Membership has its privileges at Costco, and in a bid to keep it that way, the retail giant is piloting a new way to keep non-members out of its stores.
Costco is testing card scanners at the entrances of a handful of stores, including one in Issaquah, Wash., where GeekWire saw the technology in action on Wednesday. The aim is to verify that the person headed in to shop is actually a member.
The Washington-based warehouse-style retailer has previously required shoppers to flash their membership card at an employee upon entry. At regular checkout lanes, membership cards were checked again. But with the expansion of self-checkout in its stores, Costco noticed a rise in non-members entering the store to shop. The company announced last summer that it would start asking for membership cards along with a photo ID to use those registers.
“We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members,” Costco said in a statement at the time.
The scanners, spotted and posted about on Reddit earlier this month, are meant to streamline the process of checking memberships. GeekWire managing editor Taylor Soper checked in to the Issaquah store, east of Seattle, on Wednesday, and when his card was scanned, a tablet displayed his image and validation that his membership was active.
“It speeds up the process at entry and speeds up the process at the checkout,” Costco finance chief Richard Galanti told CNN. “That’s what we believe and we’re going to pilot it.”
Employees will no longer need to ask customers for their membership cards at cash registers and self-checkout.
Costco members pay $60 a year for a regular membership or $120 for an executive card. The cards are non-transferable, but the company allows members to give a second household card to one other person in their home.
The company generated $4.6 billion in membership fees from nearly 128 million members, according to its 2023 Annual Report. Those membership fees are key to helping Costco keep its prices down, and demonstrate the steps the retailer is willing to take to maintain membership renewal (93% in 2022) and growth.
In his Retail Radar newsletter, Seattle-area tech executive Lawrence Lerner wrote about why membership fees are a good thing for clubs like Costco, but questioned whether the retailer’s efforts to protect exclusivity was keeping up with modern family and household dynamics, especially when it comes to which names to associate with which cards.
Meanwhile, Walmart-owned Sam’s Club is rolling out new AI-powered technology that can visually scan customers’ carts during the exit process, eliminating the need to manually check receipts to ensure customers are paying for their purchases.
And the streaming television service Netflix started cracking down on password sharing last May, saying that the practice was hurting its bottom line. In October, the streamer said it added 9 million new subscribers globally since its ban went into effect.
