Sam's Club CEO says automating stores isn't a move to eliminate jobs

• Sam's Club CEO told BI the warehouse club's automation push isn't about wanting to trim its workforce.
• Chris Nicholas said the new tech is removing "mundane" tasks and giving workers more time to engage with shoppers.
• "We will not have fewer associates in clubs," he said.

Sam's Club's newest location is chock-full of tech to let members skip many of the traditional touchpoints of warehouse club shopping — namely no checkout lanes and no receipt checks.

The building also brims with sensors, cameras, and robotics that handle a large and growing list of daily tasks.

Sam's Club CEO Chris Nicholas told Business Insider that the company's automation push isn't about trimming the number of employees in stores long-term.

"This is not an efficiency play — this is a growth play," he said at the club's grand opening. "This is an empowerment play. We will not have fewer associates in clubs."

Nicholas's view contrasts with concerns from some US workers, including some who work at warehouses, that automation could one day result in job cuts or the elimination of their roles.

Sam's Club said the opening of the warehouse (which had closed after tornado damage two years ago) brought roughly 270 jobs back to the Dallas-area town of Grapevine, Texas. That's almost double what a typical club employs, according to Sam's Club.

Nicholas said that's by design.

"We've taken 100 million tasks out of associates' hands this year, but we've got more associates. Why? Because our job is to create delightful experiences for our members," he said.

"When people are walking around with clipboards, or redoing work, or being really inefficient, they can't spend time solving problems for members," he added. "The way we drive more membership and more renewals and create more delightful experiences is by freeing our associates up to do that."

In the low-markup world of warehouse club retail, overall profitability is heavily tied to membership fees. While Walmart-owned Sam's Club doesn't report segment financials in great detail, its publicly traded rivals do, and membership fees represent more than half of the operating income for both Costco and BJ's wholesale.

The push into automation over the last few years has also contributed to Sam's Club growing top-line sales by roughly 50% in the last five years — without adding a single new location until this month.

Nicholas also said Sam's Club is growing faster than both the club segment and the wider retail sector, which so far has required hiring lots of workers.

Agility Robotics CEO Damion Shelton told BI last year that the need for workers in warehouses and distribution centers exceeds what is currently available. Agility supplies tech for Amazon.

"There's a long history of technological anxiety about automation and jobs, but it's definitely not robots or workers," he said. "Our robot is meant to complement people and let workers be more productive by taking on dangerous, repetitive tasks so people can focus on the more interesting, creative aspects."

Nicholas, who spent his early career stocking shelves and pricing items as a teenager in the UK, said he's done enough of these jobs to see automation as an improvement.

"When you're doing those hourly jobs, you don't want to do the mundane things that you know a computer can do," he said.

A recent Amazon-sponsored MIT survey of 9,000 workers in a variety of jobs indicated that employees feel more optimistic about technologies that help perform more routine tasks and let humans focus on more creative ones.

In general, many jobs involve some mix of routine and non-routine work that must be done, and this is especially true in warehouse retail. For example, at Sam's Club, it used to be the responsibility of a worker to walk every single aisle of the cavernous store with a clipboard to make note of inventory levels for restocking ahead of the next morning's opening. Now an autonomous robot does that — and cleans the floors at the same time.

More recently, AI-powered computer vision gateways verify shoppers' purchases as they walk to the exit, and only flag an employee if something may be amiss.

The MIT researchers described changes that improve both productivity for the business and benefits for workers as "positive-sum automation."

Nicholas said when workers are able to concentrate on more meaningful work, they stay longer, develop more skills, and get promoted.

"This is how you get 75% of our club managers that started as hourly associates," he said. "That will continue, and hopefully it'll be higher."

If you are a Sam's Club worker who wants to share your perspective, please contact Dominick via email or text/call/Signal at 646.768.4750. Responses will be kept confidential, and Business Insider strongly recommends using a personal email and a non-work device when reaching out