BIG NEWS: Costco makes major change to stop membership sharing
Costco customers are familiar with the routine of showing their membership card to enter the store and self-checkout lines. Soon, Costco will be updating its entry process to include scanning membership cards for store access. The company, which operates 882 stores globally, including 611 in the U.S. and Puerto Rico and 108 in Canada, will require customers to scan their cards at store entrances starting soon.
New Scanning Process for Store Entry
Under the new system, customers will need to scan the barcode or QR code on their membership card or phone to gain entry. A store staffer will still greet customers at the entrance, but the scanning process will become mandatory. Nonmembers must be accompanied by a member to enter the store. Those with expired cards or new customers will be directed to a membership desk to renew or sign up.
Costco’s Push to Combat Fraud
This update follows Costco’s pilot testing of the electronic scanning system in January. The move aims to reduce fraud and membership abuse, such as unauthorized use of someone else’s membership card. Costco has been grappling with issues related to membership sharing, which undermines its pricing model.
Membership Fee Increases
On September 1, 2024, Costco will also raise its membership fees for the first time since 2017. Regular Gold Star memberships will increase by 8% to $65 annually, while Executive Card memberships will rise by 8.3% to $130. Executive Card holders will benefit from a 2% annual reward, with the maximum reward increasing from $1,000 to $1,250.
Mixed Reactions from Customers
The fee hike and new scanning process have generated mixed reactions among customers. Some express concern about potential delays and inconveniences, while others view the changes as necessary to curb membership abuse. Despite the concerns, many acknowledge the efficiency of the new process.
Memberships Driving Costco’s Success
Costco’s membership fees are a key component of its business model, allowing the company to maintain low profit margins on its goods and services. This model has contributed to Costco’s rapid growth and success. The company’s stock has risen 27% this year, with shares reaching $839.52. Costco’s market capitalization stands at over $372 billion, making it the third-largest U.S.-based retailer after Amazon and Walmart.
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