Sam's Club will sign up for free and introduce an all-digital, AI-powered shopping experience for its customers, a move that has privacy advocates who fear new AI tools can unfairly target some customers with higher-priced customers based on their shopping habits.
The all-digital approach began with the reconstruction of the mountain club in the suburbs of Dallas, which was severely damaged by a tornado in 2022.
Two years later, when the retail location opened, it was the first of its kind to abandon its registry for the “Scan and GO” program, which allows customers to scan every item placed in their physical cart and paid for via the mobile app. The program has been driving at nine locations on the Dallas Metro and a store in Missouri since then, according to Retail Diving.
The client did not hand the receipt to Sam’s club staff for review, and before leaving the store, the client walked through an arch equipped with an AI-powered camera to capture images of items in the cart and electronically matched items paid through the app.
Sam's Club did not disclose when AI technology will come to California stores, but Sam's Club has stores in Torrance, Fountain Valley, El Monte and Riverside.
The company said it is using the data collected by the app and categorizing it with the help of AI to promote promotions sent to club members through the store app based on their shopping habits.
Advocates of consumers raised concerns that such data collection and custom advertising could be used to promote high-priced and defaulted products to certain customers based on their shopping habits.
Sam's Club said it always promotes low prices for all customers and does not use new AI technology to augment shoppers.
According to the FTC, monitoring pricing is the practice of using customer personal information (such as location, demographics, shopping and online browsing history) to tailor specific prices online.
This means that based on the data collected for each customer, retail companies can promote higher prices to them or adjust the products they see online.
The FTC offers examples of a pharmacy that does not include the average customer performing special promotions over-the-counter medications or weight loss supplements, assuming that these customers may be able to purchase these products anyway. Instead, pharmacies can target these discounts at rare buyers of these products to avoid losing them as customers.
The price of a product usually fluctuates based on real-time supply and demand in the market or market competition. However, under monitoring pricing, products that customers display on their applications or websites are entirely based on information collected by AI.
Retailers have collected a large amount of customer data through loyalty reward programs and club cards for decades. But tools used to collect and analyze that data today, including the AI cameras from Sam's Club, have become more complex.
Monitoring pricing is just the latest way to promote promotions and products to customers.
The term was notorious early this year, when the Federal Trade Commission found that at least six companies (Mastercard, Accenture, Professionals, Bloomreach, Bloomreach, Revionics and McKinsey) frequently used the practice while collecting “one person’s location and demographic information until mouse movement on the webpage,”
Federal agencies found that the company is working with third-party companies to process the collected customer data and adjust prices accordingly.
Sara Geogheege, senior consultant at the Electronic Privacy Information Center, said that a large amount of this data was collected and processed through AI-powered algorithms to divide customers into different categories, including considering the portions that customers are most likely to buy.
"(Companies) want to track us to understand the highest prices we are willing to pay for products or services, and they use AI-DRIEN technology to do that," Geoghegan said.
"People are serious about discrimination or price, which happens in black boxes that we don't always know," Geoghegan said. "Someone's price can be higher without understanding why or just thinking 'OK, the cost of things is rising.' Transparent
FTC research found that some third-party companies “can show consumers higher-priced products based on “search and purchase activities.”
For example, these companies could use this type of data to place customers in a "new parent" profile and then promote a "high-priced baby thermometer" on the first page of search results," the report said.
“I think surveillance pricing is a particularly evil approach because we are talking about the actual dollars consumers are spending,” Geoghegan said. “It’s the practice of companies extracting and utilizing our personal information.”
Another problem, she said, is that the data collected is being shared with other retailers, third-party companies, data brokers or advertisers.
Harvey Ma, vice president and general manager of Access Platform, a member of Sam's Sam's Club Club, said the warehouse club is collecting data about your shopping behavior and using AI tools to analyze your habits, but it is not using it to sell to you. But immediately said that warehouse club stores do not conduct surveillance pricing.
Sam's Club says it has a daily low-priced retail pricing strategy, which means the product is available at low-priced, competitive prices.
“Our businessmen work tirelessly to make sure that there is that value every day and is suitable for all customers and members,” Ma said. “We are not a premium, low or promotional retailer, and I think this is where the (monitor pricing) practice begins.”
The high and low pricing strategy is that the retailer sets an initial high price and then offers discounts or promotions over time.
The Sam Club decided to introduce AI tools to analyze customer data because “millions of signals occur in real time and our job is to use tools to filter those signals to understand the best form of intention,” MA said. He and his team have done this manually before, but now it can be done faster.
According to the Federal Trade Commission, any website or app uses different technologies to track and collect information about your online habits.
What FTC says is what you can do: