ALEXANDRIA, Va.—In the face of inflation and an overload of subscription-based services, Walmart believes that Americans need another subscription, reports CNBC. The Walmart+ program offers users benefits such as free shipping for online purchases, free deliveries from the store and gas discounts.
According to Chris Cracchiolo, head of Walmart+, Walmart+ signups and renewals have remained steady in recent months, and its members are younger and more tech-savvy and more affluent than the typical Walmart shopper. Cracchiolo told CNBC that the service also attracts the budget-conscious consumer as well—about one in four Walmart+ members receive government-provided food assistance benefits.
A recent Numerator study found that nearly two-thirds of U.S. households subscribe to a retail membership, with over 62% of households holding at least one retail membership. While Amazon Prime retains the highest satisfaction rate, Walmart+ has shown the fastest adoption. The program captures the highest purchase frequency, buy rate and share of wallet from subscribers out of all programs tracked—capturing 18.5% of its subscribers’ share versus 14.6% of their total shoppers’ share.
Some subscription services are losing customers, including Netflix and Stitch Fix, a personal styling service, but club memberships are increasing among consumers, particularly as food costs have skyrocketed. Walmart thinks of its subscription service as a club membership, reports CNBC, where its customers can stock up on essentials, rather than it being like a streaming service, where subscribers may drop after a favorite show’s season ends and then renew when the series returns.
In April, Walmart+ increased the fuel discount it offers its members. Subscribers can get up to 10 cents off on every gallon of fuel they purchase at more than 14,000 participating gas stations. Walmart had been offering its Walmart+ members a fuel discount, but the savings doubled, and the retailer partnered with Exxon and Mobil stations to add an additional 12,000 gas stations where members can save—a more than sixfold increase.
Walmart also launched a new rewards program for its Walmart+ members. Subscribers can earn and redeem points both in store and online on certain items. Members also get free home grocery delivery on orders of $35 or more.
Membership for Walmart is estimated to be around 11 million to 11.5 million, according to market researcher Consumer Intelligence Research Partners based on quarterly consumer surveys and industry research. That translates to about 25% of Walmart’s online shoppers. In comparison, Amazon Prime has an estimated 168 million members in the U.S. as of June 30, according to CIRP, and about 70% of its shoppers are members.
Walmart+ costs $98 per year or $12.95 per month.
“This is the time when Walmart shines,” Cracchiolo told CNBC. “This is what we do best. When there’s uncertainty, when there’s inflation, when customers are on really, really tight budgets. This is when we step up. And Walmart+ membership is that on steroids. What we’re seeing is more customers actually seeing the need.”
Cracchiolo told CNBC that its core demographic for Walmart+ is busy families, which is about 50 million households in the U.S. He said subscribers spend twice as much as non-subscribers, and they have a bigger basket size, visit in stores more often and shop across departments.
“For us, it’s about developing a relationship with a customer where it’s not just a transaction,” Cracchiolo told CNBC. “The more we can offer customers that help them in their everyday lives, the more we build that emotional connection with the customer.”
According to Leroy Kelsey, NACS research director, convenience retailers are testing subscription models to skirt shopper resistance to premiums. Subscriptions make upselling, cross-selling and basket-building easier. They also reduce the cost to acquire customers and streamlines sales forecasting, plus they build loyalty and make revenue predictable.
“Prior to the pandemic c-store shopper e-commerce membership was 32% and growing by about 5% each year,” said Kelsey at the 2022 NACS State of the Industry Summit. “The lockdown and busy lifestyles have doubled that type of engagement.”