Executive members will pay $10 more per year to get a $130 membership, a change that affects 52 million members, “just over half of whom are executive members,” Costco said. Said In a news release, the executives said: offered Customers can receive up to $1,000 in rewards on purchases, but the company said the fee increase will increase the rewards cap to $1,250.
The fee hike comes even as Costco seeks to protect its image as a place to find bulk goods at low prices in an inflation-plagued economy. On an earnings call in late May, the company’s Chief Financial Officer, Gary Millerchip, told investors that Costco’s hot dog and soda combo will continue to sell for $1.50, the same price it has since the 1980s. Winner It received widespread praise.
Millerchip also said on the May conference call that Costco has not ruled out raising membership fees, adding that the company considers raising membership fees about every five years.
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“Costco has kept prices low despite inflation,” says Felipe Calo, a professor at the UCLA Anderson School of Management. “But they’re going to have to raise membership fees eventually, and it makes sense to do so now that customers are really seeing the value. Costco’s stock price has risen since the announcement, and the market is acknowledging that it was the right decision at the right time.”
Costco shares rose more than 2.5% following the announcement.
company Posts Net income for the 12 weeks ended May 12 was $1.68 billion, including $1.12 billion in membership fees received during the quarter. Costco earned nearly $4.6 billion in annual membership fees for the fiscal year that ended in early September, up 8% from a year ago.
But Dinesh Gawli, a marketing professor at the University of Arkansas, said the surcharge could hurt Costco’s ability to attract new customers and retain newer members, who may not be as loyal as longtime customers.
“I don’t believe the company has offered customers other perks or new services to justify the fee increase,” he said.Less loyal or recently joined customers may consider shopping at rivals such as Sam’s Club, Ghauri added.
Sam’s Club, a wholesaler like Costco, has increased membership fees for 2022. Fee Basic membership will increase from $45 to $50, while Plus membership will increase from $100 to $110.
Ghauri said customers could also switch to rivals that don’t require memberships, such as Target or Kroger. Those companies have “upped their game” in recent years, he added, and he believes they offer stronger pickup and delivery options than Costco.
“If you’re someone who doesn’t need to be a member, you might not lose out that much,” he said.
