Costco is testing new system for entering stores

(CNN) — If you’ve been using someone else’s Costco membership to get into stores, we’ve got bad news: The retail giant has started taking steps to stop it.

When you enter Costco, you must show your membership card to an employee to make a purchase. Costco membership cards are not transferable, but the company allows members to give another card to someone in their household. The company stipulates that anyone with the card can bring a maximum of two guests during each trip.

But Costco has found that people without memberships are entering stores with cards that don’t belong to them, especially since Costco expanded self-checkout.

The company recently began asking shoppers for their membership cards in addition to photo ID at self-checkout registers, the same policy they have for regular checkout registers. “We don’t think it’s right for non-members to receive the same benefits and prices as our members,” Costco said in announcing the change.

Additionally, Costco has now introduced a system that requires members to scan their membership card at the store’s entrance rather than simply showing the card to employees. Some customers spotted the new scanners at a store in Washington state and posted photos on Reddit.

Costco CFO Richard Galanti told CNN that more people are sharing their memberships since the 2020 pandemic.

Costco is testing the scanners in several stores to see if they are useful. The scanners will also prevent employees from asking customers for their membership cards at registers and self-checkouts.

“It speeds up the check-in process and it speeds up the checkout process,” Galanti said. “We believe in it and we’re going to test it.”

This is the latest example of how Costco and other companies like Netflix are taking steps to prevent subscription sharing.

Costco had approximately 66 million paid members and 119 million cardholders in 2022, making it one of the largest membership clubs in the world. Costco members pay $60 per year for a regular membership or $120 for an “Executive” card, which includes additional benefits.

The subscription model is key to Costco’s business, which has grown rapidly during the pandemic. The annual fee helps the company increase profits and offset expenses, which in turn helps it keep its prices low. Membership increases or any change in renewal rates could hurt Costco and force it to raise prices.

The retailer earned $4.2 billion in membership fees in 2022, a 9% increase from 2021, with a high renewal rate of 93%.

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