Amid ongoing tariff disruptions affecting the U.S. economy, Walmart has positioned itself strategically through its membership platform, Walmart+, which is increasingly driving both foot traffic and online sales.
According to information shared by the company with Finance Newso, Walmart+ subscribers accounted for nearly 50% of total spending on Walmart’s digital platforms during the last fiscal year, concluding in January. On average, members of Walmart+ engage in shopping twice as frequently and spend about three times more than non-subscribing customers.
This surge in Walmart+ becomes particularly pertinent as the retail giant grapples with a less-than-ideal outlook, which was further complicated by President Donald Trump’s recent tariff announcements that raised concerns over a potential global downturn.
As the leading grocery provider in the United States, Walmart holds a competitive advantage, especially during economic downturns, but the Walmart+ membership program is expected to provide additional resilience against tariff-related challenges by fostering customer loyalty and creating new revenue streams.
During a conversation with Finance Newso, Chief Growth Officer Seth Dallaire characterized Walmart+ as a “frequency driver,” noting significant increases in spending per subscriber and a rise in memberships thanks to Walmart+ Assist, an initiative that offers eligible customers a discounted membership rate.
Dallaire also mentioned that as the membership base expands, Walmart anticipates higher profitability, allowing it to maintain low grocery prices while investing in key competitive areas. The retailer can also leverage consumer data to enhance its advertising strategies—a growing, profitable aspect of its business—and refine its product offerings.
Walmart is expected to share insights into its retail operations and other alternative revenue avenues, including the membership program and advertising strategies, during an investor event in Dallas scheduled for Tuesday and Wednesday. The company is often viewed as a bellwether for consumer sentiment in the U.S. and may provide updates on the current economic climate.
Walmart+ propels e-commerce growth
In essence, Walmart+ serves as Walmart’s response to Amazon Prime, mirroring strategies employed by Amazon, which overtook Walmart in revenue for the first time during the last quarter of 2022.
Later this month, Walmart plans to enhance member retention by introducing Walmart+ Week, starting on April 28, featuring exclusive offers and deeper discounts on existing benefits like gas discounts and complimentary sandwiches from Burger King.
The annual fee for Walmart+ is $98, or $12.95 monthly, which partly contributes to the surge in its e-commerce division. The retailer has recorded 11 consecutive quarters of double-digit growth in online sales in the U.S., including a remarkable 20% growth in the latest quarter.
Though Walmart has not publicly disclosed the total number of Walmart+ subscribers, Consumer Intelligence Research Partners estimates that the program had around 25 million members by the end of January, a significant leap from approximately 11 million to 11.5 million in the fall of 2022.
However, Walmart+ still operates on a smaller scale compared to Amazon Prime, which was introduced in 2005 and boasts an estimated 190 million members in the U.S. Consumer surveys suggest that almost 75% of Amazon’s consumer base holds a Prime membership, while only 43% of Walmart.com users report having a Walmart+ membership.
Despite its smaller reach, Walmart+ is steadily attracting more subscribers. Just three years ago, a mere 23% of Walmart.com shoppers indicated they were Walmart+ members.
Impending tariffs create uncertainty
The timing of Walmart’s investor event coincides with the impending implementation of significant tariffs affecting several key manufacturing countries for the retailer, including China, Vietnam, and Cambodia. These new duties are anticipated to begin on Wednesday, following the recent introduction of a 10% tariff on Saturday.
Earlier this year, Walmart released its sales forecast for the coming year without factoring in the anticipated tariff adjustments. In late February, the retailer projected a 3% to 4% increase in net sales and adjusted operating income growth of 3.5% to 5.5% based on constant currency. The forecast considered a 1.5 percentage point challenge stemming from the acquisition of smart TV company Vizio and next year’s leap year effect. At that time, Walmart indicated it expected adjusted earnings of $2.50 to $2.60 per share, including a 5 cent per share currency headwind.
Growing uncertainties surrounding international trade have aroused concerns of a potential recession, with consumer confidence slipping to its lowest level since 2022, according to a recent University of Michigan survey.
Retailers are bracing for the ramifications of the tariffs, and while Walmart may not be entirely shielded from their effects, analysts like Seth Sigman from Barclays believe the company is better prepared than its competitors. Being the largest grocery retailer in the nation, Walmart’s business model is considered more resilient during economic slowdowns, allowing the company to negotiate with suppliers over cost increases and absorb some of those costs. Furthermore, as a recognized value retailer, it stands to benefit from shifts in consumer preferences towards lower prices amidst economic strain.
Moreover, the introduction of revenue-generating initiatives like Walmart+ enhances profitability while fostering stronger customer loyalty.
