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Why Apple Is Checking Out Wal-Mart

NEW YORK ( TheStreet) -- Imagine having to pay $12 million per second. This is what Wal-Mart Stores (WMT - Get Report), the world's largest retailer, pays on a daily basis at its U.S. stores on cashier expenses.

But now it's looking for ways to trim down on those expenses while improving arguably one of its chief weaknesses - the checkout process. To that end, it has called upon Apple (AAPL - Get Report) to help revolutionize the way its customers shop and pay.

My recent article discussing how Apple could kill off Visa (V) generated a "mixed" reception. In the article, I said the following:

"But I'm starting to get the sense that these card companies, many of which have introduced convenience to the payment process, could be in trouble. Although they were successful at convincing consumers that it is best to leave their cash and checkbooks at home, it is not out of the realm of possibility that they could soon become the dinosaurs of the payment process, if they don't adapt.

"The one thing consumers can't ever be without is their cellphones. That's why vendors like Starbucks (SBUX), which recently formed a partnership with Square, are becoming more open to the idea of mobile payments, a new craze that has the potential to eventually become the world's currency. If this happens, it would mean that in addition to seeing Visa and MasterCard logos on the doors of your favorite store, you will see logos of Apple and Google (GOOG)".

Well, it now looks as if this very idea has started. The premise was simple -- if stores are able to cut down some time during on the checkout process, not only will it benefit the consumer but it is certain to minimize loss revenue while improving margins.

In Walmart's case, it understands that even though its stores have self-pay kiosks where customers are able execute their own transactions, $12 million per second on cashier expenses remains glaring enough that it needed to do something about it. Its competitive future depends on it.

A story by Reuters last week revealed Walmart has embarked on a pilot program aimed at speeding up the payment process. The company asked employees that owned iPhones to participate in an exercise and simulate a shopping experience that allowed them to scan and pay for their own items. If this works it has the potential to save Walmart millions of dollars annually.

Although details of the experiment remain unconfirmed, sources say customers might soon be able to scan and bag items as they walk through the aisles with their shopping carts. Using the iPhone app, a detailed list of each item within the cart would then be issued at the self-checkout area. This, too, will minimize additional time needed to rescan each item as has been conventional method.

Walmart has been looking for ways to trim costs and preserve its competitive advantage, which is offering shoppers the lowest costs among all of the retailers.
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