Dive Brief:

• Walmart plans to build a 32,000-square-foot Sam’s Club store in Dallas sometime this fall, according to a company blog post. The location is a fraction of the size of a typical Sam's Club, which average between 100,000 and 150,000 square feet, and will stock between 1,000 and 2,000 products, compared to the typical 6,000. The store will employ between 30 and 40 workers, and ike other Sam's locations, will only sell to members.
• Grocery offerings will be a focus, with grab-and-go meals and top-selling consumables available. The new store will also feature store technologies like Scan&Go checkout, fast membership sign-ups, digital signage and self-service returns. Customers will be able to pick up orders and receive deliveries from the store.
• “This will be smaller than a typical club – which is perfect for testing innovations in a live shopping environment,” wrote Jamie Iannone, CEO of SamsClub.com and executive vice president of membership and technology, in the blog post. “You can expect to see a new level of convenience at this facility, and the technologies we use will continue to evolve.”

Dive Insight:

Small stores are all the rage right now, with everyone from Albertsons to Meijer set to test pint-sized outlets. But will the concept work for a retailer whose brand value revolves around selling bulk goods in cavernous stores?

Certainly, the model will appeal to customers looking for a more curated selection, including those who might not normally shop club retailers. It also gives the company a chance to show off new technology, including digital shelf displays and the Scan & Go app (which Walmart recently scrapped).

But don’t expect the concept to expand beyond a few locations at most. The store’s main utility — as the company notes — will be as a testing ground for new technologies and services. In such a small space, and in a hotly contested market, Sam’s Club executives can closely track how customers interact with key products and store features.  

Sam’s Club needs to make some changes. Back in January, Walmart closed 63 stores as part of an effort to trim underperforming locations and build new e-commerce fulfillment centers. The club retailer has also long played second fiddle to Costco, which offers a unique store experience that’s driving comp-store sales gains quarter after quarter. Once believed to be vulnerable to online shopping competitors, Costco is now widely viewed as Amazon-proof.

Sam’s Club wants to be known as more than just a Costco follower, and store technology may offer a key point of differentiation. For all its merchandising prowess, Costco doesn’t have a particularly resonant store app, checkout technology or other digital integrations. Its e-commerce offerings are resonating with consumers, though it had to be dragged kicking and screaming into the channel.

Meanwhile, Sam’s Club is clearly focused on innovation, with a focus on digital shelves, faster checkout, self-service returns and new ways for shoppers to sign up for memberships. The company has Walmart’s capital and expertise on its side, and now it has a store to help it hone these offerings.