Walmart’s Secret Weapon for Growth Amid Tariffs and Recession

As tariffs roil the U.S. economy, Walmart may find safety in a new part of its business that’s driving more store traffic and online sales: its membership program, Walmart+.

Customers who belong to the subscription-based service accounted for nearly 50% of spending across Walmart’s website and app in the U.S. in the most recent full fiscal year, which ended in late January, the company told CNBC. On average, Walmart+ members shop twice as much and spend nearly three times as much as Walmart customers who aren’t subscribers.

The membership program’s gains come at a helpful time for Walmart. The big-box retailer disappointed Wall Street with its outlook for the year ahead even before President Donald Trump announced tariffs on goods from around the world, sparking retaliation and fears of a global recession.

As the largest grocer in the U.S., the discounter has advantages in an economic downturn. Even so, Walmart+ could help insulate it from tariff turmoil, not only because it’s a new source of revenue, but also because it helps to drive loyalty.

In an interview with CNBC, Chief Growth Officer Seth Dallaire described the program as a “frequency driver.” He said Walmart has seen a rise in spending per subscriber and strong growth of sign-ups through Walmart+ Assist, a program that allows customers who qualify for government assistance to pay half price for membership.

He added that as Walmart+ grows, higher profits will allow Walmart to keep grocery prices low and invest in other areas to make it more competitive. The company can also use customer insights to pitch itself to advertisers — another growing, high-margin business for Walmart — and inform choices about the products it puts on shelves.

Walmart is expected to give an update on its retail business and other alternative revenue streams, such as the membership program and advertising, on Tuesday and Wednesday at an investor event in Dallas. The company, often seen as a barometer for consumer health in the U.S., could also give commentary on the state of the U.S. economy.

Walmart+ drives e-commerce boom

Walmart+, which launched almost five years ago, has become a loyalty play and one of the reasons why Walmart has been able to grow profits faster than sales. It offers perks including free shipping, free same-day grocery deliveries for orders of $35 or more, gas discounts and a Paramount+ subscription.

The membership program was Walmart’s answer to Amazon Prime. It’s just another page the retailer has taken from the playbook of Amazon, which surpassed Walmart in revenue for the first time in the fourth quarter.

Later this month, Walmart will look to build on member loyalty by using another tool deployed by Amazon. Starting April 28, it will throw Walmart+ Week, a special event with deeper deals on the program’s existing perks like gas discounts and free sandwiches from Burger King.

Walmart+, which costs $98 annually or $12.95 per month, also explains in part why the discounter’s e-commerce business has boomed. Walmart has posted 11 quarters in a row of double-digit online sales gains in the U.S., with 20% growth in the most recent quarter.

Walmart has not disclosed the number of Walmart+ subscribers. Market researcher Consumer Intelligence Research Partners estimates the program had about 25 million members as of the end of January, according to estimates based on quarterly consumer surveys and industry research. That’s more than double its estimate of around 11 million to 11.5 million in the fall of 2022.

Walmart+ has much less reach than Prime. Amazon’s subscription service, which debuted in 2005, has an estimated 190 million members in the U.S., according to CIRP. Nearly three-quarters of Amazon’s customer base reported having a Prime membership, according to CIRP surveys, compared with 43% of Walmart.com shoppers who reported having a Walmart+ membership.

Walmart+ is still winning over more customers, however. Three years ago, only 23% of Walmart.com shoppers reported having a Walmart+ membership.

Trump’s tariffs loom

Walmart’s investor event this week will coincide with the expected start of steep tariffs on countries across the globe that have become major production hubs for the company and other retailers, including China, Vietnam and Cambodia. The tariffs are expected to start on Wednesday, after 10% levies took effect on Saturday.

Walmart gave its forecast for the full year in February, ahead of Trump’s broad tariff expansion. In late February, the discounter said it expects full-year net sales to grow 3% to 4% and adjusted operating income to increase between 3.5% and 5.5% on a constant currency basis. That includes a 1.5 percentage point headwind from acquiring smart TV company Vizio and from having a leap year in 2024. The company said in February that it expects full-year adjusted earnings of $2.50 to $2.60 per share, which includes a 5 cent per share headwind from currency.

Escalating global trade conflicts have raised concerns that a recession may be looming. And consumers weren’t feeling great even before Trump announced the new duties: consumer sentiment dropped in March to its lowest level since 2022, according to the University of Michigan’s survey.

As retailers brace for the impact of tariffs, Walmart “is not immune,” but should be better positioned, said Seth Sigman, a retail analyst at Barclays. As the nation’s largest grocer, its business is steadier even if shoppers pull back on other kinds of spending, he said. As a giant company, it has greater ability to nudge suppliers to share higher costs and to absorb some of them. And as a well-known value retailer, it can gain sales if upper- and middle-income shoppers seek lower prices, he said.

Plus, he added, new moneymakers like membership have brought greater profitability and “a stickier customer wukong778”