Walmart takes aim at Costco with a new shopping perk

Walmart and Costco have long been rivals. 

Walmart doesn’t just operate Costco competitor Sam’s Club. Walmart’s regular retail stores, with their massive selection and amazingly low everyday prices, also tend to draw customers away from Costco. 

Now, Walmart is making another move to get shoppers to spend more money at its stores. 

The retail giant is introducing Express Pickup, a new service that lets customers order through the Walmart app and pick up their purchases curbside in as little as one hour. 

The service is already available at 500 stores, with a nationwide expansion to follow.

For Walmart+, the company’s paid membership program, Express Pickup comes with an added benefit — unlimited use without an additional fee.

The new offering is part of Walmart’s broader push to make shopping more convenient, particularly as consumers prepare for the busy holiday season. But it could also give the retailer another way to compete with Costco.

Walmart wants to win more last-minute purchases

Costco has built its business around bulk purchases, competitive prices, and the appeal of discovering new products during warehouse visits. 

Walmart, meanwhile, is trying to make itself the easier choice when customers need something quickly.

The appeal of Express Pickup is straightforward. 

Customers can order groceries, household essentials, and other available merchandise through Walmart’s app without having to walk through the store or wait for a traditional shopping trip.

That convenience could matter when shoppers have limited time and an immediate need.

“Costco is great when you’re planning a shopping trip. Walmart wants to be there when you’re not planning anything,” said Dominick Miserandino, CEO of RTM Nexus.

“You forgot something for dinner, you need batteries, or you’re running late. Those smaller purchases add up, and Walmart has an opportunity to capture more of them.” 

The distinction highlights an important difference between the two retailers’ business models.

Costco’s warehouse format encourages customers to stock up on products, often in larger quantities, and its membership program gives shoppers an incentive to keep coming back. 

Walmart’s expansive store network and digital shopping options allow it to compete for a different type of purchase — the item someone needs today.

Those transactions may be smaller than a typical warehouse haul, but they can create more opportunities for repeat business.

Express Pickup could also help Walmart strengthen its relationship with customers who already shop through its app. By making online ordering and curbside collection faster, the company is giving shoppers another reason to choose Walmart instead of a competing retailer.

Walmart keeps investing in memberships

Walmart’s decision to include unlimited Express Pickup in Walmart+ without an additional fee also reinforces the company’s investment in memberships.

During Walmart’s most recent earnings call, the company reported that membership fee revenue increased 17% globally, driven by record second-quarter net additions for Walmart+ and 6% growth at Sam’s Club U.S.

Paid memberships can encourage repeat shopping by giving customers benefits they don’t want to lose. 

Walmart+ already offers a collection of perks designed to make shopping easier, and Express Pickup adds another convenience-focused feature to that package. That puts Walmart in a stronger position to compete for shoppers who value time as much as price.

Costco has demonstrated the power of membership through a business model that gives customers reasons to renew year after year. But it has long trailed Walmart and Sam’s Club in the context of convenience. 

Not only is Sam’s Club known for faster delivery, but the company’s curbside pickup offering lets members shop without having to leave their cars.

Costco has been expanding delivery service in an attempt to keep up with Walmart and Sam’s Club. But whether it’s winning in that category is questionable.

A smart move for Walmart

All told, Walmart’s larger strategy is clear.

Walmart wants to be more than a place to save money. It wants to be the retailer customers turn to when they need something quickly and don’t want to wait.

If Express Pickup delivers on that promise, Walmart could gain more frequent visits, strengthen its membership proposition, and capture additional spending dollars.

In today’s competitive retail environment, all of that counts for a lot.

Maurie Backman owns shares of Walmart and Costco.

Related: Costco is getting a new kind of member