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Sam’s Club is opening a Dallas-area store that will force customers to go digital. Shoppers will use a smartphone app to scan and pay for their own purchases rather than standing at the checkout counter.
Sam’s Club
GRAPEVINE, Texas — When shoppers walk into the new Sam’s Club store, they’ll soon see a shiny blue Mercedes-Benz SUV, a sectional sofa and no cash register.
Welcome to WalmartThe company-owned members club’s first fully digital store – and a glimpse of what its future could be.
Inside the club, which opens in mid-October, customers will have to use a smartphone app called Scan & Go to phone in their purchases while browsing the aisles. In the area typically reserved for cash registers, the company will feature online-only items as varied as a 12-foot Christmas tree and a 5-carat lab-grown diamond. Members can scan QR codes and directly access the elements of the application.
Store employees will have about four times more space to prepare customers’ electronic orders for curbside pickup and home delivery, according to Sam’s Club executives.
“It’s kind of the physical manifestation of a journey that we’re trying to go on as a company,” said Chris Nicholas, CEO of Sam’s Club, introducing the club before its grand opening.
The online-only items will be on display at Sam’s Club’s new Dallas-area location. Items will range from a 12-foot Christmas tree to a sectional for the living room. Each will have a QR code nearby where shoppers can scan for more information or to make a purchase.
Sam’s Club
Since Walmart founder Sam Walton opened the first Sam’s Club in 1983, the membership-based club has become the most tech-savvy arm of his retail giant. The club has developed several key innovations that its parent company now also uses, such as Scan & Go. It has also used its digital offerings to try to outperform its biggest rival, Costco.
Sam’s Club is doubling down on that strategy with the Dallas-area store, which is reopening nearly two years after being damaged by a tornado.
Nicholas said when it reopens, the site will become a testing ground for Sam’s Club’s latest features and emerging technologies.
“The idea is that over time our business will be 100% committed to digital, and you’ll have to prove things work before you scale them,” he said.
He added that he hopes “this looks like what it will be like to shop in the future.”
Compete with Costco
Costco has long been “the king of the warehouse club channel,” said Peter Keith, senior research analyst at Piper Sandler. But Sam’s Club has added features to “enhance shopping experiences,” he said, such as introducing a permanent position at some clubs where a chef prepares sushi rolls in front of customers.
And notably, Sam’s Club has differentiated itself by embracing e-commerce offerings and attracting customers who are looking for easier, faster ways to shop, like Scan & Go.
“It really eliminates the most annoying part of these member clubs, which is the long lines to check out,” he said.
Sam’s Club and Costco have about the same number of clubs in the United States, but Costco generates about twice as much annual revenue. Sam’s Club’s net sales totaled $86.2 billion in its most recent fiscal year, compared with $176.63 billion for Costco’s U.S. clubs.
Sam’s Club has taken several other key steps to catch up with Costco: it has consolidated its private brands of more than 20 different brands in one: Member’s Mark. She has reduced the number of unique items she sells and is therefore focusing on tried and true, popular items. And it recently announced it would raise the average hourly wage of nearly 100,000 of its workers before the holiday season.
Sam’s Club also opened The Clubhouse in August, a roughly 37,000-square-foot office building across the street from the retailer’s headquarters in Bentonville, Arkansas. It includes workshop rooms and tools like whiteboards, arts and crafts supplies, and cardboard models that will help the retailer come up with new ideas, test products and collaborate on projects with cross-department teams.
And it is in the midst of an aggressive expansion, with plans to open around 30 new clubs over a five-year period.
Sam’s Club U.S. comparable sales, a metric that includes sales at stores and clubs opened in the prior 12 months, rose 5.2% in the most recent quarter ended July 31 versus to the period of the previous year. This included e-commerce growth of 22% year-over-year.
The Dallas-area club will have 6,000 square feet to fulfill e-commerce orders, a jump from other clubs’ average of about 1,500 square feet. It will also feature cooling pads where store employees can store bags of frozen and refrigerated items.
Sam’s Club
Nicholas said the new clubs, including the one opening in Grapevine, will also be designed to better handle higher volume.
For example, the club’s cafe will feature a pizza robot that can prepare up to 100 pizzas in an hour. It will also test a new system that delivers food orders to an assigned compartment after the customer orders via Scan & Go.
The digital age
Like its parent company, Walmart, Sam’s Club has been attract customers from a wider range of incomes and ages by focusing on offering convenient ways to shop. About half of the new members who joined Sam’s Club in the most recent quarter were millennials or Generation Z., according to the company.
One in three members currently use Scan & Go to shop at clubs, according to Sam’s Club. It recently rolled out new exit technology that automatically checks customers’ carts and allows them to leave the club without an employee looking at a receipt or checking their cart. Shoppers walk under an arcade powered by computer vision and artificial intelligence. This system works in the same way as from Amazon The Just Walk Out technology which has begun to be implemented in event stadiums in addition to certain physical storefronts of the e-commerce giant.
But Nicholas acknowledged that some buyers may be reluctant to adopt new technology or a new routine.
Tiffany Zuniga, a mom and Lyft driver who lives in the Dallas area, said she’s eager to return to Sam’s Club, but is a little wary of the new technology. Zuniga used to turn to the club for easy family dinners or supplies for church events, but switched to Costco when Sam’s Club was closed due to tornado damage.
She’s never used Scan & Go and says she hopes the new technology doesn’t come at the expense of customer service.
“Sometimes it can get a little dicey if you scan the wrong item or need help,” she said. “I hope they have enough staff.”
As construction crews finished work at Sam’s Club in Grapevine, the retailer installed signs at the nearby Sam’s Club gas station and car wash to train customers to prepare for a club’s return and encourage them to download Scan & Go.
And when customers enter the newly reopened club, employees will be ready to help them download the app or accompany them on a shopping trip if they need help learning how to use it.
Nicholas said there will be no change in the number of employees at Grapevine’s stores, but some will have new roles.