Sam's Club China, with an annual revenue of 140 billion yuan, faces leadership changes after being summoned for talks—how will it restore member trust amid rapid expansion?

Sam’s Club China has fallen into its biggest public opinion storm in recent years. On June 15, the State Administration for Market Regulation summoned executives of Walmart (China) Investment Co., Ltd. The regulators did not name specific stores or products, but pointed to "frequent food safety issues discovered by regulators and exposed by media at Sam's offline stores and online shops in recent times." A series of high-level personnel changes at Sam's Club followed shortly after. The day after the meeting, Liu Peng, former Alibaba Vice President who joined last year, officially took over as Chairman and Legal Representative of Walmart China. Soon afterwards, Zhang Qing, Chief Procurement Officer of Sam's Club China, resigned for personal reasons and will leave at the end of June. Neil Maffey, the former Chief Procurement Officer from 2013 to 2017, will act as interim replacement, and a global search for a successor has begun. Sam's Club China is currently in its fastest expansion cycle since entering the market. Industry estimates suggest that in 2025, Sam's Club China will break through 140 billion yuan in sales, with its 63 stores contributing nearly 80% of Walmart China's revenue and maintaining nearly 40% growth. In 2026, Sam's Club plans to open as many as 13 stores, once again setting a new annual opening record for itself. Over ten thousand food safety complaints on the Black Cat complaint platform, more than ten public penalties, coupled with turbulence among senior management and rapid store expansion, underscore each other. Such a continuously stretched system during high-speed expansion is beginning to feel pressure at Sam's Club's proudest areas: product quality, and the trust of members built upon that quality. Expansion Costs In the retail industry, scale and quality often constrain each other. Sam's Club spent nearly thirty years slowly building its reputation in China, only to start consuming it at scale in less than three years. In 2025, Sam's Club China will rake in 140 billion yuan in sales with 63 stores, growing almost 40%. There is no comparable figure in China's retail sector—the scale is about twice that of RT-Mart and 14 times Costco China. While the well-known Costco has yet to open a store in Beijing and still seems distant from mainstream middle-class life, Sam’s Club has already extended its reach into inland regions, aggressively sinking into “mountain and river provinces.” Sam's Club's ability to outpace competitors in China hinges on two main advantages: active supply chain localization and instant retail transformation. The traditional warehouse club model operates with "low SKU, standard products, large packages, high turnover," so its supply chain only needs to handle bulk procurement and stable distribution for a few standardized products, making quality control easy. In recent years, Sam's Club has gone the opposite direction, developing a large array of bakery items, short shelf-life foods, and Member’s Mark custom products catering to Chinese families. Short shelf-life supply chains inevitably require intensive local sourcing, but the more localized, the more complex the supply chain becomes. The more Sam's Club tries to hook members with these frequently consumed fresh foods, the deeper it must dive into a non-standard, short-chain, highly time-sensitive domain. If local supply chain, cold chain, and workforce management cannot keep up, fresh and short shelf-life products are more likely to become hotspots for food safety controversy. Sam's Club's second atypical path in China is “instant retailization.” Sam's Club's Chinese footprint consists not only of over 60 large stores, but also relies on a three-tier fulfillment network even larger: "central warehouse + store + cloud warehouse/front warehouse." There are more than 400 community-adjacent front warehouses, at least six times the number of stores. This network not only expands single-store reach, enhancing per-square meter efficiency and meeting instant demands of Chinese consumers, but also serves as a testing ground for new store locations. This strategy has produced significant results. By 2025, Sam's Club China's online sales will account for over 50%, propping up half its business in China. Hundreds of front warehouses mean hundreds of relatively decentralized units for picking, storage, expiry management, and delivery. Temperature control, handling near-expiry products, and standards for picking operations all require coordination between systems, personnel, and on-site management, further increasing complexity. Since the beginning of 2026, members in Beijing, Shanghai, Hangzhou, and other cities have reported buying near-expiry foods through Sam's “Express Delivery” instant retail channels. Some consumers say products arrived with only one day left before expiration, questioning whether Sam’s Club is using express delivery channels to clear near-expiry inventory. Whether this judgment is justified or not, it at least shows that shelf life management and quality perception in Sam’s Club’s front warehouse system are becoming new cracks in member trust. Sam's Club, now advancing rapidly, leaves little time for new project adjustment. The Zhongshan project took just two years from signing to opening; the Jinan project, as the first inland store, was completed and delivered in one and a half years from signing. Kevin, founder of retail case database, told Wallstreetcn·All-Weather Technology, “Previously, for deeply co-created in-house brand new products Sam's Club would take one to one and a half years for R&D and supply chain optimization, and even more than two years for organic/custom fresh categories; now, some fast-iterating new products launch in three to six months.” In his view, “Paying the price for rapid expansion” may be the roughest but closest answer. With shorter store opening cycles, quality control, inspection, and staff training phases also come under simultaneous pressure. Changes in Product Selection Logic If expansion speed is an external pressure on Sam’s quality problems, what’s happening internally is truly transforming the system. At the beginning of 2025, veteran president Wen Ande of Sam’s Club China left, and Walmart’s expatriate Jane Ewing took over as acting head. Afterward, Sam’s Club China entered an adjustment period. In October, former Alibaba Group VP Liu Peng became the President of Sam’s Club, making him the first Chinese President of this format. This personnel change was seen as a sign of Sam’s Club strengthening localization, omnichannel operations, and Chinese retail capabilities. While on social media this Alibaba-alum executive was blamed for member “backstab” feelings, the management shuffle is not the whole issue. What truly affects Sam’s product system is the increasingly tightened internal business assessment during this process. A person close to Sam’s Club China told All-Weather Technology that in 2025 Sam’s Club adjusted its internal procurement assessment system, clearly aiming to eliminate highly homogenized, low input-output products. Everyday People previously also reported that Sam's procurement department's profit indicators are stricter, requiring new products to have a gross margin over 20%, as well as lower purchase prices and unique market presence. By comparison, Costco's comprehensive gross margin is maintained at 11%-14%, with anything over 14% needing board approval—this is Costco’s most rigid institutional safeguard for the principle of "member interests first." If Sam’s sets new product gross margin targets above 20%, it means its procurement logic is shifting toward ordinary retailers rather than narrowing toward the warehouse club model. These changes quickly caught members' attention at the shelves. In July 2025, members noticed "star products" with high repurchase rates like sun cakes, rice pudding, low-sugar egg yolk pastries left the shelves, while common supermarket brands such as Orion, Weilong, Liuliu Mei, Xu Fu Ji began to appear. At the same time, Sam's differentiated weapon, its private label Member’s Mark, began to change. Consumers discovered that MM organic soybeans had dropped from grade 1 to grade 3 and protein content from 36.4g/100g to 33.8g/100g on new packaging, sparking concerns about declining quality. Soon after this controversy, Sam’s Club’s private label rice also gradually disappeared from store shelves and e-commerce channels. Kevin told All-Weather Technology: “Sam’s basic soybeans and rice are highly standardized categories, with many similar alternatives in other channels, transparent pricing, and not much difference in perceived quality.” For Sam's private label, independent R&D, exclusive supply chain, strict quality control combined with fresh and short shelf-life categories’ low tolerance for error all translate into higher supply chain costs. In Kevin's view, as internal procurement KPIs emphasize margin and input-output even more, products with highly transparent pricing, high transportation/storage costs, and insufficient differentiation to support premiums are likelier to be reassessed. Beyond membership fees, Sam’s increasingly needs to secure definite margin returns from the products themselves. This move is understandable. Any fast-expanding retail company must balance product diversity, profit margins, supply stability, and consumer experience. But the real issue is that Sam’s never sells just products—the membership fee implies a tacit trust: consumers believe Sam's has already screened and vetted and found better product answers for them. Meanwhile, there’s a limited pool of local suppliers capable of meeting Sam’s quality standards and co-developing exclusive new products. When Sam’s pursues low prices, margins, supply stability, and speed of new product launches, turning towards mature brands is almost a natural choice. Brands like Orion and Weilong offer stable supply chains, adequate production capacity, and clear quality responsibility boundaries, making it easier for procurement KPIs—but the cost is clear: the line distinguishing Sam’s from a regular supermarket might blur. Sam’s Club’s Urgency The membership retail track in China looks fiercely competitive, but there are almost no players who can really threaten Sam’s Club. Costco China has opened only 7 stores in five years, never entering Beijing; Hema X Membership Club fully contracted in 2025, with its last store closing at the end of August; RT-Mart M Membership Club is still in a regional trial phase around the Yangtze River Delta, far from nationwide replication. The need for membership retail is real, but Sam’s Club is currently the only one capable of large-scale fulfillment. Yet from Sam’s perspective, it still seems to have reasons to press forward. On Xiaohongshu and Douyin, Sam’s Club remains a hot topic, scalpers are still active, and unmet demand itself is the strongest argument for expansion. Kevin judges that Sam’s acceleration is not driven by external competition, but by the company’s own development and local government enthusiasm for investment. On one hand, the Chinese market is big enough and Sam’s Club has strong store expansion needs. On the other hand, many local governments are actively striving for Sam’s Club to land. According to Kevin, multiple city investment platforms and local state-owned enterprises are actively advancing Sam’s Club projects. "Good tax revenue, job creation, high-end retail under a Fortune 500 parent boosts local commercial zones—a plus in local investment and performance metrics." From a map view, Sam’s Club’s territory battle has moved from lower-tier Yangtze River cities to the Central Plains. Entering Shandong, Hebei, Henan—these inland provinces—is essentially about occupying core cities, strong second-tier cities, and front warehouse networks before competitors scale up. Retail wars are not limited to the warehouse club format. The battle for instant retail and private label mindshare is equally intense. Hema’s self-operated matrix, regional platforms like Pupu and Xiaoxiang, are all intensifying their private label moves. Even Walmart under the same group is racing down the same path. Walmart’s own brand, “Wo Jixian”, expanded from dozens of SKUs to nearly a thousand, covering core categories like fresh food and groceries; its display logic, blockbuster product strategy, and fresh food ratio are all converging towards Sam’s Club. In an environment of fully transparent prices, traffic, and delivery, if retailers can't provide exclusive supply via private labels, competition inevitably slides towards homogenization. The fundamental difference between warehouse clubs and regular retail lies in a chunk of revenue from membership fees—“prepaid trust.” The moment the consumer pays, they've already made a choice. As long as there is no severe breach of trust, renewal inertia will help Sam’s Club weather many ups and downs. Sam’s Club is betting on this: supply chain can be fixed, quality control restored, product mix adjusted—but once scale is established, the moat becomes harder to shake. But as the promise of “strict selection” is continually hit by food safety, near-expiry product and selection controversies, Sam’s Club must re-weigh the gains and losses between expansion speed and quality control bottom line. Risk Warning and Disclaimer The market involves risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account specific investment goals, financial circumstances, or needs of individual users. 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