Costco increasing price of club membership
Costco has become a beloved destination for Canadian shoppers, capturing hearts and wallets across the country. With its unique business model and commitment to customer satisfaction, this bulk shipping club offers numerous benefits that resonate deeply with Canadians. In recent years Costco came under critique because of steep increase in grocery pricing. Now, Costco is about to increase its memberships by $5 for regular membership and $10 for Executive.
Costco’s popularity in Canada is the result of a blend of value, quality, and community engagement. By offering a wide range of products at competitive prices, maintaining high standards of customer service, and fostering a sense of community, Costco has secured its place as a beloved shopping destination for Canadians. Whether for the savings, the quality, or the overall shopping experience, Canadians have numerous reasons to love Costco.
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In recent years, Costco has followed the trend of steep grocery price increase together with its close counterparts Loblaws, Metro and Walmart and by the opinion of many, Costco can not fly the banner of affordable and cheapest groceries. Some prices at Costco have risen more than prices at other mentioned grocery giants.
Even though, the prices are not as they used to be and the saving are very small to none compared to buying smaller packages, Canadians still storm Costco doors on daily basis. To Costco management benefit, Canadians have not changed their grocery shopping habit. Now, even bigger reward for good business standing is the decision to increase membership prices.
About 52 million memberships—just over half of which are on the “Executive” plan—will be impacted by the membership hike, which is scheduled to take effect on September 1, 2024. Costco has announced that, as of September 1, yearly membership costs for Canadians with individual, corporate, or business add-on memberships would increase by $5 to $65.
Executive members will see a $10 boost to $130 in rewards, as well as a rise in their annual maximum.
Membership hike will affect about 52 million members and U.S consumers will pay same hike amount as Canadians. Costco members hold a bit more than half of executive plans which means there will be an additional $400 million in extra revenue for Costco per year. A healthy extra income while more Canadians and Americans struggle to make ends meet.
Good news though: Costco has promised that they won’t change the price of $1,50 hot dogs!
“The market has been expecting (discussion of) a membership fee hike for a couple years … management historically tends to raise membership rates every 5 to 6 years,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“This announcement will be a welcome relief to those who have been waiting for it and should provide a solid lift to revenue as well as the stock,” Schulman added.
Clearly! Investors and management will surely welcome the extra revenue, but how about Canadian consumers? Will they welcome the extra membership hike?
Who knows?
