One of America’s top retailers, Costco, made a big decision to increase the company’s membership fees. The retailer is known to always put the needs of its consumers first and does not necessarily stand for the increase of product prices. However, in the past, the retailer made similar decisions to increase the membership fees rather than increase the prices of products. Now, the retailer increases the membership fees again to test the loyalty of consumers.
Details behind the raised membership
The fact that Costco decided to increase the membership fees to test the consumers’ loyalty can be seen as a gamble the company made. However, it is safe to say that the gamble paid off since millions of consumers signed up anyway. Also, the membership renewal rate is currently at a significant 92%. Therefore, Costco tested the members with higher fees to see how they will respond to it.
The annual membership cost for consumers to enter Costco’s big-box warehouses and stock up on their bulk groceries, not to mention the free food samples, has increased. However, this is not stopping loyal consumers from becoming or remaining loyal members.
Since last year, September 2024 to be specific, individual members in the United States pay $65 per year, which was a $5 increase from past dues. When it comes to Executive memberships, it has been $130 per year, which is an increase from $120.
Costco’s membership fees
When it comes to the loyalists of the Issaquah, Washington-based retailer were not dissuaded. It had a total of 68.3 million people who held individual memberships by the end of fiscal 2025. According to Costco’s annual report filed this month with the U.S. Securities and Exchange Commission, this is an increase from 63.7 million in 2024 and 58.8 million in 2023.
The retailer is attracting new members
It is safe to say that Costco is attracting new members, too. David Bellinger, who is the director and senior analyst at a Japanese investment banking and securities firm Mizuho Securities made a statement in an email. He stated that “Costco membership is becoming increasingly popular for younger customers.” He estimated that there are nearly half of the new sign-ups who consist of individuals under the age of 40. There’s an average number of members who falls below the 50 years age bracket.
As stated by Bellinger, “This is helping to cushion the impact from lingering inflation across the board, particularly within the food category.” He further alluded to the fact that these patrons tend to do digital sign-ups, with “modestly higher churn rates,” or the rate at which a consumer cancels their membership. According to Bellinger, Costco “senior management (is) indicating this could lead to a downtick in membership renewal rates into 2026.”
Additionally, at the end of the fiscal year of 2025, the business looked good for the retailer. When it comes to the net sales, it increased by 8%, and membership fee revenue climbed 10%. As indicated by the reports, this is all due to the new sign-ups and the membership fee increases the company implemented.
As stated by the company’s annual report, “By strictly controlling the entrances and exits and using a membership format, we believe our inventory losses (shrinkage) are well below those of typical retail operations.” However, the company also stated that it still encounters severe competition in the retail industry. The reason for this is because “the retail business is highly competitive,” and the retailer is impacted by myriad economic factors, supplier issues, changes in foreign currency rates, natural disasters, as well as stock market expectations.