Costco holds off on hiking membership fees, citing inflation

[Yo_Mama_Been_Loggin]

Costco Wholesale Corp. (Nasdaq: COST) is holding off for now on raising its membership fees, said Bob Nelson, senior vice president of finance and investor relations, during a call with investors Thursday.

Earlier this year, the Issaquah-based warehouse retailer hinted it could hike its dues as early as this summer.

On average, Costco increases membership fees every five and a half years. The last price hike was in June 2017, when Costco raised its annual dues for Gold Star and Business members by $5, to $60. The Executive member price rose $10, to $120.

"As we approach this five-and-a-half-year mark [in November], there will be more discussions with [CEO Craig Jelinek], [President Ron Vachris] and the executive team, but for today, we have nothing more specific to report in terms of timing," Nelson said. "Given the current macro environment, the historically high inflation and the burden it's having on our members and all consumers in general, we think increasing our membership fee today, ahead of our typical timing, is not the right time."

https://www.bizjournals.com/seattle/news/2022/05/26/costco-membership-fees.html

Unlike the oil companies.

[MichMan]

1. Never understood why I should have to pay to shop somewhere

No thanks. Never set foot in Costco, Sam's Club or any others.

[wryter2000]

2. Up to you

But I won't use anyone else's cheeses to make pesto. I've ordered parmigiano online from Italy at crazy-high prices, and it isn't as good as what Costco imports.

[Earth-shine]

3. I find the membership fee to be worth it.

Generally speaking, the Costco shopping experience is excellent.

By contrast, I didn't like BJs so much. Costco wannabe.

[Casady1]

5. The deals you get are worth it

This is one of the best all around deals. Toilet paper and paper towels are 2/3rd's the regular store prices and gas is usually 20 cents cheaper per gallon plus you get an additional 2% back on gas for using your their credit card. Your rebate per year pays for your membership. Yesterday top notch jeans were 10.99 and my daughter priced out a car and there is no destination charges and additional dealer chargers. It was at least $5,000 cheaper than going to a dealership.

Anything with the "Kirkland" names which is there store name is top notch. I bought a briefcase years ago and it was the closest you could get to a Tumi. The price yesterday for Mobil one synthetic oil(6pack) was $5.00 a quart. You can't get that price for regular oil at Autozone.

They are also a union company and the top paying company that employ's retail workers. They pay for the workers health insurance. It is completely a win win.

[maxsolomon]

7. #1: Fuel. 40 cents cheaper/gallon than the local Shell or Chevron.

2. Bulk purchasing: Pistachios, Lamb, USDA Prime Beef, toilet paper, paper towels, fruit. it's all significantly cheaper. All stuff you have to buy anyway.

3. Booze. Significantly cheaper. Their Kirkland vodka is made by Grey Goose.

4. Car washes: $8.

5. Tires. Significantly cheaper. They fill them with Argon & will top them off each visit.

6. People. My Costco, the original Costco south of downtown Seattle, is like visiting the UN: Indian, Somali, Ethiopian, Chinese, Filipino, Vietnamese, Polynesian, & Japanese-Americans. I love it. I'm usually in the minority as an Middle-aged White Man.

The membership pay for itself, and you get a kickback that usually pays for the next year. I don't think we've had to lay out cash since the initial expense.

[Casady1]

8. In Atlanta

when they first came in, the first year was free and they gave you a turkey.

[MichMan]

9. It is a 100 mile round trip to the closest Costco

Doubt that a discount on gas will make up for it

[Casady1]

10. That is fine

but you put down the shopping value. I have friends who live 70 miles round trip and when they shop they make big purchases. They store up for 3 months.

[maxsolomon]

12. Well, it's not for you, then.

It's a 20 mile RT for me.

It's an urban company; it's located where the people are.

[MichMan]

13. Which is what I stated in the first place

[Hekate]

14. So the commute is your reason for not shopping there. Just say so.

All the people who’ve talked about the quality of products, prices, and excellent employment policies — I second that.

Before they moved into my town, I had never shopped there either, and I was suspicious of “big box” stores on principal. Now it’s close and easy to get to, and I’ve had time to rate them — Costco is excellent.

[MichMan]

15. My original comment was that I refuse to frequent a retailer that charges me to shop there

It is at the top of the post you are replying to; you must have missed it


The 100 mile round trip is secondary, or I would have mentioned it in my original comment. Sam's Club is much closer, but I don't go there either.

[wryter2000]

19. Sam's club is Walmart

Good enough reason not to go there. And the distance to Costco is ridiculous for you. I wouldn't go 100 miles one way to shop there, either.

