Overview of the New Membership Policy
The days of sneaking into Costco using someone else’s card are numbered. Costco has started implementing automatic card scanning at store entrances to put an end to membership sharing. The new scanning devices, already in use in some California locations, will soon be rolled out nationwide. From now on, guests must be accompanied by a valid member to gain entry, and members without a photo on their card need to show a valid photo ID. If you haven’t got a photo on your card, you can head over to the membership counter to update it.
Reason for the Crackdown
Costco’s main goal here is to boost efficiency and limit non-members from taking advantage of member benefits. Remember, those membership fees are vital to Costco’s bottom line, contributing $4.6 billion last year. This crackdown mirrors moves by other companies, such as Netflix, to secure their revenue streams and ensure only paying customers get the perks.
“We don’t feel it’s right that non-members receive the same benefits and pricing as our members” – Costco spokesperson
Impact on Customers
Needless to say, the new rules might not sit well with some customers, especially those accustomed to sharing memberships with friends or family. The crackdown aims to streamline operations, but how well this goes down with the general populace remains to be seen.
Broader Business Implications
Costco’s tightening of membership rules comes hot on the heels of a recent membership fee increase. Effective September 1, the membership fee has been bumped up by $5, making it $65 annually in the US and Canada. This is the first increase since 2017, and it’s designed to support the company’s broader business strategy. Given the rising profits—Costco reported a $1.68 billion profit in the third quarter of 2024, a 29% increase year-over-year—this crackdown seems to align with bolstering their bottom line.
Costco is cracking down on shoppers who are using other people’s membership cards. https://t.co/6RLQYlJs5A pic.twitter.com/CO2S58A8Ce
— CNBC (@CNBC) June 28, 2023
CEO and Company Statements
CEO Ron Vachris isn’t shy about the benefits of the new scanning policy. According to him, verifying memberships at the entrance will not only speed up the checkout process but also help with parking space turnover and gas station expansion.
“They’re speeding up our registers significantly when we get all the scanning and memberships are verified at the front door” – Ron Vachris, CEO of Costco
Relevant Questions to Answer
So, what’s prompting this sudden crackdown by Costco? The main motivators appear to be improving checkout efficiency and ensuring only paying members enjoy the benefits. For those who’ve been sharing memberships, the new policy will bring major changes, likely causing some dissatisfaction.
But how does this policy fit into Costco’s broader strategy? With membership fees being a significant part of their revenue, tightening rules now makes perfect financial sense. The leadership at Costco acknowledges the potential backlash, but as Vachris pointed out, the overall benefits to efficiency and member satisfaction seem to justify the move.
So there we have it.. Whether you’re a long-time Costco loyalist or just like snagging bulk buys occasionally, these new rules will inevitably affect your shopping experience. Time will tell how this crackdown plays out, but one thing’s for sure—Costco is doubling down on making sure membership matters.
