The Origin Of The Costco Vs Sam's Club Rivalry

Costco and Sam's Club are known rivals in the world of wholesale retailers. Both are among the most affordable grocery stores, running membership-only warehouses where customers can buy the items in bulk at discounted prices. Costco and Sam's Club were both launched in 1983 and have been competing for dominance in the wholesale market ever since. But in order to truly understand the nature of this rivalry, we have to go back to 1976 when a store called Price Club popped up in California.

Price Club paved the way for modern wholesale stores by being the very first warehouse club grocery store in the United States. Originally, it only catered to businesses that were looking to purchase supply items in bulk at wholesale prices, but it quickly expanded its reach to include the general population as well. The revolutionary concept of a warehouse store paired with incredible deals noticeably appealed to customers, so it wasn't long before other people tried to replicate the concept.

In April 1983, the first Sam's Club (owned by Walmart) opened in Midwest City, Oklahoma. Later that same year, in September, the first Costco location opened in Seattle. The competition was there from the start, as both stores grew rapidly over the next decade, making billions of dollars in sales annually. Then, the year 1993 ended up being a big tipping point for the warehouse membership market.

By 1993, Sam's Club was the leading warehouse wholesaler in terms of profit, making about $12 billion annually and owning over 300 locations. The second-biggest profit maker was Price Club, bringing in $7.5 billion annually across 94 stores. Costco was No. 3, making $6.5 billion and owning 103 stores. Price Club realized the market was getting too competitive and made the decision to merge with one of the other two wholesaler giants. Both Costco and Sam's Club wanted to merge with Price Club, but ultimately, the company chose Costco. 

Price Club owners allegedly felt that Sam's Club brand was too different from their own, but it's hard not to speculate whether the decision had something to do with Jim Sinegal — one of the two Costco founders who held a high position at Price Club before branching out on his own. The merger created a $14 billion company that became a true force to be reckoned with. Originally called PriceCostco, the chain was eventually renamed to just Costco in 1997.

The merger didn't stop the growth of Sam's Club, though. The chain went on to acquire 91 Pace Stores owned by Kmart, with the intention of turning them into Sam's Club locations; this brought their overall number of stores above 400. In 1998, it launched its own private brand (Member's Mark), three years after Costco launched Kirkland Signature. In the nearly three decades since, both stores have continued to compete in the wholesale market, a rivalry that's still ongoing to this day.