Sam’s Club is making a big change by going register-free and introducing a new digital shopping experience powered by artificial intelligence. This shift has raised concerns among privacy advocates, who worry that the AI could unfairly target customers with higher-priced items based on their shopping habits.
The new approach began with a Sam’s Club in Grapevine, Texas, which was rebuilt after a tornado caused significant damage in 2022. This location reopened two years later as the first Sam’s Club to eliminate traditional cash registers. Instead, it features a “Scan and Go” program that allows customers to scan items as they shop and pay through a mobile app. This program has been tested in several locations in the Dallas area and one in Missouri.
When customers finish shopping, they can walk through an arch equipped with AI cameras. These cameras capture images of the items in their carts and match them with the purchases made through the app, eliminating the need for a receipt check by employees.
Sam’s Club has not yet announced when this technology will be available in California, where it operates in cities like Torrance and Riverside. The company claims that it uses data from the app to personalize promotions for members based on their shopping habits. However, consumer advocates express concern that this data collection could lead to higher-priced products being promoted while discounts on other items might be hidden.
While Sam’s Club insists that it promotes low prices for all customers and does not use AI to upsell, the practice of tailoring prices based on customer data, known as surveillance pricing, is under scrutiny. This involves using personal information, including shopping history and demographics, to set specific prices for different customers.
The Federal Trade Commission (FTC) has highlighted how some companies use surveillance pricing to target customers with higher-priced items based on their buying patterns. For instance, a pharmacy might offer promotions on over-the-counter medications to infrequent buyers while excluding regular customers. This practice can lead to confusion and potential price gouging, as customers may not understand why they are being charged different prices for the same items.
Sam’s Club maintains that it follows an everyday low price strategy, ensuring competitive pricing without relying on high-low pricing tactics, where items are initially priced high and then discounted. The company asserts that its AI tools are used to analyze customer data more efficiently but do not engage in surveillance pricing.
As retailers increasingly use sophisticated tools to collect and analyze customer data, the implications for privacy and pricing practices are becoming more significant. Customers are urged to take steps to protect their privacy, such as deleting browsing history and adjusting app permissions.
In summary, while Sam’s Club is pioneering a new shopping model with AI technology, the potential for misuse of customer data raises important questions about privacy and pricing fairness in the retail industry.