As Walmart chases Amazon. com, Amazon is chasing the luxury market.
Walmart’s (ticker: WMT) new subscription service, Walmart+, launches today, after months of anticipation. Analysts have been eager for the service’s arrival. They expect it will help the company compete against Amazon.com (AMZN), especially in key areas such as groceries, as more people buy food online during the Covid-19 pandemic.
Walmart+ is priced below Amazon Prime, although it also comes with fewer additional features beyond free shipping (at least for now). Ultimately, it may not be realistic to expect the service to peel away consumers who are already using Prime. It does, however, give Walmart the opportunity to retain some new customers that it may have picked up during the pandemic, as big essential retailers have grabbed the lion’s share of shoppers’ spending. Consumers who are new to the company and to online grocery shopping may be more amenable to signing up as they have formed new habits.
Data from Sensor Tower show that last month saw a 33% increase in Walmart mobile app installations since January, drawing from Apple’s (AAPL) app store and Google’s Google Play. Year over year, installations rose 18%.
Way to access new luxury service
That is still behind levels for Amazon’s app, but the numbers may show that a younger, more digitally savvy customer is warming up to Walmart—the kind of customer that may be more likely to sign up for a subscription service.
However, the Amazon app is the only way consumers can access its new luxury service—and even then that is only true of select shoppers. On Tuesday, Amazon announced the launch of Luxury Stores with Oscar de la Renta’s newest collection, with more brands slated to be available in the coming weeks. Luxury Stores is available in the Amazon app by invitation only to select Prime members.
While some brands have pulled away from Amazon due to brand control and counterfeiting problems, the Luxury Stores aims to combat these issues by a ‘store-within-a-store’ model. This includes detailed product views, and the model allows designers to customize shoppers’ experiences—and set their own prices—while still being under the Amazon umbrella.
As Barron’s has noted before, exclusivity and pricing are key components for luxury brands to maintain their value—thus Amazon’s Luxury Stores won’t be a destination for bargains. Yet the company is likely betting that consumers will prefer the ease and convenience of using its app for high-end purchases just as they do for more quotidian needs.