Sam’s Club CEO Kath McLay, speaking at a recent Jefferies Virtual Consumer Conference & Digital Gaming Day, said inflation is entering into the Walmart division’s plans.
McLay noted that Sam’s Club merchants are aware of the increased raw material costs in, for example, resin and aluminum, and is prepared to work with suppliers.
“Our merchants have been working very closely back with their suppliers, and we have had a number of requests for cost increases,” McLay said. “And so the merchants look at the portfolio and what items we’re getting from that supplier. ‘Let’s work with them to see, are there cost savings we can put into place across our business with that particular supplier? Is there a way we can mitigate?’
Right now, McLay said, mitigation is the best available solution, and Sam’s Club is looking at where it has to hold the line and where it has to pass on some costs in its effort to maintain “disruptive” prices for its membership while optimizing margin.
“We don’t want to penalize our suppliers,” she says. “We want a good business relationship with them that continues on. But we also don’t want to just accept prices and pass them through to the members as well. So it takes a little bit of negotiating and hard work and still creative work to be able to find cost savings, to be able to manage through all of that.”
