Behind the Scenes at Sam's Club: Chris Nicholas Talks Technology and Experience

Hello, everybody.

This is Omitalk retail, coming to you live from Grocery shop 2024.

I'm Ann Mazanga.

And I'm Chris Walton.

And we are here in the fusion group booth, booth number 8210.

We're still early on in the day.

We're still getting warmed up behind myself.

Yes, we'll be here for the next couple of days, so please make sure to stop by, say hello.

We've got lots of great interviews for you.

And joining us now, the man of the hour, Chris Nicholas, the CEO and president of Sam's club.

Chris, welcome.

Hi.

Thanks for having me.

Well, we're really excited to have you.

Thanks for being here and for joining us for grocery shop.

Let's start maybe, Chris with a couple questions.

Yeah, I've got some questions for you.

Thank you.

We got you here.

You stopped by.

So your background's really.

Let's start with your background.

We always like to start with the background of our guests.

You've worked on what looks like multiple continents before your current position.

You've been in the role about a year, give or take.

Right?

Like last September.

So tell our audience about who you are and how you came to this role.

Yeah.

Chris Nicholas, CEO and president of Sam's club.

There we go, my friend.

Yes.

Thank you.

You know, I started in retail really young.

I'm from the UK.

Yeah, I'm from the UK.

Started at 14, working in a little grocery store in a place called Hull.

It's a place where people don't have a lot of financial means, you know, and so everyone works, and I had to work, too.

And I found a passion really early, so I was really lucky to find that, you know, grocery or retail in its broadest sense, was just a place where you could just solve real people's problems.

Right.

You also saw, like, really young.

I saw really young that done well.

Retail really makes a difference to families lives and, you know, that kind of mattered to me a lot.

And here I am, lots of years later, still in it and just having a ton of fun.

And what was the first job?

Yeah, I was working in the back room in a little tiny grocery.

Literally, my first job was hiding inventory from the regional manager.

The store manager was like, listen, lad, if it's going to work here, you've got to take these cages and move them out of the way so the regional doesn't see them.

So I.

Forecasters worst nightmare.

That's basically what you're telling us.

Yeah, exactly.

And I learned right there the tricks that I needed to be aware of as I was then, you know, running stores and all of those things.

You were curious, but only about the right things at the right time, right?

Yes.

There we go.

Got it, got it.

Well, you're doing one of the keynotes today.

Yeah.

Tell us what you hope the audience will learn and take away from that session.

I'm really excited about talking to the industry about how we think about pioneering the future of retail.

I think it's important that we are all focused on what the future of industry looks like in serving people that need to be served.

And so we'll talk about the importance of being an innovator, being a pioneer, and we're talking about three big areas.

The first is the importance of digital engagement.

So that's both online, using your phone, but it's also in the club.

So we've got this really cool innovation called Scan and go, where like, over a third of our members today are scanning their own items, checking out online, and then we've got this other innovation with these computer vision arches, where people can just walk straight out.

So if you scan your own items, then you can.

The computer vision arches will look at what's in your basket, compare it to your receipt, and they'll allow you to just walk out.

That's really cool.

So you get that innovation online, but you also get it in club.

And that, mixed with e commerce, is a huge, like, powerhouse of growth for us as a business.

The other two innovate.

The other two things we're focusing on are member engagement.

So what experiences can we create for our members?

And finally, just great innovation with great items, which is member's mark.

Yes.

So membersmark's a brand we're really proud of.

It's really resonating with people.

And so it's like, innovation, innovation, innovation.

And all three of those are connected to growth.

If you're doing a good job and innovating, generally growth comes.

Do you have any favorite members, mark new products right now that we should check out?

Yeah, it changes weekly.

It should change weekly, though, because you want that innovation pipeline.

Every time I come in to Sam's.

I want to be real.

Price is a factor in what you like too, so you're probably changing prices regularly too.

And, you know, you know, actually EDLC and EDLP is really important to us.

We're not promotional business.

We have a limited number of items, about 4000 in the club.

Yeah.

And every item has to sell enough that you can sell it on a pallet.

So it needs to be really good item, really good value.

Yeah.

And we love national brands, by the way.

Yeah.

As long as they are great value and as long as you're getting great innovation.

And that's what Sam's club brings along with members, Mark.

Right.

So, you know, I don't know.

I always, like, go to a food item because I love food, and I love all come along with it.

As opposed to what, a clean supply?

Pots and pans?

I don't need those right now.

I know.

Like, what food.

I need to go in there, get lots of.

Yeah, that's.

Please do.

Please buy lots of it.

What I would tell you, funnily enough, before we get into my favorite item is when you talk to members about the things they love.

Oh, yeah.

Like, why are you a sam's club member?

They'll be like, it's the trash bags.

They are like, they are the best trash.

I'm like, they're are good trash bags.

I agree with you.

Or paper products or water.

Yeah.

But I I love the inspiration of these new items.

And we've got this at Christmas set right now.

We get, we get into seasons early.

Wow.

Yeah.

Really?

Yeah.

We're almost out of Halloween now.

We like to get in early and get out early and.

Smart merchandising.

It's smart merchandising.

Our merchandise is a brilliant, we've got this thing called the prismatic display.

Oh, Boyden, it looks like, imagine a winter wonderland in your front yard that has a seven foot snowman, a big arch that looks like it's made of crystal.

You name it.

Prismatic.

You should look at it.

Prismatic.

It is selling out faster.

You're going to have to be quick.

But that Christmas inspiration that our merchants have just innovated, it didn't exist.

They made it exist.

We sold out in a hot minute last year.

We doubled the buy.

It's gonna sell out in a hot minute again.

So we're feeling excited about it.

Cheer in a, in a box.

Christmas joy.

Christmas cheer in a box.

Nice.

And in your front yard.

All right, well, so, getting back to the joy of why we're all here at grocery shop, I got off on a tangent.

Technological innovation.

Yeah.

I want to, I want to circle back to what you said, too, because I think it's important.

You gave the statistic on scan and go.

One third of shoppers that's across the chain.

That's like 600 stores, give or take it, right?

Yep.

Is that right?

That's the right number.

So.

So one third of shoppers are using scan and go.

Yeah.

To do their shopping inside a Sam's club store.

Yeah, that's important.

So then the next part I want to double click into is you've made a couple headlines.

You've mentioned them already to some degree, but then you had one that came out today that we're very keen on understanding.

So.

So first off is I want you to talk more about the computer vision receipt checks.

Yeah.

How does that work?

And then secondly, you also open up a new store.

You are planning to open up a new store in the coming weeks, that it basically takes the checkout lanes away completely.

So how the hell does that work?

So the floor is yours, my friend.

Chris.

I appreciate that.

Look, here's the idea, is that our job is to take friction out of members lives.

And so every day that we get to take friction out of a member's life, we give them back time, which is really exciting because that's the thing they most want.

And so what we decided years ago was we needed to go on a journey of innovation to solve our members problems.

So the first thing we did was scan and go.

Scan and go was the ability for people to just take control of their own shopping and, and.

But members told us that we don't want any friction in our lives, and we've got friction in other environments where we have to scan our way into a club, we have to stand at a checkout, we have to scan on the way out.

And our job is to say no.

We want to give you great items and great prices, but we also want to give you great experiences.

And so over the years, we've learned a lot about computer vision.

Computer vision is something that if you can get it right, you can really give joy to a lot of customers and a lot of members by taking friction out of their lives.

And I'm going to give you an example.

So if you, if you do some shopping and you buy 30, 40 items, if you're queuing at the checkout, that it's just not a joyous experience.

No, it's not.

It just isn't.

No.

If you're walking around and scanning items yourself, you can also see what those items are all about.

You can investigate them as you're walking around.

