Costco Making A Big Change That Customers Will Hate
Costco has come out and said they will be raising the cost of their membership and will not be adding new membership tiers.
This article is more than 2 years old
Bulk-buying giant Costco is making waves with its membership customers this week. Many retailers are feeling the stress and strain of the global climate this year; with hyperinflation, and the rising cost of basically everything, running a successful business is proving nearly impossible, even for multi-national retail chains.
Trying to run a business in such a volatile market is not easy, even for Costco. During the store’s fourth quarter earning meeting, CEO Richard Galanti confirmed that Costco memberships are expected to increase. This increase was expected due to the unpredictable state of the global retail market, but also Costco is known to increase its membership prices every five years.
Members should expect the price increase to come into effect at the start of next year, as that is when previous increases have been implemented. But the CFO of Costco stated that it is not the case. The price increase for memberships will be implemented at some point, but the date has not been released.
Richard Galanti stated that increasing membership prices would give customers more value for money in the long run.
During the fourth quarter meeting, it was also stated that no additional memberships are being offered at this point. Costco will keep offering the same types of memberships, such as the gold star and the executive membership, with no additional ones.
A large part of Costco’s income is from the membership of its customers, with over a quarter of its yearly revenue coming from the subscription program. Like every retailer, Costco’s monthly profits are down by 8%.
Many retailers took a collective sigh of relief that they survived the COVID-19 pandemic restrictions. There was elation when the restrictions were removed, and everyday shopping could resume; now, threats of a recession bombard every new station daily.
As Costco is a membership-only retail store, consumers who want to shop within the store will have to pay the new prices, happy or not. Over the years, it is known for its excellent savings with bargain-busting deals, even down to its food.
Earlier this year, Costco stated that their iconic hot dog and soda combination, a firm favorite with customers, would stay at the $1.50 price forever. This meal deal has been at that price since 1985, and customers were happy to learn that its price would not increase even with the cost of living skyrocketing.
But even though Costco did not increase the price of its iconic meal, it is getting customers to pay another way, through its membership.
Every business worldwide is tightening its belts and budgeting where it can. Due to the price increase on everything from products to raw materials, not only do they have to budget, but many companies have to increase their prices to break even. To be a consumer, it seems like everywhere you turn, something else has increased in price; now it’s Costco’s turn. Determined to keep their costs down and their doors open, most loyal customers will accept their increase in membership prices; they have accepted every other retail price increase.
