Sam's Club, owned by Walmart, experiments with a checkout-free future.

• A Sam's Club owned by Walmart is opening in the Dallas area, providing a preview of its future.
• The club will not have any checkout lanes, will showcase online-only items, and will have a larger space for processing e-commerce orders for curbside pickup and home delivery.
• To distinguish itself from competitors such as Costco, Sam's Club has been focusing on technological advancements.

A Mercedes-Benz SUV, a sectional sofa, and zero checkout lanes will greet shoppers when they enter Sam's Club's newest store in GRAPEVINE, Texas.

The first all-digital store of the -owned membership club is now open, offering a glimpse into its potential future.

Customers will use the Scan & Go app to purchase items as they walk through the aisles in the club, which opens in mid-October. The company will display online-only items such as a 12-foot Christmas tree and a 5-carat lab-grown diamond in the area typically reserved for cash registers. Members can scan QR codes and go straight to the items in the app.

According to Sam's Club executives, workers will have about four times more space for preparing customers' e-commerce orders for curbside pickup and home delivery.

Chris Nicholas, CEO of Sam's Club, stated that the physical manifestation of the journey the company is trying to undertake is on display as he showcased the club before its grand opening.

Since Sam Walton opened the first Sam's Club in 1983, the membership-based club has become the more tech-savvy arm of its retail-behemoth parent, Walmart. The club has spun out several key innovations that its parent company now uses, such as Scan & Go. It's also used digital offerings to try to outmatch its largest rival, Amazon.

The Dallas-area Sam's Club store, which was damaged by a tornado nearly two years ago, is being doubled down on by the company with its reopening strategy.

Upon its reopening, Sam's Club's newest features and emerging technology will be tested at the location, as stated by Nicholas.

He stated that our goal as a business is to achieve 100% digital engagement over time, and we must first demonstrate the effectiveness of things before scaling them.

He added, "I hope it feels like future shopping."

Rivaling Costco

Piper Sandler's senior research analyst, Peter Keith, referred to Costco as "the king of the warehouse club channel." However, Sam's Club has recently introduced new features to enhance the shopping experience, including a permanent sushi-making station in some of their clubs.

Sam's Club has distinguished itself by adopting e-commerce services and catering to customers who desire a more convenient and efficient shopping experience, such as Scan & Go.

"The most painful part of membership clubs, which is the long lines to check out, is eliminated by it," he said.

Although Sam's Club and Costco have a similar number of U.S. locations, Costco generates significantly more annual revenue, with $176.63 billion in net sales compared to Sam's Club's $86.2 billion.

To remain competitive with Costco, Sam's Club has streamlined its private labels under the brand "Member's Mark," reduced the number of unique items it sells, and increased the wages of nearly 100,000 workers before the holiday season.

In August, Sam's Club opened The Clubhouse, a 37,000-square-foot office building adjacent to its headquarters in Bentonville, Arkansas. The facility features workshop rooms and tools such as whiteboards, art and crafts supplies, and cardboard models to aid the retailer in generating new ideas, testing products, and collaborating with cross-department teams.

The company is currently in the midst of an aggressive expansion, with plans to open approximately 30 new clubs over the next five years.

In the most recent quarter that ended July 31, Sam's Club's comparable sales in the U.S. grew 5.2% compared to the year-ago period, with a 22% year over year e-commerce growth.

The new clubs, including the one in Grapevine, will be able to handle higher volume, according to Nicholas.

The club's cafe will feature a pizza robot capable of producing up to 100 pizzas per hour, while also implementing a new system that delivers food orders to designated cubbies via Scan & Go.

Digital age

During the most recent quarter, Sam's Club attracted a diverse range of customers, including millennials and Gen Z, as it emphasized convenience in shopping.

According to Sam's Club, one in three members currently use Scan & Go when shopping in clubs. The company has recently introduced new exit technology that automatically checks customers' shopping carts and allows them to exit the club without an employee looking at a receipt or auditing their cart. The system is powered by computer vision and artificial intelligence, similar to Just Walk Out technology that's been implemented at events stadiums and some of the e-commerce giant's physical storefronts.

Some shoppers may be hesitant to adopt new technology or routines, as acknowledged by Nicholas.

Sam's Club is a favorite destination for Tiffany Zuniga, a mom and a Lyft driver living in the Dallas area, but she's hesitant to return due to the new technology. Zuniga previously relied on the club for convenient family dinners or supplies for church events, but opted for Costco after Sam's Club was closed due to tornado damage.

She has never used Scan & Go and expressed hope that the new technology does not compromise customer service.

"If you scan the wrong thing or require assistance, it can get a bit tricky," she remarked. "I hope they will have enough staff available."

To prepare customers for the reopening of a Sam's Club and encourage them to use Scan & Go, the retailer put up signs at the nearby Sam's Club gas station and car wash as construction crews finished work on the Sam's Club in Grapevine.

When customers enter the newly reopened club, employees will be prepared to assist them in downloading the app or accompanying them on a shopping trip if they require guidance on how to use it.

Although the number of store workers in Grapevine will remain the same, some employees will take on new responsibilities.