Some consumers are buying Costco’s $4.99 rotisserie chicken and paying at self-checkout. The problem: they are not members of the chain.
Since Costco expanded self-checkout, the company has noticed that non-member consumers are using membership cards that do not belong to them. The retailer is now requiring buyers to present their membership cards along with photo identification for use at self-checkout – the same policy already in place at regular checkout.
“We don’t think it’s right for non-members to receive the same benefits and prices as our members,” Costco said in a statement.
Costco had about 66 million members and 119 million cardholders in 2022, making it one of the largest membership clubs in the world. Costco members pay $60 annually for a regular membership or $120 for an executive card that provides some extra benefits, such as earning points that can later be redeemed for purchases.
The company has not raised its annual fee since 2017, despite competitors like Amazon and Sam’s Club having done so. However, Costco has hinted that it may soon increase its membership price.
Costco’s membership model is crucial for the chain’s business, which grew during the pandemic.
The fees help boost the company’s profits and offset expenses, allowing Costco to keep its prices low. Costco is known for offering some of the lowest prices in the retail sector.
The chain generated $4.2 billion in membership fees in 2022, a 9% increase from 2021. The company’s renewal rate was 93% last year.
Any changes to membership or renewal fees could harm Costco and force it to raise prices.
“As we achieve growth in our membership base, we increase executive member penetration and sustain high renewal rates that substantially influence our profitability,” says Costco.
Source: CNN