But if you live close to a Costco, you can save the cost of your membership by shopping there. Someone mentioned gas, but you can also get really cheap and good butter, eggs, and mayo. If you have a large family to feed, you almost can't afford not to shop there.

The more expensive membership almost pays for itself with the 5% you get back when you shop there. Add to that the fact that you can buy things there that are really hard to find elsewhere like parmigiano reggiano stravecchio (Please excuse my atrocious Italian spelling.) and prime beef. And the baked goods are fabulous.

Plus, they are a blue company that is really good to its employees. Other places have a hard time getting bakers because they all want to work at Costco.

(Come to think of it, I might just drive 100 miles to shop there.)

[jimfields33]

16. I agree. Highway robbery if you ask me.

120 dollars is outright theft.

[Casady1]

18. Read it closer

Regular membership is $55.00 executive is $110. You get a 4% rebate with executive vs a 2%. Executive is for businesses.

[jimfields33]

20. In the article they said holding off raising to 120.

Even 55 is a lot just for the pleasure of buying their stuff.

[Casady1]

23. Almost everyone

On this thread really likes Costco and your yearly rebate pays for the fee. Is everyone wrong?

[jimfields33]

33. No. Different people love every store around for different reasons.

I’d imagine that’s why there are so many stores.

[Casady1]

36. You started by saying

That “ why would anyone pay for a membership, then when everyone said it was well worth the money you came up with the fact that it is 100 round trip. Then when I said everyone likes some store. The fact is you are pretty wrong and you can’t back down.

[MichMan]

37. I was the one who said it was a 100 mile round trip in another post upthread

Your reply here isn't directed to me.

[Ms. Toad]

27. I save nearly $350 in prescription meds every year.

See the analysis here: https://democraticunderground.com/100216747131#post25

For me, saving $350 on prescription meds ($410 savings - $60 membership fee) is a no brainer. Getting to shop there is a bonus.

(You misread the article. The current cost is $60 - raised from $55 five years ago. $120 is the current cost of a business membership.)

[haele]

17. The membership fee started for three reasons back in the day -

We lived up in Seattle when Costco started, and my parents jumped at getting a membership, even though the original store was a 20 minutes drive away.
1. It was based on a co-op model. Subscription fees allowed them to sell produce and market overstock items in bulk without charging certain types of local fees and some of Washington State's notorious VAT based tax system.. All the non- perishable produce was sold BOGO bulk (pay less per item if you buy two, five, ten, etc...). This was really a lifesaver for families that needed baby food, formula, diapers, sanitary napkins, toilet paper, etc...a couple of our student neighbors would get together for weekly purchases to support their families before WIC and SNAP filled in gaps for poor young families.
2. Membership required entry cut down on casual shoplifting, which became a big problem in the 70's while I was growing up due to inflation.
3. Retailers and small offices/businesses were able to save money on "consumables" if they didn't need to buy a full pallet of TP for an employee bathroom or if they wanted to get a larger assortment of, say, sodas or candy bars without buying more than they needed.
On edit -also, the membership/subscription fee was tax deductible for businesses.

When they expanded beyond a regional chain to a full service store (adding mail order, tire service, pharmacy, optical, and food court), they kept the system that benefitted Washingtonians for 20 years prior, because the whole purpose was always to cut prices by providing at least one hub for co-op type services in regions that are underserved.

It is also a miniscule fee if someone goes there once a month, considering the savings they provide compared to other area stores.

Haele

[Hekate]

21. Thank you, haele. I didn't know that!

[Ms. Toad]

28. Aside from glasses and prescriptions -

I find them overpriced compared to other warehouse stores (BJs, Sams), and about the same price as retail for nearly everything.

There are a few bargains (their price on string cheese can't be beat, and some of the produce is chepaer). But having shopped in their competitors in the past, I was surprised at how few bargains I found - and how many things were actually more expensive than other places I shop. The first time my spouse went with me (she regularly shops with her sister at BJs) the lack of bargains was nearly the first thing she commented on. So just on shopping, I wouldn't save $60 going once a month.

Where I save is pharmacy ($350 - after deducting the $60 membership fee from the $410 savings), and glasses. My spouse's glasses are usually $400/pair. She got two pairs for $200 (with insurance - but still far cheaper than she normally pays).

