Sam's Club closing dozens of stores

Walmart piloted delivering groceries right into customers' refrigerators, one of the creative ideas retailers rolled out in 2017. (Photo: SAUL LOEB, AFP/Getty Images)

In a note, Sam's Club president and CEO John Furner said that a review found stores that were hindering business at other locations, or operating in areas that had not seen the population growth that was expected.

"We’ve decided to right-size our fleet and better align our locations with our strategy,'' he wrote. "We will be closing some clubs, and we notified them today. We’ll convert some of them into eCommerce fulfillment centers - to better serve the growing number of members shopping with us online and continue scaling the SamsClub.com business.''

News of the closures began to slowly trickle out Thursday. Notices filed with the Indiana Department of Workforce Development revealed that three Sam's Club stores in Indiana would be shutting down, while news outlets across the U.S. began reporting possible closures in cities from Memphis to Atlanta to Houston.The company would not immediately say the specific locations that will be affected by the closures, or the number of employees that would be impacted. But at the three Indiana locations, 419 employees will be affected according to state filings.  And in his note, Furner confirmed that the first of the stores to transition into a distribution center will be in Memphis.

Furner  said that the company would try "to place as many associates as possible in new roles at nearby locations.''

The entire retail landscape has been upended by the rise of Amazon and the growing shift by consumers to shopping online. Though warehouses like Sam's Club and Costco have a steady revenue stream fueled by the fees paid by their members, they are also having to adjust to an environment in which customers can buy groceries, electronics and other products from a growing array of e-commerce and brick and mortar retailers.

Though Walmart reported that Sam's Club's sales rose 4.4% in the most recently completed quarter, Furner says that the store closures will free up resources that can be focused on bolstering its website as well as in-store technology. There are also plans to improve the club's fresh food offerings, overall product selection and its private label Member's Mark.

Rival Costco has seen significant online sales growth in the wake of improvements to its site, the launch of two new delivery options, and introduction of an option for shoppers to buy computers, jewelry and some other items online and then pick them up at a store. Last month, it reported that its online sales had leaped 43.5% in the most recent quarter.

The Sam's Club closures were announced  the same day that Walmart said it would lift the hourly minimum wage in the U.S. to $11 and give out bonuses of up to $1,000.