Introduction
Costco is one of the most popular retailers in the United States, and it’s no surprise that the company is rumored to be increasing its membership fees. This news has caused a stir among shoppers, as the potential increase could rival inflation. In this article, we’ll take a look at the potential fee increase, what it could mean for shoppers, and how it could affect the competition. We’ll also discuss some of the ways that shoppers can save money at Costco, even if the fee increase does come to fruition.
Costco’s Rumored Membership Fee Increase Rivals Inflation — Eat This Not That
Costco shoppers may soon be paying more for their membership. According to reports, the warehouse giant is considering raising its annual membership fee by as much as 20 percent. The proposed increase would bring the cost of a basic membership to $120, up from the current $100.
The news has sparked a debate among shoppers, with some arguing that the increase is necessary to cover rising costs and others arguing that it’s too steep. But regardless of where you stand on the issue, it’s important to understand the potential implications of the rumored fee hike.
The Impact of the Increase
The proposed fee increase would be the first in five years, and it would bring the cost of a basic membership to $120. That’s a 20 percent increase, which is significantly higher than the current rate of inflation. In fact, the Consumer Price Index (CPI) has only risen by about 2.5 percent over the past year.
The increase would also put Costco’s membership fee on par with rival warehouse clubs like Sam’s Club and BJ’s Wholesale Club, both of which charge $120 for a basic membership. That means that Costco would no longer have a competitive advantage when it comes to membership fees.
What You Can Do
If you’re a Costco shopper, there are a few things you can do to prepare for the potential fee increase. First, consider whether you’re getting enough value from your membership. If you’re not, you may want to consider switching to a different warehouse club or shopping at a traditional grocery store.
You can also take advantage of any current promotions or discounts that Costco is offering. For example, the company is currently offering a $20 gift card for new members who sign up for a basic membership. That could help offset the cost of the fee increase.
Finally, if you’re a Costco executive member, you may want to consider downgrading to a basic membership. That way, you can save money on the membership fee while still taking advantage of the discounts and other benefits that come with being an executive member.
Bottom Line
Costco’s rumored membership fee increase could have a significant impact on shoppers. But by taking advantage of promotions and discounts, and by considering whether you’re getting enough value from your membership, you can minimize the impact of the increase.
Around 80% of grocery shoppers say they are spending more money on food amid inflation rising, according to a Credit Karma survey published right before the new year. The rate is currently beating a 40-year-old record at 8.5%, according to the U.S. Inflation Calculator, yet no one should expect a quick fix anytime soon—in fact, experts say that prices will continue to climb.
Coincidently, if one legendary pattern repeats itself, Costco members who love the warehouse chain for its low prices may be faced with more expensive access later on in 2022 in addition to these higher grocery costs.
In the past, Costco has raised its membership fees about every 5.5 years. The last uptick was in June of 2017 when it went from $55 to $60 for the Gold Star Everyday membership and $110 to $120 for the Gold Star Executive membership. Say the same jump of $5 and $10 happens this year and the cost of an annual membership at Costco will go up 8.3%—almost as much as inflation.
In the grand scheme of things that membership fee increase is only $5 or $10, and is a relatively small amount of money compared to what members sometimes spend on a warehouse run.
Comparatively speaking, other parts of the Costco experience are cheap—and always have been. The $4.99 famous rotisserie chicken loses the company money by being so inexpensive. Yet CFO Richard Galanti said in 2015 that Costco is willing to keep the price low.
This is the same reasoning the company employs to cap the hot dog and soda combo in the food court at $1.50. In 2018, one of the co-founders of the big box chain Jim Sinegal told CEO Craig Jelinek to figure out a way to not raise the price since the store is synonymous with the deal. “If you raise the [price of the] effing hot dog, I will kill you,” he reportedly said.
In the end, Costco has over 100 million members across the globe, and to each individual, the 8.3% membership increase may not break the bank. However, until the announcement is made it will be looming over every shopper’s head, just like inflation—especially when inflation may be to blame for the increased price of one of the most popular items in the warehouse.
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Amanda McDonald