The business models at Costco (COST) and Walmart's (WMT) Sam's Club are nearly identical.
Both warehouse retailers offer members a simple proposition: Pay a membership fee each year and get access to low-priced merchandise, services, and more.
The experiences at the two are also similar: Sam's Club and Costco provide a no-frills selling space where merchandise is stacked on pallets and few workers are on the floor offering customer service.
Selection is limited and merchandise changes regularly, but low prices are a constant. Both chains squeeze vendors to get the absolute best deals possible.
That's easier to do when you buy at the huge levels Costco and Sam's Club do. When you can promise a massive order to a supplier, you get huge leverage when it comes to asking for changes that bring the prices down.
Both chains follow that model, but Sam's Club has actually made a cost-saving move its rival hasn't -- and it's doubling down on those efforts.
Image source: Sam's Club
Sam's Club Bets Big on Robots
Automation and robots have made their way into a variety of businesses. Amazon (AMZN) most famously uses robots in its distribution centers, and a number of fast-food chains have at least dabbled with robots/automation.
Starbucks (SBUX) has also bet big on automation (albeit not robots) focusing on where it could use technology to free up human staffers to focus on customer service.
That's the model that Sam's Club has been using. The chain started those efforts with robot floor scrubbers, which have been very successful.
"Our initial goal at Sam's Club was to convert time historically spent on scrubbers to more member-focused activities, Todd Garner, Sam's Club vice president of in-club product management, said in a statement.
"Our autonomous scrubbers have exceeded this goal. In addition to increasing the consistency and frequency of floor cleaning, intelligent scrubbers have empowered associates with critical insights."
It's a simple model, not unlike Starbucks's effort to have technology handle things like inventory and ordering. Using automation (in Starbucks's case) and actual robots (at Sam's Club) leads to better customer service.
"At Sam's Club, we have a member-obsessed culture. These scrubbers help associates ensure products are out for sale, priced correctly, and findable, ultimately making it easier to directly engage with our members," Garner added.
Now, Sam's Club has taken its automation efforts to the next level.
Sam's Club Bets Big on Robot Inventory
Sam's Club's parent, Walmart, has not been shy about testing new technology. It has also been willing to walk away from things when they don't work, like its online order-pickup towers. The warehouse club began rolling out inventory-scan towers as an addition to its floor-cleaning robots earlier this year and those efforts appear to be successful.
Once installed on the scrubber, the cloud-connected Inventory Scan tower captures data as it moves autonomously around the club. As functionality is deployed, insights such as product localization, planogram compliance, product stock levels, and verification of pricing accuracy will be delivered to the club. Each function negates the need for time-consuming and potentially inaccurate manual processes that can impact product availability, member experience, or create waste caused by inaccurate ordering.
Essentially, as the robot cleans the warehouse club's floors, it also tracks inventory.
"Through the use of Inventory Scan, Sam's Clubs across the country are able to access a trove of critical inventory data in real-time, which they can use to better inform decision-making, run their clubs more efficiently, and provide a better in-club experience for their members," said David Pinn, chief executive of Brain Corp., the San Diego producer of the robots.
