How Sam’s Club CEO Plans To Beat Amazon and Costco

Walmart, the world’s largest retailer, is used to being the big dog.

So when Rosalind Brewer took over the company’s Sam’s Club division in 2012, it put her in an odd position. Walmart’s (WMT) warehouse club business is No. 2, second in size to industry rival Costco (COST).

“It’s difficult when you are in the baby business in the big mothership,” Brewer said at the Fortune Most Powerful Women “Evening With…” dinner in New York City on Monday evening.

Brewer has worked to flip that dynamic since taking over the top job of the $57 billion-in-revenue division four years ago. She’s placed big bets on digital retail, an area that Costco has largely ignored. “If you study Costco, they have won because of the discipline of their model,” she said. There is a downside to that discipline, however: The retailer has been slow to expand into new areas.

Attempting to capitalize on that opening, Brewer has made major investments in digital, ploughing resources into the company’s mobile app, which allows customers to pick up at stores within two hours of placing an order and notifies the store as soon as customers arrive in the parking lot. In the past 24 months she’s hired only decision scientists for the membership team—professionals skilled at using analytics to bring in new members.

To her mind, this the future of retail, and she’s focused on how she can “build this for the long haul, not just for today or tomorrow.”

Brewer also offered up an assessment of Amazon’s intentions to expand its private label into grocery.

“I say good luck to them,” she said. “That may be one of the hardest tasks they’ve every done.” She noted that Amazon (AMZN) has already struggled in household goods private label after it introduced a diaper brand that it quickly pulled. Brewer said private label takes a lot of time and focus, adding that retailers who pursue it rashly risk diminishing their relationship with national brands.

Sam’s Club at one time had 20 private label brands that Brewer has since brought down to one. Having its own brand has helped Sam’s Club push its suppliers to innovate because if they won’t do it, Sam’s Club will with its own label.

The New York dinner is the capstone event for the annual Fortune/U.S. State Department Global Women’s Mentoring Partnership, a three-week program that pairs women from emerging markets with senior female executives from companies such as The Dow Chemical Company, Accenture, and Johnson & Johnson.

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