[Ms. Toad]

25. Let me see . . .

Medicare Part D drug costs for me (premiums + meds): $465
Medicare Part D drug costs for my spouse (premiums + meds): $980.40

Total cost: $1445.40

Cost of Costco Membership for my spouse and I: $60
Medicare Part D drug costs for me (premiums + meds) + pricier meds bought from Costco mail order: $342.46
Medicare Part D drug costs for me (premiums + meds) + pricier meds bought from Costco mail order: $692.97

Total cost: $1095.43

Saving $349.97 in prescription drug costs - pretty much a no-brainer for me. (My membership this year was supposed to be $30, as an educator - but ended up being free.)

I could get a similar price by using GoodRx, pricing every new med, or every current med at each renewal, and spreading my medication purchase out over several pharmacies. But the convenience of limiting my non-Medicaid shopping to a single location is worth $60. And Costco within a couple of dollars of the cheapest GoodRx cost.

I wish I had discovered Costco's pharmacy earlier. Until I signed up for Medicare I just used my drug plan. In choosing my Medicare drug plan, I priced every single medicine and was shocked at the price differences (both within plans, and from the cost without a plan. (Potassium Citrate ER ranged from $108/year to $1407/year - but the $108 plan, even with Costco replacements for the pricier drugs was not the cheapest overall). (For reference - Costco was $244/year.)

I've gone back and looked at my drug costs over the past couple of years and the difference between buying within the plan and buying from Costco was far more than the $60 membership free. Aside from the hassle of checking out where to send every new prescription, it would have been a lot cheaper to have switched earlier.

In other words - I might agree with you paying to shop, if it was just paying to shop for the store items. There's nothing I would spend $60 a year for in the store realm. But prescription drugs is, as I said, a no brainer. And, as a bonus, I get to shop for everything else.

[helpisontheway]

35. I saved a few hundred dollars on ONE car rental through Costco Travel

That alone covered more than the cost of my membership.

[maxsolomon]

4. Why would I join a hiking club at Costco?

Couldn't resist.

[MurrayDelph]

11. Have you SEEN the size of some of those warehouses?

Walking the aisles can be a heck of a hike.

[bif]

6. Huge Costco fan

I've been a member for at least 20 years. Great store, and they're very good to their employees. That's why I've seen the same workers there for ages. I've tried to get a job there several times, with no luck. Oh well.

[wryter2000]

22. I love the company so much I decided to buy a few shares of stock just for fun

When I googled "Buy Costco stock," I was directed to a page on Costco's website where, if I bought $100 worth of any stock through a company that's now Etrade, Costco would kick in an extra $40. They were basically giving members $40 to invest.

So, I bought $140 worth of Costco stock, and it's now worth almost $2,000. Many, many years later. It almost never loses value.

[bif]

24. Nice!

I finally bought some last November. I haven't fared as well, but I think it's a safe bet in the long run. Not worried.

[wryter2000]

31. The market is pretty much in turmoil right now.

Just checked. I did have quite a plunge, but it's up some today. Should be fine in the long run, as you say. I've had this stock for many years. It wasn't any kind of windfall, not even small. Just pretty slow and steady most of the time.

[bif]

39. Turmoil is an understatement!

I try to not look!

[Midnight Writer]

26. So far, I've got my membership fees reimbursed by rebates.

Because they are about 50 miles away, I only go there 4-5 times a year, when I go to "the city" for other reasons.

I would go there a lot if they were closer to home.

[Delmette2.0]

29. My sister lives 50 miles away in a small town with one grocery store.

We go to Costco once a month. Sometimes we buy a bulk package of meat or produce and split it. We have both found quality merchandise at a good price that isn't available any where except on line.

We share the cost of membership and basically double our benefit.

[kimbutgar]

30. I got an executive membership and the every year when I renew it practically costs me nothing

I love Costco and have saved a lot of money shopping there since the 80’s. I Was an original member of Price club. I worked for an investment banking firm in the 80’s and when they went public our firm was one of the underwriters. They gave us all employees a free years membership, When price club and Costco merged I continued with my membership and eventually converted to the executive club to get rebates. At Christmas last year I saved over $100 on an IPAD I gave to my husband at Christmas. So that membership fee paid for itself in my savings.

[DavidDvorkin]

34. Same here

I think the refund has more than covered the membership fee every year since I upgraded to Executive.

[EYESORE 9001]

32. I am happy that Costco is building in my locale

Not sure when it’ll be completed, but ground has been broken. I will happily pay the fee to access their buying power.

[madville]

38. It's a great place to shop, well worth it

The Costco and a Walmart are next to each other in my city but it’s like being in two different countries inside the stores. Walmart will have two checkout lines open and the employees look miserable, while Costco has 10 open and the employees are pleasant.

[ck4829]

40. Kick