Why Costco's Membership Price Won't Change As Of Right Now
Lately, it seems as though prices are going up left and right. With year-over-year inflation running the highest it's been in over 40 years, according to the Bureau of Labor Statistics, and food and energy costs bearing the brunt of those price increases, it's not surprising that many of us are fearing that grocery prices may skyrocket again. The August 2022 Consumer Price Index for food at home was up 13.5% from August in 2021.
Amid so much economic uncertainty, especially centering around the grocery store, there's never been a better time to be a member of a bulk or discount store like Sam's Club or Costco. This is especially true since Costco CFO Richard Galanti said the chain has only raised prices overall about 8%, well below that 13.5% national rate (via Food Navigator). Unfortunately, however, this international price hike at grocery stores happens to coincide with when Costco would ordinarily raise its membership prices. The brand "typically raises membership fees around every five years," according to CNBC. Nevertheless, there's good news for those loyal customers: Costco will be holding its membership price steady for now. Here's why.
Costco believes higher membership fees wouldn't be helpful right now
There's never been a more popular time to be a Costco member. The brand saw a record 92.6% membership renewal rate in the United States in the fourth quarter of 2022, according to Food Navigator. And people weren't just letting those membership cards sit in their wallets — they were out using them. In Costco's fourth quarter financial earnings report, the chain reported that foot traffic was up 7.2% worldwide, and sales were up 15.2%. The store also saw higher sales per transaction, with customers buying more items in stores rather than just breezing through for 50 rolls of toilet paper.
All those things added up to an unusually good quarter for Costco and, satisfied with its lot at the moment, the big box store is passing a little bit of that good fortune back to its customers. Since its fourth quarter earnings were better than predicted, the bulk chain will not be raising membership prices for any of its membership levels, reports CNBC. Costco said its financial performance would have been even better this year if not for inflation, so the chain doesn't currently see a benefit in charging customers even more for the shopping experience. That memberships will be staying at $60 a year (for now) is definitely not among the secrets Costco doesn't want you to know; it seems more than proud to be passing those savings on to customers.