And then once you're done, you just check out on your phone, you just swipe right.

Yeah.

And then you walk to, you just walk to these arches and there's nobody there other than nobody there checking you.

Because what the computer vision does, it says, let's take a look at all the receipts out there.

Let's take a look at all of the items on your basket, there's no face check, there's no biometrics.

It just looks at what's in your basket, and it compares that to all the receipts that are outstanding.

And as long as it can compare the two and see everything in your basket, it gives the validation that you're good to go.

And so then the members job is to just walk out and feel good about Sam's club.

Now, that didn't happen overnight.

No.

Like, we needed to do a lot of work on the engineering and on the.

On the computer vision in the background.

And the reason we got there was we did a lot of work in the back end on the associates work.

Okay.

Because you can't give all of these exciting experiences to members without sorting what the associates are doing and taking friction out of their life and taking mundane tasks out of their life.

And so we started a long time ago with this computer vision journey with our associates work with inventory management.

And so what we've got is we've got these floor scrubbers.

Right.

That go around the club.

Oh, yeah.

I.

And they take 23 and a half million pictures a day of what inventory we've got up in the steel and on the shop floor.

And so we know what everything looks like.

We know where everything is.

And we've taken 100 million tasks out of our associates hands.

And so they get to.

They get to do two things.

One is they have a better life because they don't have all this mundane work.

And the second thing they do is they get to invest time in the members by giving them an elevated experience, by helping them out with their problems.

Right.

And so.

So that's.

So basically, if I say what, wrap.

Up what you said.

In a nutshell, you're taking all this information that you're getting by way of the scan and go application, the computer vision, where it's implementing the store and it's correlating it together.

Yeah.

To provide the shopper with the best experience they can.

And you guys are taking that to the next level.

And I think it's Grapevine.

Grapevine.

Grapevine, Texas.

And when does the store open?

Yeah, so we've got this club at Grapevine in Texas, just near DFW.

It's going to open next week on the 17th, and it brings together what the future should look like for Sam's club.

Okay, so you've already paint the picture, my friend.

Yes, paint the picture.

You're going to walk into this club, and it's a fully digital experience.

So you walk in, and the first thing you're going to notice on your left hand side is there are no registers.

So we expect 100% digital engagement.

Wow.

In that club, which means everyone's shopping, scan and go, and it means everyone's walking through those arches.

Now, we're going to have lots of associates there helping people.

Right.

Because, you know, whilst we've got a lot of people that are digitally engaged, there's going to be some people that we just got to help them get on that journey, but there's a lot more than that.

So because you don't have registers, you have space where the registers used to be.

We're going to have some amazing online to offline experiences.

Big things that you can buy online where you can interact with those items, you can order them online.

Right.

That's really exciting.

We call.

You can do that on the app.

Right?

You can do all of that on.

The app where you're going to order.

Exactly.

So that's exciting.

We've got a lot of space dedicated to online pickup and online fulfillment.

We've got six and a half thousand square feet of space where our associates can pick orders, they can get ready, stage the orders ready for pickup.

So we expect the online pickup and delivery to be huge there.

Right, great point.

We've got some really cool innovations that only a retailer would care about.

Maybe like more refrigeration space.

We've got some cool innovations in our fresh area, like a big sushi island, which we're really excited about.

People love sushi.

And by the way, it's also really exciting to be able to connect with the community.

So as you walk in on your right hand side, there's a huge big picture that's been painted of the community by a local artist.

So we just feel like this connection with the community is something that's really elevated too.

Well, I was just going to ask, you know, 100% digital adoption in this one.

All the other clubs are seeing a third of members using the app.

I have to ask because I know that there's probably retailers and brands listening who are curious, like, how did you make that decision to go all in on 100% digital for this one, knowing that it might alienate some consumers, but it's really the way of the future.

It's really a good question.

We are seeing rapid adoption of our scan and go and have just walk out anyway.

And what we found is that just by listening to our members about what do they want us to do?

