Costco is testing a new store entry system

New York
CNN
—

Bad news if you're ditching someone else's Costco membership: The retail giant is cracking down.

When you enter Costco, you must show an employee your membership card to shop. Costco membership cards are non-transferable, but the company allows members to give a second household card to someone else in their household. The company states that a person with a card can bring up to two guests into the club during each visit.

But Costco has noticed that non-members are sneaking in with membership cards that don't belong to them — especially since Costco expanded its self-checkout system.

Costco recently began requiring shoppers' membership cards as well as photo ID at self-checkout registers, the same policy as regular checkout lanes, to crack down. “We don't feel it's right for non-members to get the same benefits and prices as our members,” Costco said He said in announcing the change.

Now, Costco is testing a system that requires members to scan their membership cards at the store entrance — instead of just showing the card to employees. Shoppers discovered and deployed the new scanners at a store in Washington state Pictures on Reddit.

More people are sharing memberships since the pandemic hit in 2020, Costco CFO Richard Galanti told CNN.

Costco is testing the scanners in a few stores to see if they are useful. The scanners also mean staff don't need to ask customers for their membership cards at cash registers and self-checkouts.

“It speeds up the process on entry and it speeds up the process on exit,” he said. “This is what we believe in and we are going to try it.”

It's the latest example from Costco and others Companies like Netflix Suppress membership sharing.

Costco had about 66 million paid members and 119 million cardholders in 2022, making it one of the largest membership clubs in the world. Costco members pay either $60 annually for a regular membership or $120 for an “executive” card, which includes additional perks.

The membership model is crucial to Costco's business, which has been very successful It thrived during the pandemic. The annual fee helps boost the company's profits and offset expenses, which helps Costco keep its prices low. Any changes in membership growth or renewal rates could hurt Costco and force it to raise prices.

The retailer generated $4.2 billion in membership fees in 2022, a 9% increase from 2021, with the renewal rate rising to 93%.