The Lesser-Known Reason Costco Installed New Membership Card Scanners in Stores

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Costco didn’t just install scanners in stores to crack down on membership sharing. Read on to see what the strategy entails. [[{“value”:”

It’s not unusual for stores to make changes to policies and practices over time. And Costco is no exception.

In recent months, Costco has taken to installing membership card scanners at the front of its stores. And the general consensus is that Costco’s goal in doing so is to put an end to membership sharing.

Indeed, Costco has been cracking down on non-members by banning them from its food courts. This change seems to fall in line with that strategy.

But actually, there’s another big reason Costco opted to install membership card scanners. And it’s one that could benefit you a lot as a regular shopper.

It’s a matter of managing Costco’s inventory

If you’ve ever shopped at a Costco store before, you most likely encountered a lot of people. Costco stores tend to see a lot of foot traffic in general. But sometimes, that traffic can be inconsistent, making it harder to ensure an adequate supply of inventory.

During the company’s most recent earnings call, President and CEO Ron Vachris explained that the purpose of the new scanners isn’t just to make sure that non-members aren’t sneaking in. It’s also to track inventory based on the number of customers who are coming into the store at different times.

As he said, “It gives our operators real-time traffic counts throughout the day. So, we’re able to adjust front-end lines that we need to open and close lines based on the fluctuations of business. We can monitor our fresh foods a little better because we know what the traffic counts look like and so forth.”

Another reason behind the decision to install scanners is to see if memberships are up for renewal. If so, Costco can direct members who need to renew to customer service so they don’t hold up the checkout lines. And given the store’s notoriously long lines, that’s a good thing.

As Vachris said, the scanners have “taken the friction of membership verification away from the front-end registers and moved that to the front door, where we’re able to look at people’s membership status. We let them know if their renewal is due before they get to the front end.”

A better customer experience could be coming

It’s clear that Costco has been making changes in recent months, including implementing a fee hike that raised the cost of a Gold Star membership from $60 to $65 per year and the cost of an Executive membership from $120 to $130 per year. But ultimately, even that change has the potential to lead to a better customer experience.

Costco uses the revenue it brings in from membership fees to offset its costs and offer up the low prices it’s known for. Costco can also use that revenue to expand its product line and services. And that, coupled with better inventory management, might actually make for a better experience for members.

After all, there’s nothing more frustrating than trekking out to Costco only to find that a few items on your list aren’t in stock. With this new system, that may be less likely to happen.

Of course, as a member, a good experience often boils down to saving as much money as possible. And you shouldn’t just rely on Costco’s low prices to maximize your savings. Instead, be savvy with the credit card you use for your purchases. Click here for a list of the best credit cards for Costco, and get ready to enjoy a host of rewards.

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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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