Walmart + has 32 million members, Deutsche Bank estimates

The Walmart + home screen on a laptop computer in Brooklyn, New York on Wednesday, November 18, 2020.

Gabby Jones | Bloomberg | Getty Images

Walmart’s membership program, Walmart +, has gained momentum and is attracting younger buyers, with higher incomes, according to a research note released Tuesday by Deutsche Bank.

The subscription service – which was launched almost exactly a year ago – has grown to about 32 million U.S. households, according to monthly surveys of consumers by the wealth research firm. In a note, retail analyst Krisztina Katai said Walmart + has made a “turning point” after months of slower growth.

About 25% of respondents said in June and July that they owned Walmart +, Deutsche Bank said. It went through the previous months, where the penetration was around 19%. In comparison, about 57% of respondents to the survey said they belong to the Amazon Prime membership program, according to the latest survey.

There is a significant overlap with the programs: About 86% of current Walmart + subscribers own Amazon Prime, according to a Deutsche Bank survey. They also have a similar demographic: About 61% of Walmart + members earn an annual family income of more than $ 50,000, and 33% earn $ 100,000 or more a year, compared to 63% and 28% with Prime members, respectively.

Walmart, the country’s largest drugstore, has debuted the membership program as a way to encourage customer loyalty, drive more frequent sales and beat competitors comfortably. However, Walmart offered few specifics on Walmart + ’s performance and did not disclose its membership numbers.

A Walmart spokesman declined to comment on the report.

The program costs $ 99 per year or $ 12.95 on a monthly basis. One of its main advantages is the free unlimited food delivery to the home for orders of $ 35 or more. It also includes benefits like fuel discounts and access to a Scan-and-Go app that allows people to skip the payline.

Over time, Walmart has sought to sweeten the deal with new benefits, such as prescription discounts. It also dropped the minimum of online shipping, putting the company in line with Amazon Prime membership and allowing people to get a single item delivered the next day or in two days.

Amazon Prime costs $ 119 a year, or $ 12.99 on a monthly basis. An Amazon Prime subscription includes free shipping and benefits such as video, music, gaming and book streaming.

Doug McMillon, CEO of Walmart, said Thursday in a virtual conference hosted by Goldman Sachs that the company is focused on the customer experience rather than the subscriber count. First, he said, Walmart needs to expand capacity to meet a larger volume of online food orders.

To do this, Walmart converts dozens of its stores into mini-stores with high-tech automated systems that help employees pick and pack orders.

“The worst thing we can do is to trade really aggressively, get a group of members who are disappointed because they can’t get a slot or don’t have the right in-stock stock or some other problem happens,” he said. . “So the primary focus we have is on that quality of experience, the delivery of the feedback, and that Net Promoter Point.”

Walmart recently hired a new executive to oversee the membership program. It’s up to Chris Cracchiolo, a 19-year veteran of American Express, who started in July. The credit card company, which charges a heavy annual fee, is known for its loyal followers and only for members, as is early access to tickets for concerts.

Janey Whiteside, Walmart’s Chief Customer Officer, also worked at American Express before joining the big-box retailer.

Deutsche Bank has a buy rating for Walmart, with a target price of $ 185. Walmart shares were trading around $ 144 Tuesday afternoon. Their share growth has been slow this year.

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