Walmart offers deeper gas discounts to attract and retain subscribers

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As prices soar at the grocery store and gas station, Walmart said Wednesday it will offer deeper fuel discounts to entice more customers to join and renew Walmart+.

Chris Cracchiolo, senior vice president and general manager of subscription service Walmart+, said the daily spend is on the minds of many shoppers, “especially in this highly inflationary environment.” He said the retailer recently surveyed its customers and about half said they were changing their behavior because of the more expensive fuel.

Walmart turned to the subscription service, which launched about 18 months ago, as a way to expand its e-commerce business and encourage customers to increase spending in-store and on the website. It also served as Walmart’s response to Amazon Prime.

Walmart+ costs $98 per year or $12.95 per month. It includes free delivery on online purchases, free home grocery deliveries on orders of $35 or more, prescription discounts, and other perks.

With inflation at its highest level in four decades, Walmart is adapting its low prices as a competitive advantage. Walmart CEO Doug McMillon told CNBC late last year that the company would use inflation as an opportunity to win customers. Earlier this month, the company aired a new TV ad emphasizing that Walmart was the place to find value at a time when “every day seems to be getting more and more expensive.”

This strategy carries over to Walmart+.

Starting Wednesday, Walmart+ members will be able to save up to 10 cents per gallon at more than 14,000 gas stations. The retailer was already offering a fuel discount, but it’s doubled the savings and increased the number of eligible gas stations sixfold through a partnership with Exxon Mobil.

Other companies, including Walmart-owned Sam’s Club, BJ’s Wholesale and Krispy Kreme, have also introduced fuel discounts.

The national average for a gallon of regular gasoline was $4.13 on Tuesday, according to AAA. That’s an increase of more than 43% over the previous year’s pump price of $2.89.

Cracchiolo, who has already spent nearly two decades at American Express, said Walmart decided to extend this benefit after reviewing members’ fuel consumption and hearing from them and potential members about the importance of this particular benefit. .

Walmart does not publicly share membership data, but Cracchiolo said members are more lucrative and frequent shoppers than its non-subscriber customers. Additionally, Walmart+ members spend more than twice as much with the company as the typical Walmart shopper, since they shop both online and in-store.

“We know that Walmart+ customers are more loyal to Walmart,” he said. “They give us a higher share of their overall wallet. They transact with us more frequently and spend more on average than non-members, and that behavior is really because we’ve developed that trust and they see the value of the program.”

He added that the grocery part of the business is “at the heart of how members shop with us.”

Over the past year, Walmart has added more perks to attract customers. It gave members the first information about deals and exclusive access to coveted game consoles during the holiday season. It also hosted a members-only sales event and began offering popular delivery time slots, such as weekend mornings, to members only. And, in March, it offered six free months of Spotify Premium to Walmart+ members.

Walmart also announced last month that all store and warehouse employees would get free membership as an employee benefit, allowing them to share feedback and have a personal experience when recommending Walmart. + to customers.

Scot Ciccarelli, retail analyst at Truist Securities, said Walmart, the nation’s largest grocer, has a natural advantage over other companies with membership programs. He said consumers are less likely to cancel a program at a food retailer than they would for, say, a streaming service.

He said Amazon had shown the power of subscription services and how they boost purchases by making them quick and easy.

“The number one thing you get from a subscription service if you get people to sign up is stickiness,” Ciccarelli said. “You’re kind of locked in. You’ve made the investment, might as well use the service. Someone who used to shop with me twice a month, now maybe they shop with me four or five times per month. “

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