Costco clamping down on sharing membership cards
Listen 3 min Comment on this story Comment Gift Article Share
It just got harder to use someone else’s Costco card. Following Netflix’s lead, the warehouse chain is cracking down on account sharing and said it will be checking membership cards to ensure the photo matches the person at the checkout line. Wp Get the full experience. Choose your plan ArrowRight “We don’t feel it’s right that non members receive the same benefits and pricing as our members,” the company said in a statement.
Though Costco has always asked customers to show their membership cards at the register, the retailer said it’s seen more nonmembers shopping with other people’s cards as self-checkout expands. If membership cards do not have a photo, customers will be asked to present a photo ID.
“Costco is able to keep our prices as low as possible because our membership fees help offset our operational expenses, making our membership fee and structure important to us,” the company said.
Advertisement
It’s unclear how the company will curb member card sharing at its popular gas stations, where fuel is often priced below local competitors.
Costco’s profitability relies in large part on its annual membership fees, which run from $60 to $120, and pulled in $4.2 billion last year. The company operates at a lower margin than traditional retailers since its business model relies less on making money on the sale of products alone. Costco touted a global membership renewal rate of 90 percent at the end of 2022.
Famous for its gargantuan packages of toilet paper and supersized household staples, the members-only club offers bulk pricing and a no-frills retail experience. It experienced a surge in sales at the height of the pandemic, as anxious customers stocked up on bottled water and pantry items in preparation for prolonged isolation.
Advertisement
The company’s shares have outpaced the broader market this year, climbing 17 percent to the 14 percent recorded by the S&P 500 index. Though sales increased slightly during its most recent quarter, shoppers are still pulling back on non-essential spending, showing lower demand for high-margin products like electronics and home furnishings.
Costco operates nearly 900 warehouses across the globe, more than half in the United States. As of May, it listed more than 124 million cardholders. Customers can choose between membership tiers: the Gold Star membership costs $60 annually, while the Executive membership, which comes with added perks, is $120. On the membership sign-up webpage, the company offers one free card to anyone older than 18 who lives at the same address registered with the account.
Costco rival Sam’s Club has no plans to change their enforcement practices, said spokesperson Steven Zapata. He said the chain is more focused on encouraging customers to sign up for memberships and directing non-members to areas of the store that sell goods to all shoppers, including the pharmacy, the cafe and the alcohol aisles.
Advertisement
The company also is moving away from physical cards as more customers are using digital cards on their phones through the Sam’s Club app, he said. Membership at the Walmart-owned chain, which has nearly 600 locations nationwide, starts at $50 a year, according to the company website. In fiscal 2022, it generated $73.6 billion in sales.
Costco’s crackdown comes after Netflix began locking out piggy back users in May. Under the new rules, anyone sharing their Netflix account log-in with family or friends who don’t live at the same address must pay an extra $7.99 a month for each additional person. People borrowing an account got redirected to a page showing how to start their own.
Though the move sent many users venting on social media, subscriptions spiked for the streaming service immediately after the shift.
Gift this article Gift Article
Source: The Washington Post
