Walmart’s membership program, Walmart +, is gaining momentum and attracting young, high-income shoppers, according to a research note released Tuesday by Deutsche Bank.
According to a monthly consumer equity research firm’s survey, the subscription service – which debuted about a year ago – has reached about 32 million U.S. households. In the note, retail analyst Krysztina Katai said Walmart + had reached an “inflection point” after months of slow growth.
About 25% of those polled said in June and July that they had Walmart +, Deutsche Bank said. This is up from previous months, where penetration was around 19%. In comparison, around 57% of those surveyed said they belonged to Amazon Prime, a competing membership program, according to the most recent survey.
There is a significant overlap with the programs: According to a Deutsche Bank survey, around 86% of current Walmart + customers have Amazon Prime. They also have similar demographics: around 61% of Walmart + members earn an annual family income of more than $ 50,000 and 33% earn $ 100,000 or more per year, with 63% and 28% of Prime members, respectively.
Walmart, the nation’s largest grocery store, launched a membership program to encourage customer loyalty, drive more consistent sales, and easily beat the competition. However, Walmart did offer some specifications on Walmart + performance and did not share its membership.
A Walmart spokesperson was not immediately available to comment on the report.
The program costs $ 99 per year or $ 12.95 per month. One of its main benefits is free, unlimited home grocery delivery on orders of $ 35 or more. It also includes perks like fuel discounts and access to the Scan-and-Go app, which lets people skip the line.
Over time, Walmart has tried to sweeten the deal with new benefits such as prescription discounts. It also lowered its online shipping minimums, bringing the company into line with Amazon’s Prime membership and allowing people to have a single item delivered the next day or two.
Amazon Prime costs $ 119 per year or $ 12.99 per month. The Amazon Prime membership includes free shipping as well as perks like video, music, games, and book streaming.
Walmart CEO Doug McMillan told a virtual conference Thursday hosted by Goldman Sachs that the company is focusing on customer experience rather than number of customers. First, he said, Walmart would need to increase its capacity to meet large quantities of online grocery orders.
To do this, Walmart is converting dozens of its stores into mini-warehouses with high-tech automated systems that help employees pick up and pack orders.
“The worst thing we can do is market it very aggressively, get a bunch of members frustrated because they can’t find the niche or they don’t have the right level of stock or something else. problem. “Is,” she said. “Therefore, our main focus is the quality of the experience, the delivery of the pickup and the Net Promoter Score. “
Walmart recently hired a new executive to oversee the membership program. He brought in Chris Crecchiolo, a 19-year veteran of American Express, which debuted in July. The credit card company, which charges a hefty annual fee, is known for its loyal subscribers and member-only features like early access to concert tickets.
Jenny Whiteside, Walmart’s customer manager, also worked at American Express before joining the big-box retailer.
Deutsche Bank has a buy rating for Walmart with a price target of $ 185. Walmart shares were trading around $ 144 Tuesday afternoon. The growth of its share this year has been almost flat.