Walmart launched its subscription service, Walmart+, in 2020. He’s added perks including deeper gas discounts and free access to Paramount+.
Walmart
Americans have tons of subscriptions.
Even with inflation, Walmart thinks they’re willing to pay for one more.
Walmart’s subscription service is Walmart+. The program includes benefits such as free shipping for online purchases, free in-store delivery, and gas discounts. It debuted in September 2020, a time when many shoppers were trying to avoid stores because of Covid-19.
Two years later, the retailer is faced with a very different background. Walmart’s e-commerce growth rate has slowed. More shoppers have returned to stores and more are forgoing voluntary purchases as they spend more on groceries, rent and other necessities.
Now Walmart must prove that its subscription service can grow in a tougher climate.
Chris Cracchiolo, head of Walmart+, said signups and renewals for the service have remained steady over the past few months. The members of the service tend to be younger, more tech-savvy, and wealthier than the typical Walmart shopper.
However, he said Walmart+ has also attracted many consumers on a budget: About 1 in 4 Walmart+ members receive government-provided food aid benefits.
This demographic could be a promising sign for Walmart+ as it navigates a segment that quickly separates winners from losers.
sea of subscriptions
Some subscription services are struggling to retain customers. Netflix and personal styling service Stitch Fix are among the companies that have lost customers. At the same time, club memberships have gained momentum. Costco has continued to attract new members, and Walmart-owned Sam’s Club has reported a record number of members. Sam’s Club does not disclose its membership count.
The company believes Walmart+ is more of a club membership that shoppers use to stock up on essential items than a streaming service that subscribers can cancel after a favorite show’s season ends and then renew when the series returns.
Cracchiolo, an American Express veteran, said Walmart+ is positioned to grow even at a time when Americans are on tighter budgets and weighing the risk of a recession.
The big retailer is leaning on value-based perks as inflation nears a four-decade high. These include steeper gas discounts and new digital coupons that push Walmart+ toward the club category. August added Walmart Rewards, an exclusive program for Walmart+ members to save money on items and use those savings on future purchases. Then, in September, members began getting free access to Paramount+.
It already included food benefits such as: B. Free home shipping on orders $35 or more.
Even before wallets hit inflationary pressures, some market research firms pointed to Walmart+’s slow membership growth, especially when compared to competitor Amazon Prime.
Walmart+ membership has fluctuated between 11 million and 11.5 million over the past three quarters, according to estimates by market researcher Consumer Intelligence Research Partners, which are based on quarterly consumer surveys and industry research. That equates to about 25% of Walmart’s online shoppers.
Amazon Prime, which debuted in 2005, has an estimated 168 million members in the US as of June 30, according to CIRP. The company estimates that around 70% of its online shoppers are members.
Walmart has not disclosed a subscriber count. However, officials said on a recent conference call that Walmart+ has been adding paying members to the program every month since it launched in September 2020.
“Here We Perform”
Walmart could also offer other benefits this holiday season – such as: B. Early and exclusive access to hot items like video game consoles. The company hasn’t announced its vacation plans for Walmart+, but it did start offering Walmart+ members last year.
The retailer has momentum in expanding its customer base: Walmart’s reputation as a discounter has attracted higher-income shoppers in recent months. About three-quarters of Walmart’s grocery market share gains came from customers with annual household incomes of $100,000 or more for the quarter ended July 31.
That momentum will also drive membership to Walmart+, Cracchiolo said.
“This is when Walmart shines,” he said. “It’s what we do best. When there is uncertainty, when there is inflation, when customers are on really, really tight budgets. Then we perform. And the Walmart+ membership is the one on steroids. What we’re seeing is actually more customers seeing demand.”
He said working families are the core demographic for Walmart+ — a profile that fits approximately 50 million homes in the US. Customers who are part of the program spend about twice as much as non-members, he added. Also, it makes money from the subscription fees. Members pay $12.95 per month or $98 annually.
Its members are filling larger shopping carts, visiting the stores and website more often, and shopping in more departments, he said.
“For us, it’s about building a relationship with a customer that isn’t just a transaction,” he said. “The more we can offer our customers that help them in their everyday lives, the more we build that emotional bond with the customer.”