"Backstabbing" the middle class: Sam's Club has already compromised

In terms of merchandise strategy, Sam's Club adheres to the principle of "broad SPU (Stock Keeping Unit), narrow SKU (Stock Keeping Unit)." Unlike traditional supermarkets carrying tens of thousands of SKUs, Sam's Club stocks only around 4,000 items—offering just one to three options per category. This ultra-curated model significantly reduces consumers' decision-making costs. Most appealing to members is its private-label brand, Member’s Mark. In 2023, this line accounted for 25%–30% of Sam's Club's total product offerings but generated approximately 40% of its revenue. Moreover, for middle-class families, shopping at Sam's Club offers more than just goods—it provides a sense of identity. The RMB 260 annual membership fee acts as an invisible class barrier, distinguishing members from ordinary shoppers and symbolizing a carefully vetted lifestyle. Now, however, Sam's Club appears dissatisfied with its current profit level and is exploring ways to boost margins—prompting some middle-class members to feel “betrayed” by its product selection. Middle-class consumers have alternatives beyond Sam's Club. Sam's Club's sense of crisis stems not only from this recent controversy over product curation but also from increasingly fierce external competition. In 2019, Costco entered Shanghai—and on its opening day, overwhelming crowds forced it to temporarily suspend operations. That event marked the beginning of China’s fiercely competitive era of membership-based retail. Over the past few years, Costco has adopted a strategy of "differentiated product selection + luxury-item traffic generation." Limited-edition Hermès handbags priced at RMB 100,000 triggered frenzied buying; hard-to-get items like Moutai were routinely sold at prices over RMB 1,000 below market rates—serving as powerful magnets for high-end members. If Costco’s domestic footprint remains relatively limited, homegrown competitors are mounting even more aggressive challenges. Last year’s tit-for-tat price war between Hema and Sam's Club over blockbuster products remains vivid in memory. Since its inception, Hema has explicitly positioned itself against Sam's Club as a benchmark; its private-label products enjoy strong user appeal, and its store network is far denser. In FY2024, Hema achieved full-year profitability, posting RMB 75 billion in sales—further narrowing the gap with Sam's Club. An even more surprising challenger has emerged from fourth-tier cities: Pangdonglai. With standout features such as high employee salaries and exceptional service, Pangdonglai has gone viral on short-video platforms and become a model studied nationwide by retail professionals. Operating only a dozen stores across Xuchang and Xinxiang, Pangdonglai posted RMB 11.7 billion in sales during the first half of this year. Meanwhile, through its "Pangdonglai Transformation" (or "Pang-Change") model, Pangdonglai’s private-label products are now entering partner supermarkets—including Yonghui and Wumart—that have adopted the reform. Notably, Pangdonglai charges no membership fee. Interestingly, shifts in the proxy-purchasing ecosystem carry even stronger warning signals. Between 2021 and 2023, many Sam's Club proxy buyers enjoyed lifestyles of "RMB 5,000 daily income, RMB 100,000 monthly income" thanks to exclusive products. Yet as Sam's Club’s exclusive offerings dwindled, its proxy-buying community rapidly faded from online visibility. Last year—before Pangdonglai introduced purchase limits and real-name checkout policies—its proxy buyers were raking in extraordinary profits. This latest eruption of trust crisis signifies that Sam's Club, a RMB 100-billion enterprise, now stands at a new crossroads. At its core, this crisis reflects an imbalance between rapid scale expansion and quality assurance. Zhu Xiaoqing, President and CEO of Walmart China, revealed that over 60 Sam's Club locations are expected by year-end.

Listed on April 23: U.S. IPO (SWIM)

U.S.-listed stock: Latham Group (SWIM) Company type: Designer and manufacturer of backyard swimming pools and related products Total market capitalization: USD 2.5 billion Offering price range: USD 19–21 per share; planned fundraising: USD 400 million Underwriters: Goldman Sachs, Morgan Stanley, Nomura Securities, BofA Securities Recommendation: Cautiously optimistic—but unsuitable for secondary-market stock trading due to its traditional industry nature. Company profile Headquartered in New York State, the company designs and manufactures swimming pools for customers across North America, Australia, and New Zealand. Even during the pandemic, the company maintained robust revenue growth. Its primary products include: backyard swimming pools, pool liners, and pool covers. SWIM benefits from strong demand driven by U.S. residential construction growth, making its long-term outlook relatively optimistic. Customer base In 2020, the company sold over 8,700 pools through more than 6,000 dealers across the United States. It designs and sells pools directly to end users. Market and competition According to market research reports, the U.S. swimming pool construction market is projected to reach USD 9.5 billion by 2021. From 2016 to 2021, the industry’s compound annual growth rate was 1.5%. New residential construction accounts for the vast majority of industry revenue. Due to the pandemic, consumer home-buying behavior shifted from densely populated urban centers to lower-density suburban areas—potentially increasing demand for pool installations. Ironically, the pandemic has proven unexpectedly beneficial to this sector! Management states that its products rank first among the three major competitors. Financial performance Latham’s most recent financial results can be summarized as follows: • Revenue continues to grow steadily. • Gross profit and gross margin have increased significantly.

Why Is Latham Group (NASDAQ:SWIM) Facing Fresh Downgrade Pressure?

Oct 8, 2026

Latham Group shares declined after a rating downgrade, as rising costs reduced profits despite revenue beats. The company must navigate pricing pressures to convert sales into improved earnings.