Walmart and Sam’s Club will merge supply chain operations, the company announced last week.
Sam's Club, historically independent from Walmart in terms of its supply chain management, will now have direct access to Walmart’s expansive infrastructure, including its modernized distribution centers. This merger is seen as a way to break down silos between the two brands and create a unified system that can better compete in a rapidly evolving retail landscape. The use of intelligent software, automated systems, and robotics in distribution is expected to drive greater efficiency and lower operational costs, allowing both Sam's Club and Walmart to maintain their competitive edge, particularly against major players like Costco.
Analysts suggest that this merger is a smart move, given the disruptions in the global supply chain and the need for greater agility in retail operations. By unifying their supply chains, Walmart and Sam’s Club can respond more effectively to challenges such as port strikes and logistics delays. Additionally, the merger could widen the technological gap between Sam’s Club and its competitors, reinforcing its position as a leader in retail innovation.
This development signifies Walmart's confidence in Sam’s Club’s performance, with the latter having grown its revenue by nearly 50% over the past five years. The merger is likely to strengthen both brands' operational capacities, further positioning them to adapt to future retail challenges, particularly in the realms of e-commerce and omnichannel fulfillment.
Sam’s Club, a membership-only retail warehouse club founded in 1983, operates under the larger Walmart umbrella but has traditionally maintained separate operations in terms of supply chain management, technology, and inventory systems. This independence allowed Sam’s Club to develop innovations and operate as a nimble organization with 600 stores across the United States, significantly fewer than Walmart’s 4,600 locations.
Historically, Sam’s Club has maintained a distinct corporate culture, characterized by a more agile, innovation-driven approach compared to the much larger Walmart. A former Sam’s Club employee noted that Sam’s Club’s smaller size allowed for quicker experimentation with new technologies and processes, which may change as it becomes more integrated into Walmart’s larger, more structured supply chain organization.
In recent years, Sam’s Club has seen substantial growth, with its revenue increasing by nearly 50% over the past five years despite maintaining a relatively small footprint. This success has been driven in part by technological innovations such as the Scan & Go feature and AI-powered exit gateways, which have enhanced the customer experience. However, with increased competition from rivals such as Costco and BJ’s Wholesale Club, Sam’s Club needs to remain competitive not only through innovative customer-facing technology but also through backend efficiencies that a unified supply chain could provide.
The collaboration also comes at a time when Sam’s Club is expanding, with plans to open 30 new locations over the next several years.
According to a Sam’s Club spokesperson, the integration with Walmart’s supply chain will give employees seamless access to Walmart’s enterprise resources, including training programs, career development opportunities, and advanced technology. This, in turn, could provide a clearer career path within the company, as Sam’s Club employees will be able to leverage Walmart’s broader organizational structure to pursue new opportunities.
David Guggina, Walmart’s head of supply chain operations, outlined the rationale behind this decision in a memo to the supply chain team, stating that the merger was a "big step in our growth journey, bringing together a supply chain that is future-ready to serve both Sam’s Club and Walmart for the long term".
Guggina’s memo emphasized that the collaboration would help Walmart and Sam’s Club move faster and better utilize the company's extensive enterprise resources, including advanced distribution infrastructure, data analytics, and automated systems.
Walmart’s distribution network already handles some of Sam’s Club’s inventory, but this merger will deepen the integration, potentially enabling Sam’s Club to access a broader network of fulfillment centers and advanced logistics technologies. The increased reliance on Walmart’s enterprise system could help Sam’s Club maintain its competitive edge over rivals like Costco, which has also been investing in logistics capabilities.
The merger of Walmart and Sam’s Club’s supply chain teams comes at a time of heightened competition in the wholesale and big-box retail sectors. Costco, Sam’s Club’s primary competitor, has been investing heavily in its own logistics capabilities. In 2020, Costco acquired Innovel Solutions, a logistics subsidiary of Sears and Kmart, in a $1 billion deal aimed at enhancing its fulfillment and distribution operations. This acquisition allowed Costco to expand its logistics footprint and better compete with rivals like Amazon and Walmart.
