Costco cracks down on membership card sharing

Exterior view of a Costco store on August 18, 2020 in Teterboro, New Jersey.

Kena Betancur | Corbis News | Getty Images

Costco is taking a page from Netflix’s book.

The retailer is cracking down on people sneaking into his clubs and trying to shop with other people’s membership cards, it said Tuesday.

Costco said it has always asked shoppers for their membership cards at the cash registers when they check out. Now, it is also requesting to see cards with a photo at self-checkout registers — and to view a photo ID if a shopper’s membership card has no picture.

“We don’t feel it’s right that non members receive the same benefits and pricing as our members,” the company said in a statement.

The membership-based warehouse club said it has noticed more abuse of card sharing since it expanded self-checkout to more of its stores.

The stepped-up enforcement was previously reported by The Dallas Morning News.

Costco stands apart from other retailers because of its business model. The bulk of its earnings come from membership fees, which help cover company expenses and keep prices low. It charges $60 a year for annual memberships and $120 a year for its higher-tier plan, called Executive Membership.

Membership-based warehouse clubs have attracted more customers and won more of their wallets over the past three years. Shoppers who turned to the clubs to help with pantry-loading of toilet paper and hand sanitizer during the pandemic are now going there for cheaper gas and bulk-sized food during a period of inflation.

walmartowned Sam’s Club has seen a similar lift in business. Its membership count has hit a record high.

Yet even the clubs have felt pressured as consumers pull back because of inflation, or spend on experiences like travel and dining out instead. In the past two quarters, Costco has reported a heavier mix of sales coming from food as demand slows for pricing merchandise and popular pandemic categories like furniture and electronics.

Its net sales rose year-over-year by about 2% to $52.6 billion, including the impact of inflation during the quarter that ended May 7.

“It rains on all of us during these tougher times, particularly with bigger ticket, discretionary items,” Costco’s Chief Financial Officer Richard Galanti said on an earnings call in December.

Shares of Costco have risen nearly 16% so far this year, outpacing the approximately 14% gain of the S&P 500. It closed Monday at $523.42.

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