Walmart is betting that inflation will push customers to subscribe

Walmart launched its Walmart+ subscription service in 2020. He added perks, including wider gas discounts and free access to Paramount+.


Americans have tons of subscriptions.

Even with inflation, Walmart thinks they’re willing to pay for another one.

Walmart’s subscription service is Walmart+. The program includes benefits such as free shipping on online purchases, free in-store pickup and gas discounts. It debuted in September 2020 as many shoppers tried to avoid stores due to Covid-19.

Two years later, the retailer faces a very different background. Walmart’s e-commerce growth has slowed. More shoppers have returned to stores and more people are moving away from discretionary shopping, spending more on food, rent and other essentials.

Now Walmart will have to prove its subscription service can grow in a tougher environment.

Chris Cracchiolo, head of Walmart+, said subscriptions and service renewals have remained stable in recent months. Service members tend to be younger, more tech-savvy, and more affluent than the typical Walmart shopper.

However, he said Walmart+ has also attracted many budget-conscious consumers, with roughly one in four Walmart+ members receiving government 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 struggle to retain customers. Netflix and personal styling service Stitch Fix are among the companies that have lost customers. At the same time, club membership is on the rise. Costco continues to attract new members, and Walmart-owned Sam’s Club reported an all-time high membership. Sam’s Club does not disclose the number of its members.

The company believes that Walmart+ is more like a club membership that shoppers use to stock up on essentials than a streaming service that subscribers can turn off after their favorite show’s season ends and then renew when the series returns.

Cracchiolo, an American Express veteran, said Walmart+ could grow even at a time when Americans are on tighter budgets and weighing the risk of a recession.

A major retailer is leaning towards value-driven benefits as inflation is at a nearly four-decade high. These include higher gas discounts and new digital coupons that are shifting Walmart+ into the club category. In August, the company added Walmart Rewards, an exclusive program for Walmart+ members that allows them to save money on items and use those savings for future purchases. Then, in September, members began getting free access to Paramount+.

It already included grocery perks like free home delivery for orders of $35 or more.

Even before inflation hit wallets, some market research firms pointed to Walmart+’s slow growth in membership, especially when compared to rival Amazon Prime.

According to Consumer Intelligence Research Partners, based on quarterly consumer surveys and industry research, Walmart+’s membership has fluctuated between 11 million and 11.5 million over the past three quarters. This equates to approximately 25% of Walmart online shoppers.

Amazon Prime, which debuted in 2005, has about 168 million US users as of June 30, according to CIRP. The firm estimates that roughly 70% of its online shoppers are members.

Walmart does not disclose the number of subscribers. However, its executives said during a recent earnings call that Walmart+ has been adding paying members to the program on a monthly basis since it launched in September 2020.

“This is when we step forward”

This holiday season, Walmart may be offering more perks like early and exclusive access to popular merchandise like game consoles. The company hasn’t announced its Walmart+ holiday plans, but last year this gave Walmart+ members their first chance at deals.

The retailer has momentum to expand its customer base: Discounter Walmart’s reputation has been attracting higher-income shoppers in recent months. About three-quarters of Walmart’s grocery market share growth came from customers with annual household incomes of $100,000 or more in the quarter ended July 31.

This dynamic will also boost Walmart+ membership, Cracchiolo said.

“This is the time when Walmart shines,” he said. “This is what we do best. When there is uncertainty, when there is inflation, when clients have very, very limited budgets. This is when we take a step forward. seeing the need.

He said busy families are a core demographic for Walmart+ — a profile that matches the roughly 50 million U.S. households. Buyers participating in the program spend about twice as much as non-members, he added. In addition, he earns on a subscription fee. Members pay $12.95 per month or $98 per year.

Members fill larger baskets, visit its stores and website more often, and shop in more departments, he says.

“For us, it’s about developing a relationship with a client where it’s not just a deal,” he said. “The more we can offer clients that help them in their daily lives, the more we build that emotional connection with the client.”

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