Sam’s Club is weighing price hikes on a range of products in response to tariffs imposed by President Donald Trump.
Kitchen appliances and outdoor décor are among the items that may see increases, according to chief financial officer Todd Sears.Â
‘If we see those higher costs come in, certainly we have to take a look at all options,’ Sears told the Wall Street Journal.
The Costco rival, which earns 80 to 90 percent of its profits from paid memberships, is known for offering high-quality goods at low prices.Â
Sam’s Club is enticing new members with reduced annual fees of $20 instead of $50 and ensuring price stability on over 1,000 products until July 22.
‘Sam’s Club is dedicated to providing value for its members. Being a membership club allows us to absorb costs wherever possible, enabling us to maintain competitive prices, particularly on essential items,’ a spokesperson for Sam’s Club shared with DailyMail.com.
‘Our members benefit from pricing that is frequently lower than what traditional retailers offer, which is fundamental to the membership’s value.’ While the company currently has no immediate intentions to increase prices on food items, some shoppers remain doubtful.
On Reddit, several users reported price jumps — including a $3 increase on Folgers coffee and a bump in meat prices. Walmart, parent company of Sam’s Club, has also been raising prices due to tariffs. Target has also been hiking prices.Â
Sam’s Club is selecting products that will potentially undergo a price hike
About 80 to 90 percent of Sam’s Club profits come from paid memberships
While social media users claimed prices are growing, Sam’s Club did not expect cost growth in food products from tariffs.
A partial reason for this is that it would reduce the chain’s costs by improving packaging to lengthen shelf life and using less packaging.
Sam’s Club also uses data and algorithms to calculate fruit demand, which are imported from countries like the US and Mexico. It has also been working to manage its inventory as a way to minimize product markdowns.
Walmart frequently helps Sam’s Club thrive by giving the chain access to its supply chain, which has helped the business fulfill orders and save money.
With Walmart having already rose product prices last month, senior equity research analyst Steven Shemesh believes the potential price rise won’t harm Sam’s Club too much. Â
‘Increasing prices is definitely a risk, but Sam’s Club, being under the Walmart umbrella, has many more tools to mitigate the impact of higher costs than a lot of other retailers out there,’ he said.
Sam’s Club usually offers pricier items than Walmart, and with the potential price rise on expensive products, it could lead to a weakening demand.
‘If tariffs are hypothetically 60 percent on the barbecue grills, maybe next year you don’t carry them. You just plan for less unit volume in that situation,’ said Rupesh Parikh, a managing director at investment bank Oppenheimer & Co.
Sam’s Club chief financial officer Todd Sears explained the chain will look at options if prices keep rising
Social media users are expecting product prices to keep rising as a result of tariffs
Walmart was one of the retailers that issued a price increase warning last year.
Employees leaked price changes on Reddit days after Walmart confirmed the growth, gradually turning into an avalanche of price hikes on popular products.
The company was also forced to axe about 1,500 jobs even though its quarterly revenue has continued to be successful.
A Costco executive warned shoppers of price hikes in December, and accusations of food court price growth swirled the internet soon afterward.
Once tariffs began to do its damage on gold, the chain was forced to place limits on its popular gold bars.
Costs of select products at Target and Best Buy rose by mid May after its CEOs issued their warning in March, and hikes in Adidas and Nike brands resulted in price changes at Macy’s.
