Sam’s Club is testing scan and ship options for shoppers

For Sam’s Club shoppers, a trip to a store usually means bringing home a large and often cumbersome item. Supply for one month of diapers. Lawn chair. A large carton of chicken broth or a huge box of cereal.

Wal-Mart-owned membership clubs are flipping it over when testing new digital tools. Customers at some clubs can browse the aisles, retrieve items that fit in the trunk of a car, and deliver other purchases directly to their homes. You can check out all purchases in one transaction on your smartphone.

Kath McLay, CEO of Sam’s Club, said the company sees technology as a way to improve the customer experience and build profits over the past year.

“We want to get great items, we want to get destructive prices, and we want to make sure we offer convenience to our members,” she interviewed CNBC. Said in. “What we really learned through the pandemic was that we needed to stay true to that strategy.”

During the health crisis, Sam’s Club deployed curbside pickups in all stores as customers sought a quick, non-contact way to receive online purchases. Announced on Tuesday, the Scan & Ship service is the latest way Sam’s Club is using digital options to stand out from its competitors. This is a Scan & Go feature that allows customers to call purchases on their smartphones as they add items to their shopping cart.

The company has also designed and released app-based tools for employees, including a voice-enabled service called Ask Sam that helps you find items and answer customer questions.

By testing and launching new ways for consumers to shop, Sam’s Club has driven its own growth and become the parent company’s technology incubator.

At Sam’s Club, comparable sales, a key indicator of tracking sales for stores that have been operating online for the past 12 months or more, have grown faster than Wal-Mart over the past year. In the first quarter, which ended April 30, Sam’s Club’s comparable sales growth and e-commerce growth outperformed its parent company, up 7.2% and 47%, respectively, compared to Wal-Mart US’s 6% and 37%. did.

The total number of warehouse club members also reached a record high in the first quarter. The number of members is not disclosed.

During the pandemic, in-stock travel became commonplace, making it difficult to find essentials such as soaps and paper towels, and the warehouse club shined. Costco and BJ warehouse club stocks surpassed the S & P 500 last year. BJ’s share price rose nearly 64%, while Costco’s share price rose 28% in 2020 compared to the S & P 500’s 16% rise.

Since January, the rise has been gradual. Costco’s share price has risen 8% year-to-date, but is trading near a 52-week high. The closing price on Monday was $ 407.88 and the market price was $ 180.31 billion. BJ’s, which has a much smaller store footprint, closed at $ 48.19, with a market capitalization of $ 6.61 billion. Stocks have risen more than 29% year-to-date.

Wal-Mart’s share price, which rose 21% last year, also surpassed the S & P 500. However, Wal-Mart’s share price has fallen by nearly 3% so far, with a market value of $ 392,440 million. Investors are worried about whether Wal-Mart will outperform last year’s strong performance.

Meanwhile, the warehouse club has endured. Jeffreys Managing Director and Retail Analyst Steph Wisink said he surprised some investors who pushed their membership growth into a “panic period” during the pandemic. Many of those customers have renewed their membership and continue to fill their baskets, she said.

“For safety and stockpiling, it wasn’t just a fleeting experience,” she said. “It was a real destination change. They are buying more goods for their homes.”

Real estate and demographic trends are expanding the club’s potential audience, Wisink said. As millennials grow older, some buy homes in the suburbs and live near warehouse clubs. The company’s new attitude towards telecommuting encouraged people to move away from the city and move to homes with larger gardens, closets and pantry.

“Buying two glasses of ketchup or two loaves of bread suddenly makes it possible,” she said.

She said the combination of items in the basket has changed over the last few months as shoppers have performed stimulus checks and purchased more common items such as furniture and electronics.

McRae said he was amazed at some of the new patterns Sam’s Club saw. For example, 45-count toilet paper is still a popular item as people get used to having spare stock in the pantry, she said. Household foods are sold at higher rates as hybrid-scheduled workers are now splitting the week between home and corporate offices.

McLay describes Scan & Go as “closest to online purchases at clubs.”

With about 600 stores and about 100,000 employees, Sam’s Club launched Scan & Go in 2016. Two years later, we opened a small store in Dallas, Sam’s Club Now, testing new technologies with our customers. A short drive from the store, an innovation center was opened in downtown Dallas with nearly 300 engineers, user experience designers and data scientists to help design Sam’s Club technology.

