Costco is cracking down on membership sharing

Costco is cracking down on membership sharing

The success of Costco’s business model hinges on rigor. The wholesale retailer, who uses a membership system, strictly monitors entry and exit and double-checks customer receipts.

But for friends and relatives of members, there was a famous hack for getting Costco’s low prices without paying the annual fee: the self-checkout lane. Some users found that they could borrow a member’s card, or a member’s QR code, from the Costco app, and avoid the identification requirements of the regular checkout lanes.

That solution is coming to an end. The company said in an emailed statement Wednesday that it has noticed that non-member shoppers are using other people’s membership cards in self-checkout lanes, which are non-transferable per Costco policy.

“We are now asking to see their membership card with their photo at our self-service checkout register,” the company explained. “If their membership card doesn’t have a photo, we ask for a photo ID,” he added.

Costco is beloved by consumers for its $1.50 hot dog-and-soda combos, long lines of cheap bulk goods, and its signature Kirkland brand products — everything from linens to wine. A regular membership costs $60 per year, and an executive card costs $120 per year.

Katie Thomas, who leads the Kearney Consumer Institute, a management consulting firm, said borrowing a friend’s Costco card or QR code was not an “unwarranted hack” for occasional shoppers, she said. They figured this might lead to new paid subscriptions. Ms. Thomas said she had recently been reprimanded for using her mother’s membership card at Costco, although she said she too was a member.

In its statement, Costco said it is “able to keep our prices as low as possible because our membership fees help offset our operating expenses, making our membership fees and structure important to us.”

The retail market has tightened, said Neil Saunders, managing director of retail consulting firm GlobalData, who speculated that reasons for the action at Costco could include increasing pressure on corporate margins and rising costs of goods, labor and overhead for wholesalers. Is.

“They probably turned a blind eye to it during growth and everything looked good,” he said, “but in a more difficult economic climate they are becoming tighter.

Although Costco faced supply constraints and labor shortages during the pandemic, it reported strong operating results An annual report for 2022 also claimed new items, including “BBQ pellets, women’s jeans, reconstituted dog food, sauté pans, fresh mini cakes and chicken yakisoba”.

The company also revealed that it had around 119 million cardholders last year. Revenue from those membership fees totaled $4.2 billion in 2022, up 9 percent from 2021. Costco’s net income was $5.8 billion last year, the company reported, with more than $5 billion in 2021.

“You see the importance of the subscription model,” Mr. Saunders said.

The company said that the worldwide member renewal rate in 2022 was about 90 percent. Costco hasn’t raised the cost of its memberships since 2017, but executives indicated in a recent earnings call that costs could go up.

Ms Thomas pointed to an apparent parallel to Netflix, which last month announced it would start kicking people out of the service if they had been using one’s account for more than 30 days while living in another location. , its action has been attributed to changes and increases in economic forces. Competition.

“We do not think it is fair that non-members should receive the same benefits and prices as our members,” Costco said Wednesday.,,

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