The 1,200 workers at Sam’s Club in Canada were part of a corporate experiment. “When one of our experiments works,” Sam Walton wrote, “watch out.” Walton admitted that Sam’s Club was an experiment — much like his company’s attempts to open up a home improvement center called Save Mor, or the retailer’s failed ‘hypermarkets’ and Bud’s discount stores. Sam’s Club “was an experiment when we started it up in 1983,” Walton said. Nine years later, it was doing $10 billion in business and had 217 stores and “terrific growth potential,” according to its founder. “If you’ve never been to one, they’re a lot of fun to shop, and the people who work there a little crazy.” Today, 1,200 Sam’s Club employees in Canada are more than a “little crazy” over the news that they are more than a little unemployed. This week, if you go to the Sam’s Club of Canada website, you’ll find the following notice posted there: “With regret, Sam’s Club Canada announces that it is discontinuing its warehouse club business in Canada. It was a privilege to serve every one of our Members, and we would like to thank you for your support and patronage. Every Sam’s Club Canada Member will receive a personal letter over the next several days. The letter will outline the various liquidation events that will take place following our closure on March 1. It will also address many of the questions that our Members will have regarding our closure… Thank you again for allowing us to serve you.” The sudden implosion of Sam’s Club Canada must have caught many of its employees by surprise. By the end of 2008, the Sam’s Club total operation had net sales of $44.3 billion, which was close to 12% of the total net sales of Wal-Mart. In 1998, Wal-Mart had a total of 443 Sam’s Clubs in America. Ten years later, there were 591 Sam’s Clubs in the U.S. But in Canada, the concept never grew beyond half a dozen stores in the Province of Ontario. The Wall Street Journal reported this week that “the half-dozen Sam’s Clubs weren’t meeting expectations, and weren’t profitable.” One Wal-Mart Canada official put it this way: “Five years ago, the Sam’s Clubs made sense. Since then, our food and supercenter business has grown dramatically and customer response has made it clear the supercenter format is where we should focus our growth.” All the Canada stores will close by the end of this month. The Wal-Mart Canada spokesman said the current economic recession was not a key factor in the decision to abandon the clubs.
Walton admitted that Sam’s Club was copied from the model created by Sol Price, who had founded a company called Price Club stores in 1976, which later morphed into Costco. Now Sam’s Club of Canada is remains left to pick from the bone. The Lowe’s home improvement chain is already looking to feed off the carcass. Lowe’s is looking to buy at least five of the former Sam’s Clubs buildings. But in case Canadian consumers are feeling abandoned, Wal-Mart assured its supporters that while there will be no more Sam’s Clubs to shop at, the giant retailer will be focusing its growth instead on pushing out more of its supercenter formats. Twenty existing stores (many of them the Woolco stores that Wal-Mart took over in 1995) will be expanded into supercenters. There will also be six new stores built. Wal-Mart continues to tell the media that its superstore expansion “will generate 5,000 new store jobs,” according to Dow Jones — but that is a gross figure, not net. The Wall Street Journal acknowledges that Wal-Mart supercenters will be “eating into market share previously held by the country’s incumbent grocers,” which in plain language means there will be little job growth for Canada, if any, from the transfer of positions to Wal-Mart Canada. From any ‘new’ jobs created by superstore expansion, the first 1,200 jobs will just replace what Wal-Mart Canada just killed off. The retailer says it will offer its former Sam’s Clubs workers “internal job fairs” to help workers find jobs at other Wal-Mart outlets. Some of these workers can apply for supercenter jobs in the greater Toronto area. The demise of Sam’s Club leaves American-owned Costco as the main warehouse club format remaining in Canada. Sam’s Canada survived just over five years after its launch in Ontario in the fall of 2003. Readers are urged to call Sam’s Club Member Service Line at 1-800-328-0402 and leave the following message: “When is the funeral service for Sam’s Club of Canada? Are you going to take care of your workers, and give them the support they need to find new jobs? Sam Walton called your operation an experiment, and I guess he was right — the experiment failed. Sam Walton siad people who worked at Sam’s Club were ‘a little crazy.’ They are now. On your way out the door, please don’t forget to refund your Members’ fees.”
