Analysts say Walmart is smart to try out the model through its membership-only chain where much more is already known about customers and their preferences. Plus, tech-savvy shopping experiences may well be where the industry is headed.
“We’ll use all available technologies – including computer vision, augmented reality, machine learning, artificial intelligence, robotics, just to name a few – to redefine the retail experience," said Jamie Iannone, SamsClub.com chief executive and executive vice president of membership and technology.
As they contend with e-commerce giants and shoppers increasingly moving online, brick-and-mortar retailers are looking to technology as one key to streamlining the customer experience. Perhaps the most recognizable example comes in the form of the country’s six Amazon Go stores, which also do away with cashiers and check out lines.
At an Amazon Go shop, shoppers don’t even have to scan their items -- cameras and sensors blanketing the store track customers as they move. The convenience comes at a price because those cameras catalog shoppers' choices and compile data on their habits and spending. Shoppers may not realize the extent of the data collected or its privacy implications. Most would never expect to have hundreds of cameras trained on them as they pick out a sandwich.
Amazon is reportedly weighing plans to open as many as 3,000 Amazon Go stores in the next few years.
Other grocers are testing their own models. In January, Kroger announced its Scan, Bag, Go technology that would be available to customers at 400 stores. The app also allows customers to keep running tabs of their orders, scan their goods and pay without a checkout line.
At Sam’s Club Now, hundreds of cameras work in tandem with the Scan & Go app. Never mind wasting time lost in the aisles: the app comes with a voice command option that leads customers to a specific item. The store also includes electronic price tags that can update in real time, and customers can place orders through the app for pickup within the hour. At just 32,000 square feet, Sam’s Club now is roughly a quarter of the size of a typical store, with a specific focus on selling produce, meat and alcohol.
Scan & Go technology had been tested at Walmart stores in Texas, Arkansas, Florida and Tennessee but was discontinued earlier this year. One labor-union backed group told The Dallas Morning News that Walmart did away with Scan & Go because “eliminating cashiers doesn’t result in more convenient shopping.” But other analysts speculated that the sheer cost of the technology was difficult to justify in a smaller physical store with fewer items for sale.
Technological experiments like Sam’s Club Now are born of retailers' desire to improve speed and convenience for customers, while also reducing their own costs and inefficiencies, said Neil Saunders, managing director of GlobalData Retail. Checkout counters create bottlenecks, Saunders said, and soak up a chunk of employee time.
But customers don’t always embrace self-checkout models or other tech-savvy options. While some like being in control of their whole shopping experience, Saunders said, others may feel less comfortable using the app and prefer interacting with human beings.
Those skeptics may soon have little choice.
“It’s obviously experimental at this stage, from Walmart’s point of view,” Saunders said. “This is certainly the direction in which the market is going.”
Greg Melich, retail analyst at MoffettNathanson, said Walmart is smart to debut the store in a Sam’s Club because of the chain’s membership-only model. Melich said that much of Amazon Go’s success likely comes from a core base of Amazon Prime members, and that through Sam’s Club Now, Walmart can capitalize on a core group of loyal shoppers already invested in the company.
A decade ago, self-checkout kiosks at grocery and convenience stores laid the foundation for what Melich dubbed the “ultimate self-checkout” being rolled out at Sam’s Club Now. But Melich said its success will ultimately boil down to a fundamental question facing retailers since before “app” was a word: “Do your members like it? Does it increase their frequency of shopping?"
“This is a natural step,” Melich said. “Walmart is clearly trying to be on the forefront of keeping up. It’s still the early days.”