Walmart’s Sam’s Club accelerates expansion in China as membership passes 10.7 million

Sam's Club, the membership-based retail arm of Walmart, is rapidly expanding its footprint in China, surpassing the 10.7 million member milestone as of June. The company opened its sixth Beijing location on Monday, greeted by eager shoppers patiently waiting in long queues. Sam's Club has found significant success in the Chinese market due to its value pricing and exclusive goods, which attract middle-class consumers despite some foreign brands halting operations or exiting the country altogether.

In June, the company disclosed that it had 10.7 million paid members, with projected annual membership revenue reaching 3 billion yuan (approximately US$450 million). Members can choose between basic memberships at 260 yuan per year and premium memberships at 680 yuan annually. According to Cathy Chao, senior director of Asia-Pacific corporate ratings at Fitch Ratings, the key appeal of Sam's Club lies in the breadth and quality of goods offered, coupled with wholesale pricing.

These goods are often unique and cannot be sourced through alternative channels, and consumers generally appreciate consistently high-quality products at reasonable prices, justifying the membership fees. Furthermore, the membership model encourages frequent visits as consumers aim to maximize the value of their annual fee. Sam's Club plans to open 13 new stores nationwide this year, including several in lower-tier cities, bringing the total number of stores to 76.

The company has also strengthened its localization efforts by introducing China-specific products, with top sellers varying by city, such as sweetcorn in Beijing, Bright Dairy milk in Shanghai, and sweet bananas in Guangzhou. In Walmart's most recent earnings report, China emerged as a standout market, with sales surging nearly 21% to US$7 billion, largely driven by Sam's Club's growth.

Beijing authorities had summoned Sam's Club in June due to frequent food-safety issues. The company promptly initiated internal reviews and corrective actions and appointed former Alibaba vice-president Liu Peng as the new president of Sam's Club China.