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walmart is lowering the cost of subscription services for Americans who receive food stamps and other types of government assistance, as it boosts the program and notes shoppers are more price sensitive.
The largest U.S. retailer said Thursday that it will cut prices on Walmart+ in half for low-income families. Beginning July 20, customers who qualify for eligible government assistance can pay $49 per year for Walmart+, or $6.47 per month. That compares with the regular price of $98 per year, or $12.95 if the membership is paid monthly.
For Walmart, the move could help attract and retain large numbers of shoppers who may be quicker to skip or cancel recurring-fee services or switch to other retailers, such as dollar stores. Walmart has not disclosed the total number of Walmart+ users, but said about a quarter of its members receive government assistance. The company declined to say how it compares to other customer groups.
On Walmart’s most recent earnings call in May, CEO Doug McMillon said customers are feeling the burden of rising grocery bills. He called persistent inflation, especially food inflation, “one of the key factors that creates uncertainty for us in the second half of the year”.
Many families who couldn’t afford groceries also received less generosity Supplemental Nutrition Assistance Program benefits (formerly known as food stamps) after pandemic-related emergency funding ended earlier this year.
If only Walmart’s discounted prices could make Walmart+ accessible to more shoppers willing to pay the fee. According to the USDA, more than 41 million Americans will receive food assistance through SNAP by 2022. The figure does not include people receiving another type of government assistance that may qualify for a discount. Most of the aid types on the list, such as Medicaid and the National School Lunch Program, help families with children or who are food insecure.
Walmart launched Walmart+ in 2020 to engage shoppers and increase the likelihood they will spend more on its website and stores.it is similar to amazon Prime and follow the playbook for membership repositories, e.g. Costco And Walmart’s Sam’s Club.
Walmart+ members get free shipping, discounted fuel, access to streaming service Paramount+ and unlimited store-to-door delivery on online orders of $35 or more.
The program appears to have gained some traction, but Walmart is still finding ways to increase its adoption as it lags behind Prime. Its membership is around 12 million, according to estimates from market research firm Consumer Intelligence Research Partners, based on quarterly consumer surveys and industry research.
Others put the figure even higher. In a recent estimate, Morgan Stanley said Walmart+ already has about 21.5 million members, or about 17% of U.S. household penetration
However, both numbers represent a fraction of Amazon Prime’s estimated 170 million U.S. members, according to CIRP.
Amazon offers similar discounted fees to low-income families who qualify for government assistance and sign up for Prime. It costs $6.99 per month instead of $14.99 per month. Fee reductions began in 2017.
Walmart said it is making it easier for families receiving food assistance to shop online, in addition to discounted Walmart+ prices. Online SNAP is now accepted in all 50 states, the company said. SNAP-eligible customers can add their benefit card to Walmart’s app or website so they can buy groceries online or use curbside pickup.
Amazon accepts SNAP in every state except Alaska.
For Walmart, expanding Walmart+’s user base has other benefits. Not only would the monthly and annual fees provide a revenue stream, but the program would also allow retailers to better understand customer preferences and purchases.
It could use those insights to power Walmart Luminate, an analytics tool it sells to customers, or to support its growing advertising business, Walmart Connect.
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