But over the past year, Scan & Go has gained new relevance, McLay said. In the first quarter, members using the Scan & Go app increased by nearly 44% compared to the same period last year.

“I keep telling the team. It felt like a product we created, waiting for a mom
ent like a pandemic, as people were absolutely flocking to contactless payments. A virtual conference hosted by Jeffreys.

Scan & Ship will bring Sam’s Club closer to online and offline, McRae said. It has been tested in three different stores. A club in Murita, California. One is in McKinney, Texas. And now Sam’s Club in Dallas. For Sam’s Club Plus members, home delivery is free.

Ultimately, the direct delivery feature will be extended to other clubs and more items, from playset and patio furniture to mattresses.

Tim Simmons, Chief Product Officer at Sam’s Club, said that reducing the hassle of certain purchases can increase store sales. “If you don’t have to carry the cart home, you’ll have more in the cart,” he said.

He said the feature could also be used to sell out-of-stock items, items of other colors and sizes, or items that are difficult to store multiple times in the store, such as motorcycles and bicycles.

According to Simmons, the goal is to improve the customer experience. Over the last three years, many steps have been taken to achieve this. At the Member Service Desk, we replaced eight pieces of hardware with iPads to speed up the return and application of new members. Turn spreadsheet binders into tools that use machine learning, and birthday cakes that bakeries, butchers, and other employees need based on factors such as past sales, major holidays, and weather patterns. Made it possible to predict the number of rotisserie chickens or hogies. Smartphone-based tools also help employees prioritize tasks in the sales floor, such as restocking products, and help managers track club sales metrics.

Some of the technology born at Sam’s Club is now in use at Wal-Mart. For example, Ask Sam and Scan & Go, which are available to Wal-Mart shoppers who belong to the membership program Wal-Mart +.

Sam’s Club serves as a high-tech incubator and is a training ground for executives who have become senior leaders since Wal-Mart. Doug McMillon was the CEO of Sam’s Club before becoming CEO of Wal-Mart. Another former Sam’s Club CEO, John Furner, is currently heading Wal-Mart’s US operations as President and CEO. Former Sam’s Club CEO Ros Brewer has also become Starbucks Chief Operating Officer and, more recently, Walgreens Boots Alliance CEO.

For Sam’s Club, technology is also a differentiator from its biggest rival, Costco.

Costco caters to high-income consumers and charges more for its services, but new features such as curbside pickups have been delayed. Currently, the option is in the pilot stage at three clubs in New Mexico.

The average Costco member’s household income is over $ 100,000. They pay $ 60 to $ 120 per year for premium membership. By comparison, a typical Sam’s Club member’s household income ranges from $ 75,000 to $ 100,000, with basic members paying about $ 45 a year and plus members paying up to $ 100 a year. The numbers are based on company comments and quotes by Jeffreys. Costco has 60.6 million members in the most recent quarter, which ended in May. Sam’s Club does not disclose total membership.

According to Wissink, Costco emphasizes profitable services that can be aggregated quickly, such as car rental, vacation bookings and hearing aid orders.

“We see more and more volume and value being created beyond the walls of the box,” she said.

So far, it’s in favor of Costco. It generates almost twice as much annual revenue per store as Sam’s Club. These stores have a slightly larger footprint, averaging 146,000 sq ft at Costco and 134,000 sq ft at Sams.

But Sam’s Club is “always at the forefront of digital integration,” Wisink said.

Take a look at the apps from the two companies. According to Apptopia, which tracks mobile app performance, the Sam’s Club app received almost twice as many downloads as Costco’s app in the United States last year. This is about 9.6 million times compared to 4.9 million times. According to Apptopia, customers also give high marks to the Sam’s Club app, with 78% of Sam’s Club users giving positive reviews, while Costco only 27%.

So far, technical benefits haven’t compromised Costco’s performance, Wisink said. However, it may happen over time.

According to McLay, Scan & Go is “one of the most sticky products” developed by Sam’s Club and “one of the most important factors why people update with us.”

McRae knows this because Sam’s Club closely monitors the factors that increase the likelihood of membership renewal.

“It’s one of the things that’s a little addictive,” she said. “It feels very yesterday when you start using it and have to go back and actually wait in line at the retail store.”

— CNBC’s Christopher Hayes contributed to this report.