In a recent announcement, Costco revealed that it will be increasing its membership fees in the U.S. and Canada as of September 1. This change will see annual memberships rise from $60 to $65, while the higher-tier “Executive Membership” will jump from $120 to $130 per year. This decision will affect approximately 52 million memberships, with over half of them being executive memberships.
Following the news of the fee increase, Costco’s shares rose by about 2% in extended trading. This marks the first membership rate increase for the company since June 2017. Historically, Costco has raised its rates every five and a half years, but it chose to hold off on doing so until now. In interviews with CNBC, CEO Craig Jelinek previously stated that the timing was not right due to high inflation. The company relies heavily on membership fees to generate revenue and keep merchandise prices competitive compared to other retailers.
Costco’s decision to raise its membership fees comes after Walmart-owned Sam’s Club increased its own fees for the first time in nine years. While a Sam’s Club membership is priced at $50 for club members and $110 for the higher-tier “Plus” level annually, Costco’s fees are now higher. Similarly, BJ’s Wholesale charges $55 and $110 for its club and higher-tier memberships, respectively. It remains to be seen how customers will react to the fee increase and whether it will impact their shopping habits.
In addition to the fee increase, Costco announced that it has ramped up enforcement to prevent shoppers from using other members’ cards. This includes implementing additional membership checks in self-checkout aisles. These measures are intended to ensure that only legitimate members have access to the benefits of their membership. This move mirrors actions taken by other companies, such as Netflix, to crack down on unauthorized account sharing.
Overall, Costco’s decision to increase its membership fees will have a significant impact on millions of loyal members. The market reacted positively to the news, but only time will tell how customers will respond to the change. With increased competition and a focus on maintaining revenue streams, Costco is taking steps to secure its position in the retail industry.