Investing.com — Morgan Stanley analysts highlight competition among large membership-based retailers, focusing on Walmart+, Amazon Prime, and Costco (NASDAQ:) in a recent note to clients. We investigated the situation in detail.
According to the report, Walmart+ continues to grow, with its membership base nearing record levels, supported by strategic initiatives such as 50% off Black Friday memberships.
Morgan Stanley, citing Consumer Pulse research, points out that as of September 2024, the number of Walmart+ members is approximately 23.8 million. Adjusting for variation in responses, this number is closer to 15.5 million people, corresponding to a household penetration rate of 18.5%.
While this is lower than Amazon.com Inc.’s (NASDAQ:) overwhelming 94 million U.S. households and Costco’s estimated 55 million members across the U.S. and Canada, Walmart+ has outpaced its peers in growth. with a compound annual growth rate (CAGR) of approximately 30. % from 2020 to 2024.
By comparison, Amazon Prime and Costco had CAGRs of approximately 3.5% and 7%, respectively, over the same period.
Membership overlap remains significant, with Amazon Prime and Walmart+ intersecting the most. Approximately 86% of Walmart+ members also have Amazon Prime, and 34% have a Costco membership.
22% of Amazon Prime members also have Walmart+ memberships.
Analysts led by Simeon Gutman said, “The high overlap of Amazon Prime members within the Walmart+ membership group is primarily due to Amazon’s large membership base; It also shows that we are continuing to compete.”
They also point out that Walmart’s promotional strategies, such as half-price member benefits, are trying to expand market share beyond essential groceries and into discretionary spending.
The retailer’s efforts are consistent with significant investments in supply chain infrastructure, Walmart (NYSE:) Fulfillment Services (WFS), and expanding markets.
“Offering discounted memberships on key shopping occasions of the year should not only drive sales, but also help leverage the fixed costs of all of these investments and new services.
seller,” the report states.
Additionally, the memo points out that approximately 25% of U.S. households have both Amazon Prime and Costco memberships but have not yet adopted Walmart+, creating untapped growth potential. I’m emphasizing it.
Morgan Stanley also considers broader influences on consumer spending habits. As households increasingly subscribe to multiple services, retailers are looking for new ways to differentiate and generate discretionary income.
As Walmart seeks to expand its membership base through competitive pricing and strategic promotions, it could appeal to value-seeking middle- and high-income consumers and position itself as a strong competitor in non-grocery areas. .
