How this US business saw record profits when it put its employees first

By Steve Prokesch

In June 2019 Sam’s Club, the membership warehouse retailer owned by Walmart, with 600 stores in the United States and Puerto Rico, launched an effort to change virtually every major aspect of its operating model. The chain significantly reduced prices and the number of stock-keeping units (SKUs), introduced an array of digital technologies, redesigned jobs, and raised the average pay of employees (whom it refers to as “associates”) in its clubs by 31% (according to fiscal year comparisons).

Since then Sam’s Club’s net sales (exclusive of membership fees) have increased by 43%, and comparable-store sales have grown by double digits 12 quarters in a row — despite the pandemic’s inventory challenges and continuing inflation. Associate turnover — which excludes people who move to a different Sam’s Club or a Walmart store — significantly decreased within the first year of the implementation. And the percentage of associates who respond positively to the question “Would you recommend this as a place to work to friends?” has soared by 440%.

In this interview with the HBR senior editor Steve Prokesch, Tim Simmons, Sam’s Club’s chief product officer and formerly its vice president of operations transformation, shares his perspective on the lessons from his company’s makeover.