1. Business

How a closed Tampa Sam's Club became a strategic weapon to compete with Amazon

The Sam’s Club eCommerce fulfillment center at 5135 S Dale Mabry Highway was a regular Sam’s Club until it was closed in January 2018. In September it reopened as the distribution center, sans any branding or logos on the outside of the building. (SARA DINATALE | TIMES)
Published Apr. 1

TAMPA — A shuttered Sam's Club near the Gandy Bridge might just be the future of retail.

Since closing its doors in January 2018, the store has been reborn into a kind of mini-Amazon that is still serving Sam's Club customers. Not that any shopper would know by looking: The outside of the building is barren, free of any branding or logos.

Inside, there are no cashiers at registers. Instead there are workers sorting packages, surrounded by a conveyor belt system and individual shipping workstations. Sam's Club, which is owned by Walmart, calls it an "eCommerce fulfillment center." Workers are tasked with quickly processing orders to send to shoppers' homes.

Some experts think such hubs will only grow in popularity — potentially taking over the very spaces left behind by retailers that struggled to adapt.

"There's a big shift," said Ed Miller, a Tampa broker with Colliers International. "Industrial is the new retail."

The online-focused hubs are a new frontier, part of a larger urban infill movement to reuse existing structures rather than create new ones. Already in Tampa, University Mall is on its way to becoming the "Uptown District." Its developers plan to turn the old Sears and JCPenney spaces into offices or research labs.

While adaptive reuse is in vogue, Miller said retailers, brokers and developers are still figuring out how "eCommerce" will fit. The pressure to adapt is on, as Amazon leads online retail with the promises of two-day shipping and Prime Now delivery in as little as an hour.

Miller, whose expertise is in industrial leasing, poses it this way: Who wants to wait a week for something they can get in a day?

What's resulting is the creation of facilities that are not quite warehouses, but not standard retail stores, either.

"This location in Tampa supports our omni-channel shopping experience by shipping items directly to members as orders are placed," Sam's Club said in a statement. "We are also testing … opening a portion of the eCommerce fulfillment center to members to shop a curated assortment of our most popular items using Scan & Go."

That would mean shoppers could use the store's app to check themselves out without having to wait in line. Right now, the delivery center in Tampa isn't open to the public.

The once typical Sam's Club is near a new housing development and shares a parking lot with a bustling Home Depot and a Regions Bank.

Sam's Club first announced it would be closing 63 locations nationally, including the store at 5135 S Dale Mabry Highway, in January 2018. It also said up to 12 of those locations would be made into delivery hubs. The details were unclear. Largely, they still are.

The first of Sam's new online order centers opened with a ribbon-cutting in Memphis, Tenn. in June. Later that month, Sam's Club filed plans with the city of Tampa's planning and development office to retrofit the location at S Dale Mabry. It opened in September. At least one other location has been repurposed in Matteson, Ill., a village 30 miles outside Chicago.

The facilities benefit Sam's Club "Plus" members who, similar to Amazon Prime members, get faster and free shipping. The centers stock items that are the most popular and most likely to be ordered.

Developers are intrigued by the mixed-use retail and distribution hubs and are interested in investing in properties that could have such a use, according to Miller.

"But they're difficult to find," he said. "You can't just put one of these centers down anywhere."

The Tampa Sam's Club is owned by its parent company, Walmart. It had been running as a typical Sam's Club for 18 years before it closed. Its location by the Gandy Bridge, however, makes it a perfect distribution point. Drivers expected to complete fast shipping times are able to bypass at least some traffic across the bay to Pinellas County while still being in Tampa to complete deliveries throughout Hillsborough County.

Sam's Club, already a warehouse-style store with docks, storage and lot of space, makes flipping it into a distribution center simple from a construction standpoint, Miller said.

On a recent weekday afternoon, the new center was mostly quiet. Large trailers with Walmart and FedEx printed on the outside sat at the docks to be unloaded. The parking lot was scattered with just more than a dozen cars.

But not all the new center's neighbors support the change. GF Properties, the owner of the nearby townhomes, filed a lawsuit against Sam's Club last month.

The reason? An agreement among all the properties dating to 1998 that defined what Sam's Club could act as — essentially, only as a first-class shopping center. Despite amendments made over the years to the agreement, the expectation Sam's would remain a shopping center, not a distribution center, never changed, the lawsuit says.

GF Properties' founder and managing partner, Bob Gries, and his attorneys argue the delivery hub doesn't match that set definition.

"In our opinion, Sam's has breached the agreement," Gries said. "It has been unfortunate but necessary to go to court over the matter. There's a requirement in the agreement to operate as a retail operation, which it has now elected not to do."

Sam's Club said in a statement it does not comment on pending litigation.

It is likely similar discrepancies to Gries' case will pop up if other retailers follow Sam's Club lead by turning old retail buildings into online order hubs. The retail industry has transformed faster than the property and legal language used to describe and sanction it.

Bob McDonaugh, Tampa's administrator of economic opportunity, said the retailer worked with the city to ensure it wasn't breaking any land-use rules. Records show the city approved the redevelopment plans in August of 2018.

"One of the things we look at is intensity," said McDonaugh. "Is there going to be more truck traffic, more cars? In this specific case, the intensity is down. We saw no impacts on adjacent neighbors."

The city is mostly seeing conversion of old retail stores into offices, McDonaugh said. He also said he was not aware of any existing land-use ordinances or zoning laws that would even recognize the Sam's Club as a hybrid center encompassing elements of traditional retail, a warehouse and online sales and delivery.

"We're in a changing world," he said.

Contact Sara DiNatale at Follow @sara_dinatale.


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