In a recent client note, Morgan Stanley analysts examined the competitive dynamics among major membership-based retailers, focusing on Walmart+, Amazon Prime, and Costco.
The report highlights Walmart’s growth, which has reached near-record membership levels due to strategies like a 50% discount for Black Friday. Based on Morgan Stanley’s Consumer Pulse survey, Walmart+ membership reached approximately 23.8 million in September 2024. Adjusted for variability, this equates to about 15.5 million members, or 18.5% of U.S. households.
Despite falling below Amazon Prime’s 94 million U.S. members and Costco’s estimated 55 million members across North America, Walmart+ is growing faster than its competitors, with a compound annual growth rate (CAGR) of about 30% from 2020 to 2024. In comparison, Amazon Prime and Costco showed CAGRs of 3.5% and 7%, respectively.
There is substantial membership overlap, especially between Amazon Prime and Walmart+, with 86% of Walmart+ members also subscribing to Amazon Prime and 34% holding Costco memberships. Among Amazon Prime members, 22% also have Walmart+.
According to lead analyst Simeon Gutman, this overlap largely reflects Amazon’s massive base, while also showing Walmart’s competitive position within Amazon’s core market. Walmart’s promotional efforts, such as the half-price offer, are expected to boost its share beyond groceries and into discretionary spending.
These efforts align with Walmart’s investments in supply chain, Walmart Fulfillment Services (WFS), and its growing marketplace. The report states that discounts during peak shopping periods should drive sales and optimize these investments and new sellers.
The note also points to growth potential, as around 25% of U.S. households hold both Amazon Prime and Costco memberships but have yet to adopt Walmart+. Morgan Stanley suggests that Walmart’s aggressive membership expansion through pricing and promotions could strengthen its presence in non-grocery categories, appealing to middle-to-upper income consumers focused on value.
Finally, the report reflects on broader consumer spending trends, as households increasingly subscribe to multiple services. This shift is prompting retailers to further differentiate and capture more discretionary income.
