Sam’s Club, the membership-based retail arm of Walmart, is set to increase its minimum wage in November.t
The move is as part of a broader strategy to retain employees and stay competitive with rival Costco.
The company will raise its starting pay from $15 to $16 per hour. It will also offer wage increases ranging from 3 percent to 6 percent for its nearly 100,000 employees, depending on their tenure.
A Move to Improve Retention and Customer Service
Sam’s Club operates in a unique market where customer service is critical to retaining its paying members. The chain charges $50 for a regular membership.
Ensuring that employees are motivated and satisfied is seen as key to improving service quality.
By offering higher wages and better financial incentives, Sam’s Club hopes to cultivate a more stable workforce.
Chris Nicholas, CEO of Sam’s Club, emphasized the importance of this strategy:
“The thing that we’re trying to do here is create good jobs that turn into great careers. Stability matters more for a club model than anywhere else.”
Costco, is well-known for offering some of the highest wages in the retail sector, with a minimum wage of $19.50 per hour.
The wage increases are seen as a necessary step to remain competitive in an industry where turnover can be costly.
Wage Growth in the Retail Industry
The retail industry has seen significant wage increases over the past few years as employers contend with a tight labor market.
Since April 2020, average hourly wages for retail employees have risen by approximately 16 percent. This is according to data from August, bringing the industry average to $24.48 per hour.
Daniel Schneider, co-director of The Shift Project at Harvard University, noted that Sam’s Club’s decision to raise wages aligns with a growing trend among companies to adopt voluntary wage standards to reduce employee turnover.
Schneider said: “That reflects the realization that these firms need to reduce turnover to manageable levels,”
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New Pay Structure and Benefits for Long-Term Employees
Previously, Sam’s Club hourly workers received annual raises of 3 percent until they reached a maximum pay rate, with some positions capping out at $36 per hour.
Under the new plan, employees will now be eligible for raises of up to 6 percent annually, depending on tenure. Additionally, once an employee hits the maximum pay rate, they will receive a lump sum payment equal to 6 percent of their annual salary.
Schneider pointed out that the move to offer more substantial raises as tenure increases is a positive change for workers. #
He said:
“Meaningful guaranteed annual raises that rise with tenure would be a big change and positive for workers,” he said, noting that Costco has long been regarded for its strong pay structure, especially for employees who stay with the company for extended periods.”
Broader Strategies to Attract Employees
The upcoming wage increases are just one part of Sam’s Club’s efforts to improve employee satisfaction.
Over the past five years, the company has raised its starting pay from $11 per hour. It has also implemented block scheduling for more consistent shifts, and offered annual stock grants to employees.
These changes have come as the warehouse club industry has experienced significant growth, fueled in part by the COVID-19 pandemic.
Consumers have increasingly turned to bulk buying for better value. This has helped Sam’s Club, Costco, and BJ’s Wholesale Club attract millions of new members.
In its latest fiscal year, Sam’s Club reported a 2.3 percent increase in sales at stores open for at least one year. This follows a 14.6 percent increase the previous year. .
Looking Forward
As the competition for retail workers intensifies, Sam’s Club’s wage increases and new pay structure demonstrate the company’s commitment to attracting and retaining employees.
With the holiday season approaching and a growing membership base, the company is positioning itself to better serve its customers while offering more financial stability for its workforce.
Whether this move will help Sam’s Club close the gap with Costco remains to be seen, but it certainly signals the retailer’s dedication to staying competitive in a challenging market.
