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NWA DemocrAt-GAzette/JASON IVESTER Aneasha Moore of Centerton looks over frozen chicken April 18 at Sam's Club in Bentonville. Sensors attached to the drones would be able to detect any obstacles as it navi- gates to a landing zone. Several landing zones — which could be in full view of shoppers or hidden from customers — would be created in stores for the drone systems. After the item is detached either automatically by the drone or manually by an employee, the device would be directed away from the delivery area. There's no guarantee the system will be utilized by Wal-Mart stores. Compa- nies often file patents that are never used. But Rich Ham, associate director of the operations management program in the University of Arkansas' engineer- ing college, believes Wal-Mart's system is feasible because of the advancements in drone technology. "Those sensors are really key to this," said Ham, who teaches a course on drones. "You have to have sensors to detect where you are. It was available, but at such a high cost and lower end of success rate just a few years ago. But the technology is turning over monthly and the capacity to do this now is definitely doable." To help create an "increased feeling of security for those below," Wal-Mart also said it could configure the flight path to go over shelves instead of aisles in the store. "You can assess the risk where there's higher numbers of people and have it fly, not over the aisles, but over areas that are more covered and protected," Ham said. "And based on the way the technology has evolved over the last few years, I wouldn't have any concern about the safety piece." Wal-Mart declined to comment about the patent, but the company has previ- ously acknowledged the use of drones in other areas of its business. Wal-Mart demonstrated drone technology at work in its distribution and fulfillment centers during a media tour last summer. Chief Executive Officer Doug McMil- lon previously said the retailer would begin to look more like a tech company as it moves forward. He told investors gath- ered at the Bank of America Merrill Lynch 2017 Consumer and Retail Technology Conference in New York the retailer has to "make our customers' worlds simpler." "Technology in particular is being used to get rid of friction, make things simpler and easier, and customers just expect that as a company, you're innovat- ing all the time and making things more enjoyable for them," McMillon said. Wal-Mart has introduced features and technologies designed to do just that, blurring the lines between in-store and online shopping as it tries to compete with companies like Amazon.com. Grocery pickup service, which allows customers to order groceries online, drive to the store and have them brought out to their vehicles, is available in more than 600 locations across the country. Wal-Mart also is tinkering with other in-store pickup options, including a large automated machine in Rogers in which customers can walk up, enter their name into a kiosk next to the machine and receive an order number. They scan the receipt at the machine and the item is dispensed. Scan & Go, which allows customers to scan their items as they shop, pay within the Wal-Mart app and walk out the door without going through a checkout line, is available in every Sam's Club and is being tested in a handful of Wal-Mart stores. Services intended to simplify the pharmacy and financial services depart- ments are also available. "We're beginning to see the end of the retail store as it is and that's because the retail store is highly inefficient," said Annibal Sodero, an associate professor an at the University of Arkansas Sam M. Walton College of Business. "The retail store of the future is really going to be much more automated. I think that we're beginning to see this with the drones because the idea, at least the idea of Wal-Mart's patent, is to make the drones fly over the shelves and bring something for customers out of the back rooms. That would allow the associates to do something else." Sodero said that doesn't mean Wal-Mart customers are going to see drones buzzing over their heads as they browse the store anytime soon. But Sodero believes the patent, and the potential use of drones in stores, "is just the tip of the ice berg" as retailers like Wal-Mart think about the future. "It's really this bigger context of how retailers are going to design the retail store and what is going to be the role of automation in that," Sodero said. 14 NWA Democrat-Gazette Walmart Shareholders Thursday, June 1, 2017 Drones v Continued from Page 12 "You can assess the risk where there's higher numbers of people and have it fly, not over the aisles, but over areas that are more covered and protected." — Rich hAM, AssociAte diRectoR of the opeRAtions MAnAgeMent pRogRAM in the UniveRsity of ARkAnsAs' engineeRing college The reinvention of Sam's Club's private label business was evident on the shelves as Chandra Holt, vice president of private brands, led a tour through the Bentonville club in April. She pointed to olive oil sourced from Italy, honey secured from a U.S bee cooperative and pre-smoked barbecue with just three ingredients — pork, water and seasoning — created with the help of Kansas City pitmasters. "Our members pay a fee to shop here so they expect to find unique things when they enter the club," Holt said. "We want to make sure we have really great items that keep them coming back." The three items were a quick glimpse of a larger private label strategy that has consumed Holt and her team, who have worked to keep members coming back by improving the offerings available at Sam's Clubs. The company has whittled its private label brands from 21 to one — Member's Mark — over the past few years to generate loyalty and eliminate confusion, announced plans to introduce 300 new private label items in its clubs this year, and is in the process of renovating about twice that many. To do so, Sam's Club has invested in its local and global sourcing capabili- ties and also reimagined packaging and branding for its Member's Mark items. The company formulated a private label team that includes product developers, culinary experts and food scientists to emphasize quality and value. "In the past, we'd always kind of benchmarked ourselves against the national brands," Holt said. "As consumer tastes are changing, some- times they want better than that. They want cleaner ingredient labels, they want more sustainable packaging, they want less ingredients in food." The effort is important for Sam's Club, which is competing for members with other retailers such as Costco Wholesale Corp. and is undergoing a leadership change after CEO Roz Brewer stepped down earlier this year. Sam's Club, which reported net sales of $57.4 billion for fiscal 2017 — a 1 percent increase from 2016, is now being led by former chief merchandising officer John Furner. Brian Yarbrough, a retail analyst at Edward Jones, said private label brands can be critical to a retailer's success as it competes with others in stores and online. "The difference on a private label brand is if you get someone hooked on your Great Value brand, or you get someone hooked on Member's Mark, they can't go to Amazon or Target to get that," Yarbrough said. "I do think there's Sam's Club shows off brand reinvention ArkANsAs DemocrAt-GAzette See BranD, Page 16