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Wal-Mart CEO: Sam's Club Shoppers Can Skip Cashier

Sam's Club is introducing a self-scan and pay smartphone app to let shoppers skip the cashier line. (iStockphoto)

Wal-Mart (WMT) is rolling out self-scan-and-pay technology at all Sam's Club warehouses this fall, letting members "skip the checkout line," CEO Doug McMillon said in last week's earnings call.

Customers can use the "Scan & Go" app to ring up items as they put them in their shopping cart and see a running receipt total on their phones. The app also handles payment, so customers just show their receipts to greeters on the way out.

The world's largest retailer by revenue also is testing similar technologies at a number of Wal-Mart supercenters after pulling the plug on an unsuccessful 200-store pilot test in 2014.

At a challenging time for brick-and-mortar retailers, investors cheered Wal-Mart's Q2 same-store sales gains of 1.6% at U.S. stores and 0.4% at Sam's Clubs, excluding fuel.

Yet operating income at U.S. stores fell as Wal-Mart continued to see profits squeezed by its second big wage hike in two years and outlays for a build-out of its online capabilities as it aims to fend off the threat from Amazon (AMZN), as well as rivals like Target (TGT) and Costco Wholesale (COST).

"Unfortunately, the price of this stability has been a multiyear erosion in margins and profitability," wrote analyst John Zolidis of Buckingham Research Group.


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After raising its base pay first to $9 an hour in 2015, and then to $10 in 2016, Wal-Mart may be positioned to move beyond its era of shrinking margins and start growing profits again. Yet, there are risks, including the political push for a much higher minimum wage that's scored its biggest wins in California, New York, Oregon, Washington D.C. and Chicago.

There's also an outside possibility that Democrats win the White House and a majority in Congress and thus have the votes to raise the federal minimum wage to $12 or beyond, while mandating other compensation hikes, such as paid sick leave and family leave.

Wal-Mart's emphasis right now is growing the top line, leveraging its stores and distribution network to compete with the likes of Amazon for web business with an in-store pickup option, along with grocery delivery.

Yet at some point, and in some high-minimum-wage areas, letting customers skip the cashier might not just be an effort to keep shoppers happy, but could also be a strategy to help contain compensation costs.

Wal-Mart hasn't softened its determination to compete by cutting prices as low as possible, doing everything it can to strip away unnecessary costs, as it showed at the beginning of 2016 by shutting down 269 stores, including 154 in the U.S.

Of particular note, Wal-Mart closed stores or called off planned openings in parts of the U.S. where the high-minimum-wage movement had scored large wage increases: Oakland, Calif., Los Angeles and Washington, D.C.

One reviewer called Sam's Club's Scan & Go app, which is downloadable onto any smartphone, "the perfect app for shoppers who hate cashiers."

Given Wal-Mart's priorities and its diverse customer demographics, cashiers aren't going to be replaced by mobile scan and payment technology anytime soon. But Wal-Mart is working on a range of such technologies, such as a grocery cart that scans every item in a collaboration with Digimarc (DMRC).

Wal-Mart closed 0.15% lower at 72.70 on the stock market today, moving below its 50-day moving average after hitting a 14-month high Thursday. Target rose 0.4%, Costco ended flat and Amazon added 0.3%.

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