Walmart bets inflation will push customers to join subscription

Americans have tons of subscriptions.

Even with inflation, Walmart thinks they’re willing to pay for one more.

Walmart’s subscription service is Walmart+. The program includes benefits such as free shipping for online purchases, free deliveries from the store and gas discounts. It debuted in September 2020, a time when many shoppers were trying to avoid stores because of Covid-19.

Two years later, the retailer faces a very different backdrop. Walmart’s e-commerce growth rate has slowed. More shoppers have returned to stores and more are skipping discretionary purchases as they spend more on food, rent and other necessities.

Now, Walmart will have to prove its subscription service can grow in a tougher climate.

Chris Cracchiolo, head of Walmart+, said sign-ups and renewals for the service have remained steady in recent months. The service’s members tend to be younger, more tech-savvy and more affluent than the typical Walmart shopper.

Yet he said Walmart+ has attracted many budget-constrained consumers, too: About 1 in 4 Walmart+ members receive government-provided food assistance benefits.

Those demographics could be a promising sign for Walmart+ as it navigates a segment that’s rapidly sorting winners from losers.

Some subscription services are struggling to retain customers. Netflix and personal styling service Stitch Fix are among the companies that have lost customers. At the same time, club memberships have gained momentum. Costco has continued to draw new members, and Walmart-owned Sam’s Club has reported record-high membership. Sam’s Club does not disclose its membership count.

The company believes Walmart+ is more like a club membership, which shoppers use to stock up on essential items, than a streaming service that subscribers may drop after a favorite show’s season ends and then renew when the series returns.

Cracchiolo, an American Express veteran, said Walmart+ is positioned to grow even in a time when Americans have tighter budgets and weigh the risk of a recession.

The big-box retailer is leaning into value-oriented perks as inflation is at near four-decade highs. Those include steeper gas discounts and new digital coupons, which skew Walmart+ toward the club category. In August, it added Walmart Rewards, a program exclusive to Walmart+ members that allows them to save money on items and apply those savings toward future purchases. Then, in September, members began getting free access to Paramount+.

It already included grocery benefits, such as free home delivery for orders of $35 or more.

Even before inflation pressured wallets, some market research firms pointed to Walmart+’s slow membership gains, especially compared with competitor Amazon Prime.

The membership count for Walmart+ has hovered around 11 million to 11.5 million in the past three quarters, according to…