Costco recently announced an increase in membership fees for the first time since 2017. Starting September 1st, annual membership fees for Gold Star, Business, and Business add-on members in the United States and Canada will rise to $65 from $60. Executive members will see an increase from $120 to $130 per year. This adjustment will impact 52 million members, with a majority being Executive members who can receive rewards of up to $1,250.
Despite the current economic climate, Costco has kept prices low, but the company felt it was time to adjust membership fees. According to UCLA Anderson School of Management professor, Felipe Caro, this change will enhance the perceived value of membership. Following the announcement, Costco’s stock price increased by over 2.5 percent.
While this fee increase may affect Costco’s ability to attract new customers, Dinesh Gauri, a marketing professor at the University of Arkansas, believes that Costco has not introduced any new services to justify the increase. This could lead some customers, especially newer ones, to consider shopping at competitors like Sam’s Club, which also raised its membership fees recently.
Gauri also noted that retailers like Target and Kroger, which do not require memberships, have improved their pickup and delivery options, offering alternatives to Costco. Ultimately, the impact of the fee increase on Costco’s customer base remains to be seen.
Vocabulary List:
- Membership /ˈmɛm.bər.ʃɪp/ (noun): The state of being a member of a group or organization.
- Adjustment /əˈdʒʌst.mənt/ (noun): A small alteration or movement made to achieve a desired fit appearance or result.
- Perceived /pərˈsiːvd/ (adjective): Regarded or interpreted in a specified way.
- Attract /əˈtrækt/ (verb): To draw or pull towards oneself or itself.
- Competing /kəmˈpiː.t̬ɪŋ/ (verb): To strive to gain or win something by defeating or establishing superiority over others.
- Impact /ˈɪm.pækt/ (noun): The action of one object coming forcibly into contact with another.
