The Walmart + home screen on a laptop in Brooklyn, New York, on Wednesday, November 18, 2020.
Gabby Jones | Bloomberg | Getty Images
Walmart’s membership program, Walmart +, is gaining strength and attracting younger, higher-income shoppers, 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 consumer survey firms by the equity research firm. In the note, retail analyst Krisztina Katai said Walmart + has reached a “turning point” after months of slower growth.
About 25% of respondents said in June and July that they had Walmart +, Deutsche Bank said. This is compared to previous months, where penetration was around 19%. In comparison, approximately 57% of respondents said they belonged to the competition members program, Amazon Prime, according to the most recent survey.
There is a significant overlap with the programs: approximately 86% of current Walmart + subscribers own Amazon Prime, according to the Deutsche Bank survey. They also have similar demographics: about 61% of Walmart + members earn an annual household income of more than $ 50,000 and 33% earn $ 100,000 or more per year compared to 63% and 28% of Prime members. , respectively.
Walmart, the country’s largest supermarket, debuted with the affiliate program as a way to encourage customer loyalty, get more frequent sales, and win the competition comfortably. However, Walmart has offered few details about Walmart + ‘s performance and had not shared its membership.
A Walmart spokesman declined to comment on the report.
The program costs $ 99 a year or $ 12.95 a month. One of their main benefits is the free, free delivery of groceries at home for orders of $ 35 or more. It also includes benefits such as fuel discounts and access to a Scan-and-Go app that allows users to skip the payline.
Over time, Walmart has tried to sweeten the deal with new benefits, such as prescription discounts. It also reduced its minimum of online shipping, getting the company to adjust to Amazon Prime membership and allow people to receive a single item the next day or in two days.
Amazon Prime costs $ 119 a year, or $ 12.99 on a monthly basis. Amazon Prime subscription includes free shipping, as well as benefits such as video, music, games, and book streaming.
Walmart CEO Doug McMillon said Thursday at a virtual conference hosted by Goldman Sachs that the company is focusing on the customer experience rather than the subscriber count. First, he said, Walmart needs to expand its capacity to meet a larger volume of grocery orders online.
To do this, Walmart is turning dozens of stores into mini-stores with high-tech automated systems that help employees choose and package orders.
“The worst thing we could do is market this aggressively, get a group of members who are disappointed because they can’t get a slot or don’t have the right level of values or some other problem happens,” he said. dit. “So the main goal we have is the quality of the experience, the delivery of the collection and the score of the net promoter.”
Walmart recently hired a new executive to oversee the membership program. He played Chris Cracchiolo, a 19-year veteran of American Express, which began in July. The credit card company, which charges a hefty annual fee, is known for its loyal fans and its exclusive benefits for members, such as early access to concert tickets.
Janey Whiteside, Walmart’s director of customers, also worked at American Express before joining the retailer.
Deutsche Bank has a purchase rating for Walmart, with a target price of $ 185. Walmart shares were trading at about $ 144 on Tuesday afternoon. Its share growth has been roughly flat this year.