And members are just saying that the less friction that I have in my life, the happier I am.

The NP's when you use your scan and go and just walk out is off the charts.

I think it's 14% higher than before the scan and go arch.

The just the exit arches were in place.

Right.

We're seeing 64%.

So just about two thirds of our members having frictionless exit just walking out.

Wow.

Okay.

64%.

And that's of all.

That's not even.

That's everywhere.

Right.

And, you know, we kind of love the renewal rate and the amount that people spend when they're digitally engaged, which is using all of this, significantly higher if you're a digitally engaged member.

So that means you use scan and go.

You walk through the arch and you shop online.

You spend three times what a non digitally engaged member spends.

So you're paying off the experience.

Like the thesis maybe, of what you're saying is that, yes, it's maybe this first time that you're learning to use the app, but you're really unlocking a much more frictionless experience for you.

And the members want it and when they use it and they never go back.

Yeah.

And what's really interesting is whether it's your Gen Z's all the way through to the greatest generation, whether it's the people that earn lease to the people that earn most, whether wherever you are geographically, everyone is involved in this.

Right?

Right.

Those types of numbers, they must be, right?

Yeah.

So I'm curious, like, what's in the water at Sam's club?

Like, what is the.

What is in the water that makes you so unafraid to do these types of things?

We were talking before we even got started.

Like, you had Sam's club now, which was a scan and go only store for a while.

It's still in existence now you're doing a checkout list store.

So a cashier list store, so to speak, what gives you the confidence to do that and have the clairvoyance to say, you know what?

This makes sense.

This matters, and we're going to learn from it.

Yeah.

I think we are a people led, tech powered business.

So if you're grounded in solving people's problems and you're listening to them, it gives you a lot of confidence for making changes.

The second thing is it's okay to just fail as long as you're learning.

So Sam's now, which was our original store innovation club, which is still there and still innovating, a lot of what we're seeing today, including scan and go, including the exit arches, and including all of the work that's made our associates lives better.

That all started there, but we might have had a hundred things that didn't work, but every single time, we just learned.

And we learned to move fast.

Right?

Sam's club has always been the sort of tip of the spear on innovation within Walmart, and it's certainly going to continue that way.

Well, Chris, as we close out this conversation and we think about what you have in store for the rest of 2024 and in your role for 2025, what else are you excited about besides the prismatic, the uber prismatic Christmas in a box display that I can go get right now?

You know, it's.

Yeah, I mean, I do love that.

And you should go and get it.

You've done as soon as you can.

While supplies left, while supplying.

I gotta open my app and order it right now for pickup when I get home.

Yes.

I mean, you can.

You can.

You will continue to see a steady stream of innovation with digital engagement with members, Mark, and with a lot of the work we're doing on, on the elevated associate and member experience.

But I think what I'm most excited about in the next few months.

Yeah.

It's just the joy that we're going to be bringing to our members.

Right.

The items that we're selling are ready for.

I mean, you know, we are excited about giving a high quality Christmas.

And so let me just talk about one of them, which is a Thanksgiving dinner.

Okay?

So we've got a $100 Thanksgiving dinner to feed ten people, and this is like, it's an elevated experience.

This is not $100 for ten people.

And, you know, it's kind of good enough.

This is like an amazing turkey.

Great stuffing, great veggies, a great dessert.

I mean, all the things that you want to be part of your Thanksgiving, and it's all for under a $100.

So, you know, if there was ever a reason to be a member of Sam's club, that would be one of them.

Right?

Wow.

It's very convincing, actually.

It's really good.

You should try it.

Yes, I think I might.

I think I might do that.

Well, Chris, thank you so much for stopping by and spending time with us today.

Again, Chris Nicholas, the president and CEO of Sam's club.

Thanks to the fusion group for supporting our work here today.

Come on by.

We're going to be here all day doing interviews with all kinds of retail executives.

We're in booth a two 10.

And until next time, and be careful out there.