Sam’s Club’s unique approach to digital disruption
While digital disruption continues to stymie a good part of the industry, Sam’s Club is using the concept to its advantage.
The company’s VP of omnichannel member communication and innovation, Darshan Gad, and executive VP of operations Don Frieson, teamed up at the “Northwest Arkansas Technology Summit” event last week in Rogers, Ark., to discuss how the chain is using disruption to drive innovation.
At a time when Sam’s Club is eager to appeal to a broader customer base, the chain is purposely embracing digital disruption to deliver more innovative programs.
“Sam Walton believed that success required changing all the time, and becoming a change agent to improve things,” Gad said. “Based on our legacy, we are all about embracing what is new. This includes using disruption to change how we work.”
With so many opportunities to leverage disruption, Sam’s Club follows a specific checklist to ensure it is hitting the mark among existing and new shoppers. This includes focusing on:
•Differentiation. Walmart is a brand known for being an industry leader and innovator. While it is eager to stand out in a crowded landscape, it also needs programs that are purposeful. Some of its most useful — and standout — projects evolve out of the company’s internal “hackathons.”
This pressure-cooker environment brings together the top minds among marketing, business operations, IT and other departments, “to solve problems and create working prototypes,” Gad explained.
One of these evolving programs is called Sam’s Club’s M-Voice, a communications service that complements its merchandise assortment operations. As the company continues to analyze customer demand to ensure it is providing the right product assortments for specific customer clusters in dedicated clubs, the chain can mindfully delete slow-moving merchandise from assortments on a store-by-store basis. It is a process that keeps fast-moving product available, and frees up space for new merchandise introductions.
The challenge however, is that some of these items are what attract specific shoppers to certain clubs. “Through M-Voice, our club managers have a real-time conduit to [view merchandise and] communicate with us the specific items they need in-stock for their location,” explained Gad, adding that the program is currently being piloted in a handful of stores.
• Rapid test and learn. The omnichannel marketplace is redefining the cycle time needed to develop and scale innovative programs and capabilities. Sam’s Club is applying this speedy timeframe to disruptor-based programs, especially those that can give the company a leg-up when attracting new shoppers. Sam’s Club’s Pokémon Go! program is a perfect example.
“When the concept was ramping up this summer, many retailers were unsure where it was going and took a ‘wait-and-see’ approach,” Gad said.
This wasn’t the case for the warehouse club. Over the course of a weekend in late June, a dedicated team created a marketing campaign designed to capture the attention of new shoppers. Early the following week, Sam’s Club offered a free one-day pass to all Pokémon Go! trainers — young and old. “We offered children free cookies, let them navigate our aisles searching for Pokémon, and hoped non-members checked out our club and walked out with a membership card,” Gad recalled.
“It was key to tap into this cultural trend and test concepts that could drive traffic,” he added. “We may not have had all of the answers when we launched the test, but if you don’t try, the opportunity to learn passes you by.”
• Get comfortable with being uncomfortable. While change is uncomfortable for many, the ability to follow trends is what helps Sam’s Club step outside of its comfort zone and embrace disruption. The chain put this theory to the test at one of its most uncomfortable times — during recent store renovations.
By merging the disruptive concept of virtual reality within an often unpleasant shopping environment, Sam’s Club is able to keep its shoppers engaged, and even excited about upcoming changes. “Redesigns are synonymous with plastic covers and dust, but virtual reality was an opportunity to present our construction differently,” said Frieson.
Using virtual reality software to gaze over specific store departments, Sam’s Club invites shoppers to get more information about the redesigned sections, displays and merchandise. “It is a way for us to stay engaged with shoppers during the remodel, and maintain traffic flow,” he added. “We will continue using this strategy going forward.”