Sam’s Club to Start Selling Local Goods Like Hot Sauce and Ghee

(Bloomberg) -- Sam’s Club is adding some local flair to its store shelves.

Walmart Inc.’s club chain plans to sell more region-specific products such as ghee and hot sauce starting this fall — a bid to attract new members and better compete with Costco Wholesale Corp.

Sam’s Club recently hosted its first-ever open call with local suppliers in Texas as it searches region-specific products to sell in stores across the state. More than 350 suppliers showed up and the company selected about 20 of them, including Culinary Cowgirls queso and Yellowbird hot sauce. The products will be in Texas stores later this year.

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Executives said this will give the retailer community-specific relevance. The next open call for local suppliers to make a pitch to Sam’s Club is planned for California, with other states following. Local products that the company picks up will primarily be in the food and consumables categories.

“It’s the first time we’ve done it where we vetted a bunch of suppliers that are Texans,” said Chris Nicholas, chief executive officer of Sam’s Club, in an interview. He added the retailer aims to be “part of the community.”

Sam’s Club has in recent years trimmed the number of items it sells, said Nicholas, a UK native who took on the role last September after serving as chief operating officer of Walmart US. Sam’s Club generated about $86 billion of sales last year, and following customer feedback, it’s now looking to diversify its product assortment and engage more with communities. Megan Crozier, chief merchant at Sam’s Club, said the company is looking for newer avenues of growth as it opens more stores.

For rivals, the strategy is nothing new. Amazon.com Inc.’s Whole Foods Market has been a pioneer of selling smaller, regional brands and is known as a launchpad for upstarts. Costco, the larger rival of Sam’s Club, has sold some local products, though it hasn’t been a big focus for the retailer.

“Everyone is trying to find that local. There are great competitors out there,” Crozier said.

Club stores typically have a smaller assortment of products than food and big-box retailers, which helps keep operations efficient. While Sam’s Club is looking to bolster its aisles with local goods, Nicholas said the company will stay disciplined in keeping its overall inventory tight. “What we will never do is we will never blow out our assortment,” he said.

Sam’s Club was started in the 1980s by Walmart Founder Sam Walton, primarily for small businesses and entrepreneurs. As a club chain, it operates nearly 600 locations and sells about 5,000 items – a fraction of what Walmart and other big-box retailers sell. The operator has customers paying annual fees for a membership – $50 for basic or $110 for premium.

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