Costco is cutting back on membership card sharing

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An exterior view of a Costco store on August 18, 2020 in Teterboro, New Jersey.

Cana Betancur | Corbis News | Getty Images

Costco taking a page from Netflix’s book.

The retailer is cracking down on people entering its clubs and trying to make purchases with other people’s membership cards, he said Tuesday.

Costco said it has always asked customers for their membership cards at the cash registers when they check out. Now, it is also requested to see cards with a photo at self-checkout tables – and to see a photo ID if there is no photo on a customer’s membership card.

“We do not feel it is right that non-members receive the same benefits and prices as our members,” the company said in a statement.

The membership-based warehouse club said it has noticed more card-sharing abuse since it expanded self-checkout to more of its stores.

The step-by-step enforcement was previously reported by The Dallas Morning News.

Costco stands apart from other retailers because of its business model. Most of its earnings come from membership fees, which help cover company costs and keep prices low. It costs $60 a year for an annual membership and $120 a year for the higher level plan, called Executive Membership.

Membership-based warehouse clubs have attracted more customers and earned more of their wallets over the past three years. Shoppers who turned to the clubs to help stock the pantry with toilet paper and hand sanitizer during the pandemic are now going there for cheaper gas and bulk food during inflation.

Walmart-the same has seen an increase in business at Sam’s Club. Its membership has increased to an all-time high.

But even the clubs have been under pressure as customers withdraw due to inflation, or spend on experiences such as travel and dining instead. In the past two quarters, Costco has reported a heavier mix of sales coming from food as demand slows for pricier goods and popular pandemic categories such as furniture and electronic.

Its year-over-year net sales rose by about 2% to $52.6 billion, including the effect of inflation in the quarter ended May 7.

“It rains on all of us in these tougher times, especially with bigger-ticket, discretionary items,” Costco Chief Financial Officer Richard Galanti said on a December earnings call.

Costco shares are up nearly 16% so far this year, outpacing the roughly 14% gain of the S&P 500. It closed Monday at $523.42.

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