Against the backdrop of a return to more in-person shopping, the growth of Walmart+ has leveled off in 2022, according to a new analysis.
As of the quarter that ended July 1, 11 million Walmart.com customers were members of the subscription program, according to a new analysis from Consumer Intelligence Research Partners. That is the same number as the quarter that ended in April, indicating the program has "plateaued," CIRP said.
“The data shows that Walmart+ membership has yet to grow in 2022,” said Josh Lowitz, partner and cofounder at CIRP. “For the last three quarters, membership has remained constant at 11 to 11.5 million customers.”
Walmart itself has not publicly released Walmart+ subscriber data. CIRP bases its findings on surveys of 500 US subjects who made a purchase at Walmart.com in the period from May-July 2022.
The launch of a subscription program was one of many moves made by Walmart to bolster ecommerce in the midst of the pandemic. Launched in September 2020, the primary Walmart+ offerings included free delivery from a store and shipping from Walmart.com, access to contactless checkout in a store, as well as savings on fuel.
Over the five quarters prior to this year, the program had steadily added members as it brought on shoppers during the pandemic, Lowitz said. The July 2022 quarter’s total was up from 9 million members from the same quarter a year ago.
(Source: Consumer Intelligence Research Partners.)
CIRP reports that 25% of Walmart.com customers are Walmart+ members, which is up slightly from the quarter that ended in April 2022.
“We’ve seen Walmart+ penetration in a narrow range, representing 23-25% of online shoppers for the past three quarters,” said Michael Levin, partner and cofounder of CIRP. “Penetration increased slowly, after strong membership growth in the program’s first year. More recently, Walmart appears to have re-emphasized in-person shopping, and customers have not seen the same need for online shopping as they did when Walmart first introduced the program and the Covid pandemic reduced in-person shopping.”
While Walmart's ecommerce business posted big gains over the pandemic, it more recently slowed amid a wider return to in-person activities. Ecommerce sales in the second quarter were up 1%, but 38% on a two-year stack, the company said.
The findings from CIRP come as Walmart is set to release its full earnings report for the quarter on August 16. In a pre-emptive move in late July, the company cut its profit outlook for the quarter and the year, saying that consumer spending was higher on food and fuel amid 40-year-high inflation, leaving fewer available funds for more profitable items like apparel. It has also been working to move inventory that was mismatched to demand, in part due to supply chain bottlenecks.
Perking up
Walmart has added perks to the subscription program in 2022. It upped the fuel benefit to 10-cents a gallon, and extended its availability to 14,000 gas stations, including Exxon and Mobil locations. It also added six free months of Spotify membership with a subscription, and opened up free membership to Walmart associates. Bringing two subscriptions together, it then combined a Walmart+ membership with InHome, the company’s service that delivers groceries directly to a person’s kitchen or fridge.
More recently, Walmart+ has explored perks that resemble those offered by Amazon Prime, the vaunted subscription service that is central to Amazon’s business. In June, it held Walmart+ Weekend, a members-only event designed to provide deals. The next month, the company didn’t hold its own discount event to coincide with Amazon Prime Day as it had done in the past, saying that it was already marking down items to deal with the inventory glut. Meanwhile, the New York Times reported this week that Walmart was holding talks to potentially add a streaming service to the program.
While adding video and exclusives to increase the value of a membership is following a similar pattern to the Prime playbook, these additions may not be aimed at bringing on new members.
“It’s not clear how, if at all, these benefits attract new members. Our analysis of Amazon Prime suggests these features help with retention, rather than with converting trials into members,” Levin said. “Most members find these programs attractive initially because of the core shipping benefits,” not the media services and other perks, he said.
Growing the number of members, then, may have more to do with bolstering its ecommerce business and fulfillment network – an area where the company is also making investments.
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Drop it in The Cart
Walmart Land is coming to Roblox. (Courtesy photo)
One of the worlds is dubbed Walmart Land, which focuses on fashion, style, beauty and entertainment. The other is called Walmart’s Universe of Play, and focuses on toys. Both will be made up of a number of experiences, called isles.
The experiences won’t feature shopping as it happens in the physical world. Rather, they are designed to interact with aspects of Walmart’s offerings, ranging from opportunities to play games featuring toys it sells to navigating an oversized obstacle course of beauty products to earning Roblox currency that can be used on virtual goods to outfit an avatar.
