Sam’s Club Bans Pallet Wraps Due to Low ROI

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Sam’s Club Bans Pallet Wraps Due to Low ROI

By Jacqueline Barba - 11/12/2018

Sam’s Club in September implemented a chain-wide ban on pallet base wraps as part of a larger strategy to simplify its business.

The year prior, Sam's Club's then-new president and chief executive officer John Furner laid the groundwork for the P-O-P policy change by underlining the importance of product over presentation. The former Sam's Club merchant said that the way to win in the club channel is by stocking the best items, and the key to that is in the merchant team, which underwent a significant restructure in early 2018.

Every part of the business was reviewed to make sure it aligned with the new strategy, including a warehouses staple: pallets.  

"We reviewed every step of the pallet skirt process and saw that it had a low ROI," Sam’s Club senior director of corporate communications Carrie McKnight told P2PI.

Sam’s Club officially notified suppliers of its decision to undress pallets via email mid-September, explaining that it would no longer ship nor set any pallets with base wraps anywhere in its stores even if a pallet had already shipped or was ready to ship.

Sam’s Club senior leadership painted this as an opportunity to be more innovative and effective and to grow business with vendors, though the move caught some people in the industry by surprise, according to a P2PI source familiar with the matter.

In terms of how this may affect brands who have a history of deploying pallets outfitted with base wraps, McKnight said, “We think brands will appreciate that we’re being mindful stewards of shared resources and are focused on implementing and executing high-value work.”

“This move is about innovation, growth, being smart about where we invest and where we ask our suppliers to invest,” according to McKnight.

Coming just ahead of the holidays, the change begs the question: How might this affect the holiday shopping season? McKnight indicated it will make for a better associate and member experience. “In fact, the initial feedback we’ve received from associates and members is they really like how this makes the club look, and it’s easier to shop,” she stated.

Most locations quickly made the change. On a recent visit to a club in Minnesota, P2PI noted an abundance of "bare" pallets, a change that was noticeable immediately upon entering the entryway merchandising area. Gone were the wraps that used to adorn pallets throughout the store, with just one skirt and one mini-skirt remaining — on a Greek Pita pallet and a Kraft Heinz Co.'s Heinz "HomeStyle" gravy pallet, respectively. 

It’s unclear how strict every location will be in enforcing the change going forward, but if it follows the lead of Walmart's ban on floorstands, it’s possible shoppers will still see the occasional pallet skirt.

P2PI's source said the change would also include moving the placement of price signs from above pallet displays to the floor, though that was not evident in the store and McKnight told P2PI there are no plans to do so.

Click here to view more images of pallet displays at Sam's Club on p2pi.org.