Costco members, brace for a price hike.
The warehouse giant announced its first membership fee increase since 2017, set to take effect September 1.
This move comes as retailers and consumers alike feel the squeeze of inflation.
Starting this fall, standard annual memberships will cost $65, up from $60. The premium “Executive Membership” will rise to $130 from $120. This change will impact about 52 million memberships, showing just how far-reaching this decision is.
Why now? Costco typically bumps up its fees every five and a half years. They held off longer this time, aware of the financial strain many households are under. As former CEO Craig Jelinek told CNBC, “It was not the right time as consumers dealt with high inflation.”
Here’s how the price of a Costco $COST membership has changed through the years 👀 pic.twitter.com/BPboGKrLJw
— Savvy Trader (@SavvyTrader) July 11, 2024
Membership fees are the backbone of Costco’s business model. They allow the company to offer low prices on goods while still turning a profit. But even Costco isn’t immune to rising costs and economic pressures.
How does Costco stack up against competitors? Even with the increase, their fees remain competitive.
Walmart’s Sam’s Club charges $50 for basic members and $110 for its “Plus” tier. BJ’s Wholesale sits at $55 and $110 for its standard and higher tiers.
Along with the fee hike, Costco is tightening security.
They’re cracking down on non-members using others’ cards, even adding extra checks at self-checkout. It’s a move similar to Netflix’s efforts to prevent password sharing.
Investors seem to approve of the decision. Costco’s shares jumped about 2% in after-hours trading following the announcement.
This suggests Wall Street sees the fee increase as a smart move to keep Costco financially healthy.
For shoppers, the question is simple: Does a Costco membership still offer good value?
As prices rise across the board, every dollar counts. Costco’s challenge will be to keep delivering deals that make that membership card worth the extra cost.
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It is another inflation hit for consumers as businesses look to maintain their bottom line.
