For the first time in six years, Costco is raising its annual membership fees. As of June 1, both the Gold Star and Business membership fees will go from $55 to $60. The Executive level membership fee is being raised by $10 dollars from $110 to $120. You can also choose to give a gift of a membership at the price of $55.
The increase in membership fees will bring in an estimated $300 million and will affect around 35 million Costco customers. The retailer is in stiff competition with Wal-Mart, Sam’s Club, and Target stores for customers. Those stores, as well as other grocery store chains, are offering a lower price model on food items. At Costco, your bargain is not as much in the price as much as in the amount you get for the price. That is what works for them.
They are also not spending money on making the store pretty for the customers. The warehouse look and feel is what customers have come to expect so there is no need to change it. Their competition is in making sure the customer feels like they are getting their money’s worth when they come to spend their hard-earned money at Costco.
The store operates on a customer-friendly business model where the customer receives a good in-store experience browsing the store while sampling snacks. Often there are demonstrations of new items for sale so the customer can see how something works before they purchase.
Costco is the second largest retailer in the United States with 508 warehouses, and 94 warehouses in Canada. The higher membership fee will likely not discourage customers from renewing their memberships and shopping at Costco. The retailer began with a membership fee of just $25 back in 1983. They have steadily grown while increasing their prices and fees, and the customers keep coming back.
Are you a Costco member? What do you think of the fee increase? Let’s discuss here or on Twitter: @lcarterwriter.