Health and wellness garners attention from Sam’s new leadership

BENTONVILLE, Ark. —Health-and-wellness businesses have been targeted for growth by a new senior leadership team at Sam’s Club that is intent on gaining a larger percentage of market share in categories viewed as having favorable growth characteristics.

The increased emphasis on traditional drug store categories is one element of a new merchandising strategy dubbed “Project Portfolio,” along with new thinking about the competitive environment being led by new Sam’s Club president and CEO Brian Cornell and EVP merchandising and replenishment Linda Hefner.

Cornell joined Sam’s in March after previously serving for two years as president and CEO of Michael’s. The following month, he called on Linda Heffner, then Walmart’s EVP merchandising for the home business, to serve as Sam’s head merchant. Together, the pair is overseeing a re-assorting of the product mix that involves increased space being allocated to such categories as health-and-wellness, as well as such fresh categories as produce, meat, bakery and meal solutions. Conversely, assortments and selling space will be reduced for such categories as large appliances, sporting goods, furniture, movies/DVDs, seasonal and apparel.

In addition to the merchandising changes, the new leadership team is thinking more broadly about the competitive environment in which it operates. For example, while Costco and BJ’s are companies Sam’s executives wake up thinking about every day, according to Cornell, Sam’s also competes with supermarkets, specialty stores and even restaurants when it comes to consumers deciding what’s for dinner.

Talk of new strategic initiatives being executed by a new senior leadership team tends to elicit a bit of a “hear we go again” reaction among Sam’s longtime trading partners who are familiar with the company’s track record of senior management turnover. However, despite occasionally wavering in its direction, Sam’s Club has grown considerably over the year, and today generates annual sales of roughly $47 billion. The club operator plans to open just five to 10 new or relocated clubs next year, but remodel between 70 and 90 units of its more than 600 domestic units. It is a continuation of a trend that began last year when Sam’s opened 15 new and relocated clubs and remodeled about 55 units.