To encourage membership and consumer spending beyond groceries, Walmart subsidizes at least a portion of the cost of its memberships.
To that end, and as described in emails from PYMNTS promoting the chance to “save on spring shopping,” American Express Platinum Cardholders can get a free Walmart+ membership.
As for the mechanics described on Walmart’s siteWhen Amex members charge their monthly Walmart+ membership for those cards, they earn a statement credit that covers the cost of $12.95. The deal has been in place since fall 2021. But amid the current promotion landing in email inboxes right now, it is a reminder that in the post-pandemic world, bolstering customer loyalty through partnership models can and will pay dividends .
The cross-fertilization efforts would benefit both companies: Amex cardholders shop at Walmart and become members; Amex enjoys repeated use of the cards.
Younger consumers with purchasing power
Amex detailed in its most recent earnings call, per CEO commentary Stephen Squeri“We acquired 3 million new card members in the fourth quarter, even as we raised our already high credit thresholds for the full year throughout the year.” Cardholder rosters are growing and have more financial firepower at their fingertips. There is clear spending by younger consumers, as billed activity among millennials and Gen Z cohorts (a definition that includes transactions) has increased at least 30% year over year. These are members that would have relatively longer lifetime values for a retailer like Walmart. As noted here, Walmart has been busy expanding its ecosystem to sell more third-party merchandise, which would help boost revenue.
As for the momentum to leverage card spend across a broad range of categories outside of groceries (which has been a particularly strong category in an inflationary environment), as Karen Webster noted in a recent column: Walmart needs to counter Amazon’s threats in categories like health and beauty, as well as apparel. Growing membership is one way to ensure that dedicated shoppers are touring the physical locations and online shelves and are inclined to buy things other than dinner ingredients and pantry staples. The chart below shows the respective stocks that Walmart and Amazon hold in terms of total discretionary spending.
PYMNTS data shows that 20% of US adults, approximately 59 million adult consumers, have a Walmart+ membership. As management noted, the company has also captured a share of $100,000+ earners and younger consumers, which aligns with the Amex profile.
Against that backdrop, the $155 Walmart+ credit seems to pale against the potential of the incremental spending that could accrue to Walmart’s coffers. And the potential to see the cards used more often for everyday purchases could help Walmart give Amazon more bang for its buck in several key categories in the months and years to come.
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