Walmart characterized the move as its big foray into the metaverse, which describes a developing set of experiences that bridge the digital and physical worlds. With its focus on building and exploring, Roblox offers a space to stand up virtual experiences where users can encounter content as part of play. Walmart is also looking to future shoppers, as it says it has the “next generation of customers” from Gen Z and younger in mind.
“Roblox is one of the fastest growing and largest platforms in the metaverse, and we know our customers are spending loads of time there,” said William White, chief marketing officer, Walmart U.S., in a statement. “So, we’re focusing on creating new and innovative experiences that excite them, something we’re already doing in the communities where they live, and now, the virtual worlds where they play.”
Even as the metaverse remains in early stages, forging a space for commerce has been of great interest to brands and retailers. Roblox has been a prime landscape for testing, as it already offers virtual currencies and a fairly open form of gameplay that allows users to wander, rather than moving through specified levels step-by-step. It’s in this format that the act of discovering a new item and spending earned capital on it can take place.
Walmart will join a number of other consumer brands in Roblox, including Nike, PacSun and American Eagle Outfitters. However, the scale of Walmart’s presence will stand out. Being a retailer that stocks many products from a variety of outfits, Walmart is also bringing many brands into the fold through its activation.
Here’s a closer look at what’s in the two worlds that Walmart is introducing:
Walmart Land
Inside a cosmetics obstacle course. (Courtesy photo)
This will feature a number of experiences within it. A virtual store will allow players to outfit their avatar with “verch,” a Ferris wheel will offer a view of the Roblox world and players can earn unlockable tokens and badges throughout. The main “isles” include:
- Electric Island: A music festival-inspired space with an interactive piano walkway, a dance challenge, Netflix trivia and a DJ booth. In October, Electric Fest will feature motion capture concert performances from Madison Beer, Kane Brown and YUNGBLUD.
- House of Style: This features a virtual dressing room, a strike-a-pose challenge, an obstacle course featuring oversized cosmetics and a roller skating rinks. Featured products will include af94, UOMA by Sharon C., ITK by Brooklyn & Bailey, Lottie London, Bubble and more.
Universe of Play
Walmart Universe of Play in Roblox. (Courtesy photo)
Walmart is launching this toy-focused activation in time for the holidays. In this area, users can earn coins for virtual goods, earn trophies by completing challenges and unlock secret codes. The area includes:
- Immersive games: Five new games will feature products and characters from L.O.L. Surprise!, Jurassic World, Paw Patrol, Magic Mixies and Razor Scooters.
- Rewards: Users can collect virtual toys to earn coins that can be used for verch. Toys will be all around the world, with a Walmart blimp regularly dropping them.
- Adventures: Items like hoverboards and a Sharper Image drone will help them move around the world quickly and find new toys.
Coming soon: Roblox ads
Walmart’s activation comes as Roblox has indicated that it will be exploring advertising and more commerce capabilities. At its developer conference this month, the company announced plans to debut ads on the platform next year. This will build on the “transactional economy” Chief Product Officer Manuel Bronstein said the company has already built. From CNBC:
Roblox describes its upcoming ad offering as immersive ads, though there’s not yet a standard format for how they will appear. Bronstein speculated that future ads in the metaverse — an online world where people socialize, work and learn — could resemble digital billboards that people can use to buy goods like shoes, or even branded digital coffee cups.
In the portal ad tests, when users interact with the brand, they can be automatically transported to the company’s virtual Roblox community, Bronstein said. At this stage, companies are just trying to understand how ads can function in Roblox and other metaverses.
While it remains to be seen how the ads will function as part of play, it’s easy to envision an environment where brands build their own activations, then advertise them in that world to attract people to them. One question is whether the ads and activations will only be marketing goods and experiences found on Roblox, or eventually include the physical goods one can buy in the real world. Judging by the description above, it appears to be the former, which indicates Roblox is essentially developing its own economy. In that scenario, the advantage for brands to join is to gain exposure, but perhaps not drive direct sales. It would be similar to an activation at a fair or festival, except the experience is always running.
Still, this leaves open the question of whether there will eventually be space to cross over between physical and digital worlds, as the metaverse nomenclature implies. Will goods created online be available in real life, or vise versa? There have been experiments with this, but for Walmart it would likely need to happen at scale. As its metaverse entrance suggests, the world's largest retailer wants to go big. But it remains early days. There is still much for Roblox, brands and retailers to build and explore – and a lot of room to play.
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