Sam’s Club’s War Against Costco Started With $1.38 Hot Dog Combo
The price cut tapped the rival’s playbook of targeting upscale shoppers to expand its business again.
Photo Illustration: Sam Wood for Bloomberg Businessweek
In November, Sam’s Club took aim at one of the most iconic prices in US retail. No longer would the membership warehouse chain match Costco Wholesale Corp.’s $1.50 hot-dog-and-soda combo. Instead, Sam’s Club said, it would charge just $1.38.
In the ensuing months, the combo meal’s sales jumped so much, they generated a noticeable boost to profits, says Sam’s Club Chief Executive Officer Kath McLay, who on Aug. 16 was named CEO of Sam’s Club parent Walmart Inc.’s international operations. The profit margin sagged, but the price cut sent a loud message, broadcasting the retailer’s newfound determination to offer Costco-beating deals.