Costco tries membership change customers won’t like

Shopping at Costco requires holding an active membership with some minor exceptions.

In some markets, the warehouse club has to make its liquor stores open to everyone. You can also use a Costco gift card to shop at the retailer without a membership but only to the value of that card. And, only actual members can buy Costco gift cards in the first place.

Costco (COST) - Get Free Report also allows non-members access to select items through its partnership with Instacart. It’s a limited selection and non-members pay 5% above the in-store or member price, but that may still be cheaper on many items than a traditional grocery chain like Kroger or Publix.

Members of the warehouse club can also bring two guests with them who are not members. Those guests can shop, but the actual member has to handle checking out and paying for the items.

Basically, Costco wants to preserve the value of being a member by only allowing its members access to its warehouse clubs. It has recently gotten more aggressive in checking IDs at checkout to make sure the cardholder is actually the member.

Only Costco members can buy gas at the warehouse club.

Image source: Kevork Djansezian/Getty Images

Costco tests a new membership policy

Currently, anyone can walk into a Costco. The chain only checks your membership card when it’s time to pay for your purchases. In some locations, Costco does have a worker visually check to make sure members have a membership card before they can enter the store.

In theory, that means non-members can window shop and partake in free samples if they choose to. The warehouse club, however, has been testing a major membership change at its Issaquah, Wash., location that’s relatively close to its Bellevue, Wash., headquarters.

“The Issaquah location, however, has reportedly added two kiosks to the main entrance, requiring customers to scan their membership cards before entering the store,” Parade.com reported.

Photos of the new system have appeared on social media. The new system works a bit like the manned passport facial recognition stations at some cruise ports (albeit with a human verifying that you are you).

“You will be asked to scan your membership card before entering the warehouse,” posted a Reddit user. “I didn’t get it in the picture but there’s two scanners at the entrance with one employee at each one….There’s a display that shows your face for the employee to check.”

That’s a major policy change and it could create a wait to enter the chain’s warehouses during busier times. On the positive side, checking at the door will prevent people trying to shop with someone else’s card from being stopped at the register. That creates a situation where store workers have to put the items back on the shelves and with fresh food it can lead to waste.

Costco keeps adding members

While Costco has gone past the period where it normally raises membership prices, it has not done so. The chain’s CFO Richard Galanti has said that the company would, at some point, increase the price of its memberships, but that no date has been picked yet for that to happen.

Galanti talked about membership growth during the chain’s first-quarter earnings call.

“Membership growth continues. We ended Q1 with 72.0 million paid household numbers, up 7.6% versus last year, and 129.5 million cardholders, up 7.1% with consistent growth throughout the quarters,” he said.

The warehouse club has also been growing its more expensive Executive membership base.

“At Q1 end, we had 33.2 million paid executive members, an increase of 939,000 during the 12 weeks since Q4 end. Executive members now represent a little over 46% of our paid members and a little over 73% of worldwide sales,” he added.

Executive members pay $120 a year instead of $60 for a standard Gold membership but get 2% cash back up to $1,000.

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