Walmart dangles deeper gas discounts to attract, retain subscribers

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

Chris Cracchiolo, senior vice president and general manager of the Walmart + subscription service, said that daily expenses are on the minds of many customers, “especially in this very high inflation environment.” He said the dealer recently surveyed customers and about half said they changed their behavior due to more expensive fuel.

Walmart has seen the subscription service, launched about 18 months ago, as a way to expand its e-commerce business and encourage customers to increase in-store and website consumption. It has also served as Walmart̵[ads1]7;s response to Amazon Prime.

Walmart + costs $ 98 per year, or $ 12.95 per month. It includes free shipping of online purchases, free home delivery of groceries for orders of at least $ 35, prescription discounts and other benefits.

With inflation four decades high, Walmart bends 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 commercial emphasizing Walmart as the place to find value at a time when “every day seems to be getting more and more expensive.”

This strategy is transferred to Walmart +.

As of Wednesday, Walmart + members will be able to save up to 10 cents per gallon at more than 14,000 gas stations. The dealer already offered a fuel discount, but it has doubled the savings and increased the qualified petrol stations more than sixfold through a partnership with Exxon Mobile.

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

The national average for a gallon of regular gas cost $ 4.13 on Tuesday, according to AAA. That is up more than 43% from the pump price of $ 2.89 last year.

Cracchiolo, who previously spent nearly two decades with American Express, said Walmart decided to expand this benefit after looking at members’ fuel use and hearing from both them and potential members about the importance of the special benefit.

Walmart does not share membership data publicly, but Cracchiolo said members are more lucrative and frequent buyers than their non-subscribers. In addition, Walmart + members spend more than twice as much with the company as the typical Walmart customer, since they shop both online and in stores.

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

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

Over the past year, Walmart has added several benefits to enticing customers. It gave members the first let go of deals and exclusive access to sought-after game consoles during the holidays. It also organized a sales event for members only, and began offering high-demand delivery times, such as weekend mornings, to members only. And in March, it threw in a free six-month Spotify Premium to Walmart + members.

Walmart also announced last month that all store and warehouse workers will receive free membership as an employee benefit, so they can share feedback and have personal experience when recommending Walmart + to customers.

Scot Ciccarelli, a retail analyst at Truist Securities, said Walmart, the country’s largest merchant, has a natural advantage over other companies with membership programs. He said that consumers are less likely to cancel a program at a grocery store than they would be for a power service, for example.

He said that Amazon has shown the power of subscription services and how they drive purchases by making them quick and easy.

“The # 1 thing you get from a subscription service if you get people to sign up is sticky,” Ciccarelli said. “You are in a way locked in. You have made the investment, you can just as easily use the service. Someone who traded with me twice a month, now they trade with me maybe four or five times a month.”