUB BOOSTING PAY FOR WORKERS

The number of people choosing "to go straight into a Plus membership or upgrade into a Plus membership has never been stronger," Nicholas said. 

This comes despite a challenging year for consumers as well as the companies, brands and retailers that cater to them, according to McKinsey. The consulting firm reported that consumers are still shifting their habits, budgeting more for necessities and trading down for better value while also demanding more from retailers.

But Nicholas credited the company's emphasis on "digital connectivity" and its private-label brand, which has outpaced legacy national brands in sales, for the increase in its most loyal members.

He noted that a quarter of Sam's Club members utilize the company's Scan and Go checkout feature on its app, allowing customers to check out on their own. He also highlighted the new AI-enabled exit technology, which captures what customers have in their carts so they don't have to be stopped by an employee. That exit technology, which is said to reduce the time it takes to leave a club by 23%, is expected to roll out to every one of its nearly 600 locations by the end of the year.

CHRISTMAS IN SEPTEMBER: HERE'S WHY RETAILERS ARE ALREADY PULLING OUT THE HOLIDAY-THEMED GOODS

In August, the company also began offering Plus members a free shipping proposition. Plus members now receive free same- or next-day delivery from a club, provided they meet the $50 minimum. This enhancement is in addition to the existing shipping options available from fulfillment centers.

"That kind of connection, along with e-commerce, is really not common in the club model," Nicholas said.

Traditionally, membership clubs have been viewed as a means to "stock up" on bulk items.

However, with these new features, the company is seeing more shoppers stopping by for just one or two items, such as a bottle of wine for the evening, further positioning Sam's Club as a grocery destination.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

This added technology also boosted growth among Gen Z and millennials, which make up its fastest growing member groups. 

Those two groups made up 50% of its new members in the three-month period ending on June 30. To compare, around 20% of new members were of the baby boomer generation.