Walmart (WMT) has announced a significant price cut for its Walmart+ membership service, slashing the annual cost by 50% to $49 from $98, ahead of the upcoming holiday season. This strategic move aims to attract budget-conscious consumers and compete with its e-commerce rival, Amazon (AMZN).
It is worth noting that Walmart’s early holiday sales push aims to counter inflation-driven consumer spending pressures. The move comes as the National Retail Federation, a retail trade association, predicts a sluggish growth of only 3.5% in holiday sales, the slowest pace in six years.
WMT Aims to Compete with Amazon
Walmart is lowering the price of its membership service to half of the regular cost to compete with Amazon Prime in the subscription market. This strategic price reduction aims to attract more subscribers and close the gap with Amazon, which currently has over 180 million U.S. subscribers paying an annual fee of $139. In contrast, Walmart+ offers a more affordable option and is expected to reach 32 million subscribers by year-end, according to industry estimates.
In terms of benefits, both Walmart+ and Amazon Prime offer a range of perks to attract members. Walmart+ provides benefits like free shipping, prescription discounts, and access to Paramount+. Although Amazon Prime includes a wider selection of perks, such as Grubhub+ membership and streaming services, Walmart’s lower price may be more appealing to budget-conscious shoppers.
Is WMT Stock a Good Buy?
Turning to Wall Street, WMT has a Strong Buy consensus rating based on 27 Buys and three Holds assigned in the last three months. At $74.11, the average Walmart price target implies a 10.44% downside potential. Shares of the company have gained more than 58% year-to-date.
