When Sam’s Club CEO Chris Nicholas saw the news that his company had unseated perennial winner Costco as the top-rated retailer for customer satisfaction, he was understandably pleased — but he didn’t bask in the feeling for long.
“There’s more to do,” he told Business Insider in an interview. “Nothing happens by accident.”
The jump in Sam’s Club’s score — leapfrogging Costco’s similarly strong rating — follows a busy year in which the Walmart-owned warehouse club rolled out new futuristic tech intended to make shopping easier and more enjoyable.
It was one year ago that the company announced its AI-powered exit gateways that are doing away with one of the biggest frustrations of shopping at a warehouse club: receipt checks at the exit. And in October, Sam’s Club opened its first location without traditional checkout lanes.
It’s a bold bet as some other retailers, like Amazon, pulled back from using AI-powered “Just Walk Out” cashierless tech at its Fresh stores in favor of smart carts, and others, including Target, have put new limits on self-service options at many locations.
For Sam’s Club, it’s part of a longer-term strategy to give it a high-tech edge in the historically low-tech warehouse retail segment. The company says more than half of customers at locations with the AI scan-and-go option use the tech, and it’s helped the shoppers get out the door 23% faster.
“This is all a result of working really hard at the inputs and then the outputs heal themselves,” Nicholas said. “Because we’re building digital products for our associates as well as for our members, it means you create connected experiences that allow people to self-solve and work together on having a delightful experience.”
One advantage that warehouse clubs, in general, have over their traditional retail counterparts is much more detailed information about shoppers’ purchase histories, as a membership is required for every purchase. (General retailers can still piece together a profile using payment or loyalty cards, of course.)
At Sam’s Club, however, member profiles are augmented by massive amounts of digital data, plus additional insights from the 50,000-strong Members Mark community of shoppers that share feedback on products and services.
“It’s certainly true that we’ve had this treasure trove of data, and we’ve been on this journey the last couple of years to really hone it so that we understand and can use this data more specifically,” Nicholas said.
Although Sam’s Club doesn’t publicly report detailed financial results, one consistent bright spot in Walmart’s earnings in recent years has been the growth of revenue from memberships and from retail media.
In addition, Nicholas notes that much of the tech investment expenses for Sam’s Club are borne by Walmart’s deeper pockets, since the club has often served as an innovation lab for the world’s largest retailer.
With all of this data, Nicholas says he decided to put one person in charge of turning it into a more effective flywheel for the business.
“The faster the flywheel spins, the more that virtuous circle helps you open up even a deeper gap versus everybody else,” he said.
In this spirit, Sam’s Club has appointed Diana Marshall, who was previously chief growth officer, as its new chief experience officer. Marshall will report directly to Nicholas.
CXO is a title that Constellation Research founder Ray Wang told BI is more typically found reporting to the CEO at tech, hospitality, travel, or financial services companies than at retailers. Sam’s Club said it consulted with Wang on the strategy.
“We see chief experience officers, in general, playing a bigger and bigger role because you’re basically differentiating on time and experience,” Wang said. “If they are saving time, they’ll pay a premium. If they get a better experience, they’ll pay a premium.”
Nicholas said that Sam’s Club is committed to the long-standing warehouse club business model of earning most of its profits from membership income. That means any revenues — say, from the expected $100 billion retail media advertising market — will be reinvested in the business in the form of better technology, higher wages, and lower prices.
“I think we can create these unexpected, unforgettable, connected experiences from members, and I believe genuinely that that’s going to redefine what the future of retail looks like,” he said.
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