There’s a reason Costco has enjoyed so much success in recent years, while rival retailers have thrived.
Costco doesn’t have to worry about profit margins like other retailers because it has a not-so-secret weapon in its back pocket: revenue from membership fees.
In Costco’s most recent fiscal quarter, membership fee revenue increased 14% year-over-year. And most of that came from the leadership members.
Once signed up, Costco members can choose a membership tier. A basic Gold Star membership costs $65 per year, while an Executive membership costs $130.
However, executive members receive a number of additional benefits.
-
2% cash back on most Costco purchases
-
Early shopping hours during the week and on weekdays
-
A $10 monthly credit on same-day orders of $150 or more
Costco is investing in adding value to executive members because it wants more people to join or move to that tier.
But the company may be going too far with its latest move.
The more revenue Costco can generate from membership fees, the better. So it’s easy to see why Costco would love to see more members move up to the executive tier.
To that end, Costco encourages employees to approach shoppers in the checkout area and ask if they want to renew their memberships.
But those workers often do it with gusto. And many Gold Star members are tired of being harassed.
Related: Costco is overhauling the food court
As Bob from Central New Jersey commented, “The last few times I’ve gone to check, I’ve gotten third degree membership. That’s getting old.”
“I don’t shop here much,” he continued. “My membership makes sense to me.”
Other members expressed frustration at being forced to upgrade.
“I had someone call the cashier to make this offer too,” commented one Reddit user. “What annoyed me was that I had to tell the woman no three times before she left.
Not only are Gold Star members at Costco increasingly suffering when they have to fend off intrusive upgrade requests, but some store employees are upset that they have to look into customers’ faces to promote executive memberships.
“We are tired of harassing everyone to update,” one Costco employee posted on Reddit. “We even have one staff member who apologizes before he starts his speech because we know the pressure it puts on you.