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Shoppers Are Abandoning Costco for Sam's Club—Here's Why

The Walmart-owned company has put itself on the map thanks to its advanced technology.

Sam's Club has spent a great deal of time and money perfecting its high-tech features, including the Scan & Go app and AI-powered exit archways to avoid physical receipt checks. And now, the Walmart-owned company is reaping the benefits. As reported by Business Insider, in a CNBC interview, CEO Chris Nicholas revealed that Sam's Club has seen a 68 percent increase in Gen Z shoppers, many of whom have praised the warehouse for its skillfully advanced technology—a noticeable weak spot for rival Costco.

"That generation believes it's cool to save money, and we agree with them," Nicholas told the outlet. We all like to save money, and supermarket warehouses in general, like Sam's Club and Costco, are known for having bargain prices. So, why are so many Costco shoppers jumping ship?

RELATED: Costco Shoppers "Hate Everything About" New Product Packaging.

According to Nicholas, the spike in younger customers is proof that technology is the future of convenience, which is a core value of the Sam's Club shopping experience.

"That's not something typical of the club model, but it's something that we offer, and it's something that's really resonating with our members," Nicholas told the Jefferies analyst Corey Tarlowe, per CNBC.

While both warehouses have self-checkout kiosks, Sam's Club also offers customers the option to shop in-store via the Scan & Go app. This app allows members to skip checkout lines altogether by scanning their items using the app's barcode feature and completing their purchases digitally without the help of a store associate.

The savvy tech feature put Sam's Club on the map—however, what really caused the company to soar in popularity was its "Seamless Exit Technology."

In a January press release, Sam's Club unveiled a new AI machine that would replace its current receipt-checking process in which employees had to conduct physical receipt checks before letting shoppers leave the store. But now, customers can exit via an archway that uses technology to detect what items are in their cart. Once your payment has been verified, you're free to go.

The initiative is unparalleled, as Costco still utilizes the in-person receipt-checking method. That, on top of the company's digital channels, is propelling Sam's Club ahead. Nicholas reported that customer satisfaction scores are through the roof as a result.

"It drives engagement. It drives renewal rates. It drives people to tell their friends, 'You've got to come to Sam's Club, and you've got to sign up for a membership,'" he explained.

RELATED: Costco Shoppers Are Abandoning These Kirkland Products: "Gone Downhill."

Sam's Club's technological advances have become a popular topic of discussion on social media. In a Reddit thread, some patrons admitted that the Scan & Go feature is what pushed them to ditch Costco for good.

"Scan and go best thing ever for sam club," wrote one person, to which someone else responded, "I agree! Way better than any other store really."

"I do love it and that is actually the reason I go to Sam's and not Costco now," shared another user.

"I use scan and go religiously and I haven't used a register in months," reads a comment.

Additionally, back in January, Best Life reported that shoppers had already begun to make the switch to Sam's Club over Costco's new membership rules, which added membership card-scanning kiosks at some store entrances.

Emily Weaver
Emily is a NYC-based freelance entertainment and lifestyle writer — though, she’ll never pass up the opportunity to talk about women’s health and sports (she thrives during the Olympics). Read more
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