Is Costco’s Latest Membership Crackdown Overkill?

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Costco has been taking steps to encourage people to buy memberships. But is its latest move benefitting anyone? Keep reading to find out. [[{“value”:”

Costco has a business model that differs greatly from that of other retailers. Most stores make their money by selling goods to customers. Costco does that, but it also makes a lot of its money by selling memberships.

Currently, members pay $60 a year for a Gold Star membership or $120 a year for an Executive membership that gives them 2% cash back on their purchases. Come September 1, these prices are rising to $65 and $130, respectively.

Because Costco gets so much of its revenue from membership fees, it wants to encourage non-members to join. And it’s taken different steps to encourage that this year.

Costco’s new entry policy

Earlier in 2024, Costco began cracking down on food court access for non-members. So now, those famous $1.50 hot dog and soda combos are only available to paying members.

Costco is also placing membership card scanners at the entryway of its stores in a growing number of locations. Members will have to scan their cards rather than just flash them at a greeter before being allowed to enter to shop.

The idea behind this change is to make sure non-members aren’t sneaking in. But there’s a question about whether this strategy will benefit Costco and the people who pay to shop there.

A potential problem

Costco’s membership card scanners make sense in theory. If you try to sneak in without a membership card, you’ll be stopped in your tracks. But there’s already a system in place to prevent non-members from making purchases. If you don’t have a membership card, you won’t be allowed to check out with a cart full of stuff. It’s that simple.

So all Costco is really doing is cutting people off at the front of the store instead of in the checkout area. You can argue this might result in shorter checkout lines. But it also has the potential to cause massive bottlenecks in the front of the store.

If you’ve ever walked into a Costco store on a weekend, you’ve probably noticed that it tends to be jam-packed. So much so that even if you’re willing to take the farthest available parking spot in the lot, there’s still a wait to ditch your car.

The problem is that if too many people need to scan their cards at once, or a given scanner glitches or gives someone trouble, it could result in a long wait and a lot of angry people.

How to avoid long lines and crowds at Costco

Understandably, Costco doesn’t want non-members to gain free access to the store. But it actually already allows that because paying members can bring a guest. So it’s not clear whether these new scanners are necessary. And the fear is that they might cause even more congestion.

If you don’t like the idea of getting stuck in a line just to enter your local Costco, you may want to change your approach to shopping there. First, consider avoiding Costco on weekends at all costs. You’re better off making an after-work trip than subjecting yourself to the torture that is visiting Costco on a Saturday or Sunday.

Next, if your schedule is flexible, try to get to Costco right when it opens. Better yet, arrive a few minutes ahead of that time in case you’re allowed in the door a touch early.

Some Costco members try to go to the store at a time when there’s likely to be a wide selection of free samples, so they’ll avoid the earliest store hours. If you’re willing to forgo that cube of cheese or bite of granola bar, you can potentially avoid a lot of people, too.

Finally, don’t hesitate to give yourself the occasional break from Costco in the form of an online order. Sure, Costco’s in-store prices are generally better than the ones you’ll find online. But if you’re desperate for a break, placing the occasional online order is not the end of the world. And besides, what you pay in slightly higher prices, you might gain in not having to drive to Costco and use gas in the process.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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