Costco memberships are not meant to be shared. Still, that doesn’t stop nonmembers from sneaking in with cards that aren’t theirs and stocking up on their paper towels, frozen foods, and free samples (obviously). But now, the company is cracking down on unwelcomed guests with new entryway technology.
Costco announced the changes in a statement. “Over the coming months, membership scanning devices will be used at the entrance door of your local warehouse,” the statement reads, in part. “Once deployed, all members must scan their physical or digital membership card before entering.”
The technology, which has been tested in Costco stores since January, is part of the company’s expanded efforts to cope with shoppers masquerading as members. When Costco expanded its self-checkout services, the problem worsened, prompting the stores to ask for membership cards and photo IDs upon checkout.
“We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members,” Costco said in a statement to CNBC in June 2023.
Costco already allows members to bring up to two guests per store visit. “Keep in mind that purchasing items is exclusive to Costco members,” the company explains on its site. If you’re the Primary Member or Account Manager, you can assign your free household card to one other person in your home. That way, they’ll also get the benefits of a Costco membership.”
Last month, Costco raised its membership fees for the first time in seven years in a change that will go into effect on September 1, 2024. The bump will impact about 52 million paid memberships. While Costco’s shares took a 4% dip following the price hike, overall, the stock’s price was up 29% for the first half of the year.
It doesn’t seem like Costco wants to keep bumping the membership price, mainly because keeping high membership numbers is essential to the brand. It allows the company to maintain budget pricing (hello, a $1.50 hot dog combo, a price that has been firm since the ’80s). Costco’s highly effective business model, which is maybe best represented by the hot dog meal, is that it takes a hit with its low prices to keep customers happy and loyal. That means it’s even more important to combat nonmembers reaping members-only rewards all too often.
“The most important item we sell is the membership card,” says Ron Vachris, Costco’s new CEO told Fortune earlier this year. “Everything we do supports that transaction.” That means keeping prices lower than average, stocking quality products, and essentially, making that membership card worth it, but only for members.