Walmart was impressive last week. Not only did Walmart take the blue ribbon at Shoptalk, but its Sam’s Club operation also surprised and delighted in a number of ways. For the first time, the industry may have received a piercing glimpse of just how smartly Walmart is approaching its innovation plans.
Last week Walmart’s outlined plan at Shoptalk to move beyond the pedestrian undertakings of buy online, pickup in-store and curbside deliveries into the next rungs of innovation, namely micro-warehousing first and autonomous delivery vehicles second is exactly the right thought process. Walmart has to get faster and more efficient with its delivery options in a world where speed and convenience are as important to retail differentiation as anything else out there.
But, for as much speed and convenience as any retailer can add to its operation (even Amazon), the question still remains: Why should people come to physical stores to shop? The answer to that question, combined with Walmart’s stated fulfillment plans above, is what is so intriguing about last week.
Early in the week, on Monday, Sam’s Club announced that it had filed a patent for next level scan-and-go technology, namely to allow customers to use visual recognition, rather than barcode scanning, to shop for products. On its corporate Sam’s Club website, you can see exactly how the new technology works. Walmart also claims the technology reduces the time to scan from 9.3 to 3.4 seconds per scan.
Here too is a similar demo of visual recognition technology in action via Amazon’s app that I shot over a year ago inside of a Starbucks to illustrate just how powerful this technology could ultimately become:
Next spring Sam’s Club plans to implement this new technology into its Sam’s Club Now store in Texas, a store the company claims is “the epicenter of the company’s commitment to continuous innovation.”
The claim is justified. Having visited the store myself this past February, Sam’s Club Now is a concept store in the truest since of the word. It is an experiment, à la a concept car in the auto industry. It is Sam’s Club walking out on the thin branch of innovation and being unafraid to fall.
Consumers simply walk in the entrance of the store, pull out their mobile phones, shop the store, pay, and then walk out the exit. It is that easy. In the spring, the experience will be made even faster (and cooler) with the adoption of the new visual scan technology referenced above.
So, the big question then, if you follow industry news closely, is that if Sam’s Club is placing even more bets on the table with scan and go, why did Walmart curtail its own scan-and-go testing programs? Shouldn’t the work of one inform the other? And, vice versa?
Yes, it should. But, it also should not.
Walmart caught headlines a few weeks back when rumors circulated that it had axed its scan-and-go pilots because theft from the program was too rampant within its pilot stores. Yet, here now is Sam’s Club doubling down on the initiative. How does that make sense?
On the surface, it might appear that Walmart is haphazardly going one direction with its experimentation and that Sam’s Club is going in another, but they are not.
I had the chance to interview Anshu Bhardwaj, Sam’s Club’s VP of product, on stage at Shoptalk last week, and she made me realize something incredibly important: Walmart and Sam’s Club are not the same Products (with a big “P”). They each represent something different to their consumers. Their operations are different and so too are their shopping experiences.
It is, therefore, erroneous to believe that the technologies that should work for one brand are the same technologies that should work for another brand, and especially so inside of a physical space, where consumers already have preconceived notions and habits about how to shop said space.
Scan and go is more suited for Sam’s Club because the operation is relatively set up for its success. Theft, similar to how one shops a Costco, is deterred because Sam’s Club, as it does in its Sam’s Club Now store, has two separate controlled exit and entry points. The technology works within the “flow” (my quotes) of what already exists.
This last point is important because ultimately it is a retailer’s store, as a Product, that gets people off of a couch to shop. The expression of that Product, i.e. the intersection of the human, the digital, and the physical design choices within it, needs to be managed in such a way that everything feels woven within the fabric of an operation together, not as standalone layers outside of the Venn diagram.
Scan and go didn’t fail at Walmart because of theft. It likely failed because it was only a layer on top of Walmart’s existing operations. It was not able to be sewn into the fabric of existing consumer expectations and store architectures. Hence, it likely stood out like a sore thumb to consumers and fit like a square peg into the round hole of Walmart’s store design. Sam’s Club’s tests, on the other hand, start from an entirely different place altogether.
So, is the thesis then that Walmart and Sam’s Club should just go about their experimentation in their own ways, distinct and separate from each other?
Not in the slightest.
They each are right to take their separate tracks, but where the real rubber will meet the road is if the Doug McMillons, Marc Lores, Tom Wards and Anshu Bhardwajs of the world have the guts to bring what they are learning from all the experiments together to create something entirely new.
Not something called Walmart. Not something called Sam’s Club. But something that the market has never heard of before, something newly named and unshackled from the albatross-like debt of store walls, consumer expectations, and the most rubber banded of tech stacks.
That is the path Amazon would and will likely take, too. It is also the reason why Amazon’s announcement of creating its own grocery chain last week should scare the pants off everyone. Amazon has been doing this type of experimentation for years. Whole Foods, book stores, 4-star, GH Lab, etc., were all only small first rungs on the ladder to an idea that could be even bigger.
For all intents and purposes, it appears that Walmart may finally be taking a page from Amazon’s book. We should applaud Walmart for the effort. It is the right first step, but they too must get more greenfield, outside of Sam’s Club and outside of Walmart, before it’s too late.
Diversifying experiments across the Walmart and Sam’s Club brands is smart, but diversifying the brand portfolio itself would be even smarter.
Date: March 14, 2019