Sam’s Club Weighs What Costs More: Tariffs or Consumer Sentiment

  Rassegna Stampa, Social
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For as long as anyone can remember, America’s big-box discounters have delivered those oh-so-low prices in part by pulling suppliers into the back room and strong-arming them into dropping their costs.

It’s a tactic that’s worked especially well for Walmart and Sam’s Club—which is owned by Walmart—and it makes possible retail miracles like that 10-cup rice steamer for $59.98 or a 7-quart air fryer for a mere $49.96.

Well, kitchen practitioners had better head to Sam’s Club soon, because those brain-baking low prices might not last for much longer.

The 600-unit discount giant is currently weighing the option of boosting prices on countertop kitchen appliances and other discretionary items. “If we see those higher costs come in, certainly we have to take a look at all options,” is how Sam’s Club CFO Todd Sears put it to The Wall Street Journal earlier this week.

And why would those higher costs come in? Well, the T-word, obviously. Tariffs have recently shifted from being a rhetorical skirmish between Washington and Beijing to something far more tenable. On June 11, Commerce Secretary Howard Lutnick told CNBC that the rate imposed on Chinese imports will “definitely” not move from where they are, and that’s 55%.

While Walmart has yet to pass tariff-related cost increases onto shoppers, the move that Sam’s is considering appears to be a counterbalancing maneuver designed to hike prices on elective purchases to help it hold the low price line on the essentials. (After all, everyone needs groceries but no one truly needs a blender or a toaster oven.)

Fortunately for retailers like Sam’s Club and rival Costco, a significant portion of profits come from annual membership fees that consumers pay to shop there—$50-$110 in Sam’s case. And so, in theory, the club retailers are less reliant on the margins they can carve out of goods for sale on the shelves.

Weathering tariffs is one thing, but another headache may lie with marketing and brand image. Sam Club’s has historically depended on good word-of-mouth. Its Refer a Friend program gives a $30 discount to the new member. But if customers get grouchy about not being able to afford that microwave today that sold for cheap just a few weeks ago, that sort of malcontent might be tough to counter.

In a recent study by First Insight, 80% of shoppers said they’d be more loyal to brands that absorb tariff costs and, if they don’t, close to 3 in 4 said they’d take their money elsewhere.

https://www.adweek.com/commerce/sams-club-tariffs-prices-consumer-sentiment/