When you come to the fork in the road, take it." Sam's Club took the road that serves small businesses. Costco also serves small businesses, but Costco is on a road that makes it more of a competitor to supercentres and larger supermarkets. While the assortments are rather similar (although Sam's seems a little lower priced), the buying audiences are more varied, which leads me to the conclusion above.

Gene Hoffman, president, Corporate Strategies International

Warehouse clubs are here to stay. Sam's and Costco both offer value to small business owners and consumers that are willing to buy in larger quantities. Sam Walton filled a market niche and created a successful business. Costco took that one step further by going upscale and adding top-of-the-line food items. When the grocery stores in Southern California went on strike a few years ago, sales soared at Costco. The grocery stores still have not recovered, which says something about the offerings at the club stores.

Max Goldberg, founding partner, The Radical Clarity Group

Sam's Club, under Doug McMillon, has found a winning formula. It is no secret that Sam's struggled for a decade or more under a variety of leaders who kept Club members scratching their heads with each new merchandising philosophy.

Doug kept a laser focus on re-building the small business confidence in their ability to supply them consistently with high-quality and low-priced products. Once this discipline was second nature, Doug began to tweak the model to ensure that Sam's captured business from the individual members and communities. The assortment and merchandising of product continues to improve, and areas such as men's apparel, previously a hodgepodge of private label ‘stuff’, has begun to take on a more branded identity and quality.

I see Sam's Club continuing to make solid gains and to differentiate itself from Costco in its own unique offer.

Charles Walsh, president, OmniQuest Resources, Inc.

I would like to know how much of Sam's sales is really to small businesses. At my local Sam's Club, which I am no longer a member of, I get the impression that Sam's touts itself as catering to small business while mainly selling in bulk to the masses. Which I prefer not to support as a small business owner. 'no_pets'

Best things about warehouse clubs: location growth is minimal, and only three major competitors. So, the clubs can make money. Manufacturers help by supplying special merchandise not available in other channels (giant sizes, different model numbers). The public gets bargain prices, and the limited competition = decent profits. If there were 19 other warehouse club chains, all in a race to build 20 per cent more locations every year, the profit picture would be different. It might look similar to the rest of American retailing: too many competitors and too many locations

Mark Lilien, consultant, Retail Technology Group

Sam's Club, like Wal-Mart, is going to face some difficult times ahead. To different degrees, they both employ the same retail 'narrow, cheap and deep' business model. They are both very short on selection, but generally have products in depth at low prices. This has worked well for the last twenty years as the mature Baby Boomer market with their defined, very predictable tastes drove both stores. Now, the Boomer generation has crested its peak buying/consuming years, and the new huge emerging market is Generation Y - now 23 years old and under. "Narrow, cheap and deep" does not work well with kids. They want selection and are driven by fads and style. Sam's and Wal-Mart cannot deliver this.

In case you were wondering, Generation X, now 24 to 43 years old, is too small numerically to fill the consumer shoes left behind by the Boomers. I know this is counter-intuitive, but it is true

Ken Gronbach, CEO, KgcDirect

Sam's is a good concept that is (amazingly) staying on track. Their focus on small business has been difficult in the glare of Costco's focus on the mid/high-end consumer. As Costco sales double or triple Sam's on a per-unit basis, the pressure on Sam's to alter course has been great.

Wal-Mart/Sam's seems to know what it wants and is perfecting the channel. I guess they know that with their buying power they can go after the high-end business anytime they want to.

Ed Dennis, president, Dennis Enterprises

I would have said that Sam's Club and Costco were pretty much the same, but I must admit, with apologies, that I have never been in a Sam's Club. Therefore, I will rely on the demographic difference that Susan Rider observed in the first comments to this question. From there, I tried to consider how the two groups may respond to the current economic climate.

For Costco, with their quality pitch and low prices, they most certainly will continue to win favour with the end-user customer. Will the smaller or independent retailer be hurt by customers going to discounters or Costco, thereby reducing sales at Sam's Club? It is a possibility.

Maybe it will be up to the smaller retailer to first convince the customer their independence makes them a better place to shop for service, value and convenience. If they do so, they may, in turn, have a positive effect on Sam's next few quarters.

Jerry Gelsomino, principal, FutureBest

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