Walmart’s Membership Program: A Stronger Strategy Amid Economic Challenges
In the face of fluctuating tariffs affecting the U.S. economy, Walmart is leveraging a key segment of its business to attract more customers and increase online sales: the Walmart+ membership program. This subscription service is rapidly becoming a crucial driver of growth for the retail giant, contributing significantly to its e-commerce success.
During the latest fiscal year, Walmart+ members accounted for nearly half of all spending on the company’s website and mobile app. According to Walmart’s reports, subscribers shop significantly more—averaging twice as many visits and spending nearly three times as much compared to non-members. This surge in membership comes at an opportune moment, especially as the retailer faced challenges with its stock market forecasts prior to the announcement of new tariffs on imported goods.
As the largest grocery retailer in the United States, Walmart has certain advantages when economic conditions are rocky. Yet, the Walmart+ program is poised to serve as a buffer against the disturbances caused by tariffs, not just by generating positive revenue but also fostering customer loyalty.
Seth Dallaire, Walmart’s Chief Growth Officer, describes the membership initiative as a way to boost shopping frequency. The program has led to increased spending per subscriber, particularly with growth noted in the Walmart+ Assist initiative, which provides discounted memberships for qualifying customers.
As the membership base expands, Walmart can enhance its profitability, enabling the retailer to maintain low grocery prices and continue investing in competitive strategies. Furthermore, the data collected from this customer base allows Walmart to attract advertising partners and refine its product offerings.
Upcoming events will provide insights into Walmart’s retail performance and the potential progress of its diverse revenue streams. Key updates expected at the investor event in Dallas include developments regarding Walmart+, advertising, and the overall state of the U.S. economy.
Walmart+ Fuels E-Commerce Growth
Launched nearly five years ago, Walmart+ continues to strengthen customer loyalty and is a driving force behind the retailer’s ability to generate profits that outpace sales growth. The membership includes various perks such as free shipping, complimentary same-day grocery deliveries on orders over $35, discounts on fuel, and even access to entertainment through subscriptions like Paramount+.
This program was Walmart’s strategic response to the thriving Amazon Prime service, marking another effort by the retailer to adopt successful elements from its competitors. To further cement member loyalty, Walmart plans to introduce Walmart+ Week, an exclusive event offering additional rewards and discounts on existing perks, much like promotional strategies used by Amazon.
Currently priced at $98 annually or $12.95 per month, Walmart+ contributes to the impressive growth of Walmart’s e-commerce sector. The retailer has recorded 11 consecutive quarters of double-digit growth in online sales, with a remarkable 20% increase in the most recent quarter alone.
Although Walmart hasn’t released specific figures regarding the number of Walmart+ subscribers, estimates from Consumer Intelligence Research Partners indicate that the membership base grew to approximately 25 million by January, a spectacular increase from about 11 million in late 2022. However, Walmart’s reach still lags behind Amazon Prime, which boasts around 190 million members in the U.S.
Despite this, Walmart+ is on an upward trajectory, with an increase in the percentage of Walmart.com visitors who hold a membership jumping from 23% three years ago to significant current levels.
Navigating Tariffs and Economic Concerns
The upcoming investor event coincides with the anticipated implementation of substantial tariffs affecting major manufacturing countries like China, Vietnam, and Cambodia. These tariffs are expected to impact Walmart’s supply chain beginning soon.
Earlier this year, Walmart shared a cautious outlook, expecting net sales growth between 3% to 4%. Furthermore, adjusted operating income is projected to rise by 3.5% to 5.5%, accounting for influences like acquisitions and economic shifts. The company is also forecasting adjusted earnings in the range of $2.50 to $2.60 per share, amidst concerns regarding international trade and economic stability.
In light of growing trade tensions and a decline in consumer sentiment—reported at its lowest level since 2022—Walmart is preparing for possible impacts. Analysts suggest that while Walmart cannot escape the effects of tariffs entirely, it is better equipped than many competitors. As the leading grocery provider, Walmart’s sales tend to be more stable during economic downturns, providing it with leverage to negotiate with suppliers and absorb some cost increases.
Adding to its resilience, new revenue streams like the Walmart+ membership enhance profitability and cultivate a more dedicated customer base, positioning Walmart favorably in an increasingly uncertain economic landscape.
