- When deciding where to shop, consumers face trade-offs between convenience, quality, and price.
- Sam’s Club CEO Chris Nicholas tells BI he wants shoppers to have all three.
- A new store in Texas showcases what Nicholas wants shopping “in the future” to feel like — with no cash registers in sight.
At the back of Sam’s Club’s new tech-infused location in Grapevine, Texas, an unassuming floor-scrubber robot sits in a maintenance closet near the loading docks.
Each day, the autonomous unit glides through the aisles cleaning up spills and crumbs while its cameras and sensors check inventory levels and update the company’s computers with the latest numbers.
Using that blizzard of data, emerging technologies, and what CEO Chris Nicholas calls “design thinking,” Sam’s Club is challenging some commonly held assumptions about the warehouse club business.
“This, here, represents what the future looks like for Sam’s Club,” Nicholas told Business Insider in an interview Thursday, standing in what would normally be the checkout lanes of a traditional store.
The newly opened Grapevine store is the first to eschew conveyer belts and cash registers in favor of mobile apps and AI-powered computer vision.
Shoppers passed through three towering blue gateways on their way out to the parking lot, pushing carts full of items they’d scanned and paid for on the app.
Thanks to data from sources like the floor scrubber, shoppers can find what they’re looking for in the warehouse, scan the barcode, and pay through the app. And they can complete the entire process without waiting in line for a cash register — or a receipt check at the door.
Those who needed additional assistance were met by tablet-wielding associates who could ring up orders and process payments on the spot.
While many of the systems have been in development at Sam’s Club since before Nicholas became CEO, it’s now up to him to ensure they all perform harmoniously.
Nicholas said the club model’s success historically has been a function of high-quality products sold at bargain prices.
“The price you pay for great items and great prices is friction,” he said. “You queue to get in the door, you queue at the register, you queue to get out. You don’t have e-commerce, or if you have e-commerce, you pay a premium.”
Consumers deciding where to shop long faced trade-offs between convenience, quality, and price.
Sol Price — the godfather of the club store, progenitor of Costco, and acknowledged inspiration for Sam Walton to launch Sam’s Club — was able to crack the code on quality and price at the sacrifice of convenience. Other retail concepts have achieved convenience and price at the expense of quality. Still others offer convenience and quality for premium prices.
In short, US shoppers often face a “pick two” scenario, but Nicholas said it doesn’t have to be that way. With the help of the modern technology found in the newly opened location, he believes shoppers can enjoy all three.
“The total club channel is doing OK — it’s growing faster than retail — but it hasn’t been where innovation has lived,” he said.
One advantage Sam’s Club has over most of its rivals is its massive parent company: Walmart, the world’s largest retailer.
“The beauty of being owned by Walmart for us is we get to leverage a big supply chain that’s automated, we get to leverage technology, which is front-end and back-end, and we don’t have to pay for it,” Nicholas said.
“We don’t have these massive investments that we have to make. We have capacity ready,” he added. “We can innovate at the pace of inspiration, versus innovating at the pace of a capital budget.”
The Grapevine Sam’s Club is literally bristling with tech, not just in the form of the hulking blue AI-powered gateways. There’s a pizza robot in the café that can knock out 100 pies per hour, RFID sensors on every aisle, computer vision pallet scanners on the loading docks, and a fleet of battery-powered coolers that will extend the club’s delivery range for perishables.
It’s Sam’s Club’s first new store in seven years and a model for the roughly 30 new locations and an unspecified number of remodels planned for the next five years.
Walmart, for its part, has a clear incentive to experiment with new technology at Sam’s Club. After growing sales by nearly 50% over the past five years, Sam’s Club’s $86 billion in revenue is still less than half of what Costco’s North American business makes. There’s plenty of ground to gain.
Several shoppers told BI they’ve been using the new tech at other Dallas-area stores and that it generally worked as expected, apart from a few hiccups due to the larger-than-usual crowd at the grand opening. Many of the shoppers had Costco memberships too. One shopper told BI he planned to cancel his.
Sam’s Club has also been a test-bed for retail concepts that eventually find their way into Walmart’s 4,600 US stores and beyond. Walmart Plus members can use a similar mobile app scan-and-go feature, and the businesses continue to combine resources — recently merging their supply chain management teams, BI first reported.
Former Sam’s Club CEO John Furner is now CEO of Walmart US, and Nicholas was instrumental in planning the modernization of Walmart’s store fleet during his earlier stint as chief operating officer for Walmart US.
During the interview, Walmart CEO Doug McMillon strolled over to say hello as he wrapped up his tour of the store. He, too, previously served as Sam’s Club CEO.
Many of the same design principles in Grapevine can be observed at Walmart’s recently remodeled stores, such as low-friction checkout options, larger dedicated space for e-commerce fulfillment, and tightly interconnected use of mobile app shopping through scannable codes and showcase displays.
Nicholas said he wants to transform shopping at Sam’s Club into a “delightful” experience, whether that means using AI to interpret the jumbled contents of a shopping cart or redesigning the pockets on the Member’s Mark jogger sweatpants to be an inch deeper after feedback so keys and phones are less likely to fall out when sitting.
“My hope is that Sam’s Club, when you shop, feels like what it’s like to shop in the future. That’s what I hope, and so that’s my job,” he said. “This is a glimpse of that.”
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