Costco, the popular membership-based warehouse club, recently announced that it will be increasing its membership fees in the U.S. and Canada. This change is set to take effect on September 1st, with the annual membership cost being raised from $60 to $65. In addition, the higher-tier “Executive Membership” will increase from $120 to $130 per year. This decision will impact approximately 52 million memberships, with over half of them being executive memberships. Despite the increase in fees, Costco’s shares rose by about 2% in extended trading following the announcement.

This is the first time that Costco has raised its membership fees since June 2017. The company typically raises rates every five and a half years, suggesting that the fee adjustment was expected around late 2022 or early 2023. However, due to various factors, Costco decided to postpone the increase until now. CEO Craig Jelinek and CFO Richard Galanti cited concerns about high inflation and timing as reasons for delaying the fee hike.

Costco heavily relies on membership fees to generate revenue and maintain competitive merchandise prices. Unlike its competitor Sam’s Club, which recently raised its membership fees after nine years, Costco aims to strike a balance between increasing revenue and keeping prices low for its members. Sam’s Club currently offers cheaper membership options, with fees of $50 for club members and $110 for its “Plus” level.

In an effort to ensure that only legitimate members are benefiting from their services, Costco has implemented stricter enforcement measures. Last year, the company began to crack down on individuals using other members’ cards and introduced additional checks at self-checkout aisles. This move mirrors similar actions taken by Netflix to prevent unauthorized usage of its platform.

Costco’s decision to increase its membership fees reflects a shifting landscape in the retail industry. By balancing revenue generation with customer satisfaction, the company aims to maintain its position as a leader in the warehouse club market. While the fee hike may come as an inconvenience to some members, Costco’s commitment to providing quality products and services remains unwavering.

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