Sam’s Club’s latest moves could leave Costco behind | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Costco and Walmart’s Sam’s Club offer similar shopping experiences and, in many markets, they’re located close to each other.

Both chains fight for every advantage possible. Costco offers its Kirkland Signature brand, which might arguably be the most trusted house brand in the country, but Sam’s Club may actually have cheaper prices.

“In 2023, AARP investigated the prices of 30 comparable grocery items at each chain and found that, across their sample, groceries at Sam’s Club are around 18.36% cheaper than those at Costco by weight. Some of the items they compared included rotisserie chickens, wild salmon filets, baked beans, mayo, rice, pasta, eggs, pretzels, and orange juice,” wrote TheStreet’s Jeremy Salvucci.

In the same article, he also found that Sam’s Club has another pricing advantage over Costco.

“The two stores’ product lines are sometimes comparable in price, but when they’re not, Sam’s Club’s Member’s Mark products are usually cheaper than their Kirkland Signature counterparts,” he wrote.

Costco and Sam’s Club have roughly 600 warehouse clubs each in the United States. Walmart does not report Sam’s Club membership numbers, so it’s impossible to know which chain has more members.

It’s fair to say, however, that each company works hard to offer a better experience than its very similar rival. Sam’s Club’s latest move, you can argue, may give it an advantage over Costco.

Sam’s Club fixes checkout

While Costco has been testing some new checkout experiences that will speed up its lines, Sam’s Club has already made a massive improvement to its checkout offering.

Sam’s Club has made significant progress in its rollout of technology that resolves a key member concern – waiting in line for receipt verification to exit the club.

The retailer’s first-of-its-kind application of artificial intelligence and computer vision technology has been successfully deployed in more than 120 clubs since its unveiling at the Consumer Electronics Show (CES) in January.

Since the update, Sam’s Club has added the technology to all of its U.S. warehouse locations.

“In clubs where the technology has been deployed, more than half of members are getting the friction-free exit experience. This translates to all members leaving the club 23% faster,” the company shared in a press release.

Sam’s Club has plans to end the traditional checkout.

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Sam’s plans to end traditional checkout

Sam’s Club also plans to eliminate traditional checkout lines.

“Traditional checkouts will be replaced by a system known as Scan & Go, which allows members to scan products with the store app and complete their purchases directly from their phones,” according to Payments Journal.

This new update adds a layer of artificial intelligence (AI) to the checkout process.

“An AI scanner verifies the goods as customers leave, eliminating the need for receipt checks at the door. Since Sam’s Club operates under a subscription model, theft isn’t as much of a concern as it would be at a flagship Walmart store,” the company shared.

That’s good for consumers — if it works. One retail expert offered further detail in an email to Customer Experience Dive, cited by Retail Dive.

It defeats the purpose if a worker has to become involved in the process.

“Most of these friction points involve excessive interaction with a sales employee, which is what self-checkouts are designed to remove,” Alloy added.

Costco has lagged behind

Costco has also been working on speeding up its checkout, but it’s using a more manual approach.

“Progress has already begun and is delivering tangible results. In the warehouse, implementation of scanning memberships at entry, the Costco digital wallet, and prescanning small to medium-sized baskets is leading to better member experience and improved productivity,” CEO Ron Vachris shared during the chain’s first-quarter earnings call.

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The results, he noted, have been positive.

“The warehouses that have first adopted this prescan technology have shown checkout speed improvements of up to 20%. And across our U.S. warehouses overall, [we] achieved record levels of checkout productivity in the final weeks of the quarter,” he shared.

Analysis: Technology can fix a Costco and Sam’s Club problem

Having been a Costco member for much of the past 30 years, I fully resent having someone check my receipt as I leave the store. I don’t enjoy the implication that I might be stealing and find the process mildly offensive.

In addition, I don’t enjoy waiting in line, so any effort to speed up the process of checking out is appreciated.

Americans want automated checkouts

“Self-service has become an essential retail feature, but good self-service is more elusive. Companies have made significant strides in recent years to increase the availability of self-service kiosks and other unattended payment options,” according to PYMNTS.com.

The payments publication also shared some other key statistics on self-checkout.

Eighty-four percent of U.S. consumers enjoy self-service kiosks, with 66% preferring them to staffed checkouts.
Eighty-one percent of surveyed consumers said they want more self-service options at the businesses they frequent.
Quantity alone is not enough, either, as 36% said they want smarter unattended payment options.

Self-checkout is becoming a retail standard, according to data from Capital One’s Shopping Research, which shared some other facts:

75.4% of self-checkout kiosks are installed in retail stores.
96% of grocery stores offer self-checkout.
Early estimates indicate that 10,000 global retailers have installed self-checkout systems as of 2024.
Projections indicate that by 2030, over 24,000 stores will offer self-checkout.
In 2023, 217,000 new self-checkout terminals were delivered to stores globally, up 12% from 2022.

“The North American self-checkout systems market is worth an estimated $2.28 billion as of 2024; projections indicate it will exceed $5 billion by 2030,” Capital One added.

Consumers want automation, but they also want to see the technology improve, according to a survey conducted by NMI.

“The majority of consumers want more self-service opportunities, but also expect a better user experience. When self-serve payments work smoothly, they represent extreme convenience — one of the most important factors driving consumer payment choice.

“But, when they don’t work, especially in fully unattended environments with no help readily available on-site, the customer is left effectively powerless, creating an extremely negative experience,” the study showed.