Costco recently made some changes for Executive members
It also gave them a small benefit that was not well publicized.
The chain also quietly added a new perk that is valuable to many members.
Costco rarely changes anything other than its product mix. The company moves very slowly and tends to let its competitors lead the way when it comes to new technology and other tweaks.
If something works the warehouse club may adopt it, but overall Costco is keeping its operations steady.
But recently the membership-based chain adjusted its hours to open earlier to Executive members. It’s a move designed to reward the customer base that drives most of its sales.
“To increase value and convenience for our members, on June 30, we added executive members-only business hours in the morning and additional hours on Saturday evenings to our U.S. warehouses. We estimate that these increased hours have added approximately 1% to weekly U.S. sales since implementation. This has been very well received by our members,” he explained.
Costco also made another small change to the benefits available to Executive members.
“In addition to early opening hours for Executive members, we also offered a $10 per month credit on Instacart purchases over $150. Since announcing these new executive benefits, we’ve seen a meaningful increase in upgrades from Gold Star members to Executive Memberships,” Vachris added.
CFO Gary Millerchip’s comments showed how important Executive members are to the chain.
“At the end of Q4, we had 38.7 million paid executive memberships, up 9.3% from last year. Executive members represented 47.7% of paid members and 74.2% of worldwide sales,” he said.
Executive members pay $130 per year, while basic Gold Star members pay $65. In addition to the extra hours and Instacart perk, senior members get 2% cash back on most purchases up to $1,250 per year.
Costco is making adjustments to some of its benefits. Brown/AFP via Getty Images” loading=”eager” height=”540″ width=”960″ class=”yf-1gfnohs loader”/>
Costco is changing some of its benefits. Brown/AFP via Getty Images
In addition to rewarding Executive members, Costco wants to encourage customers to add Citi’s Costco Anywhere Visa card.
This was something Millerchip mentioned during the company’s earnings release.
“From our credit card perspective, this has been an incredibly successful program for us, and we’re providing a lot of incremental value to our members through the credit card, with the rewards we offer and some additional travel-related benefits. We recently made some changes to our credit card, recognizing that we felt there was an opportunity to increase value and also continue to grow this program,” he shared.
It’s a small change, but it makes a lot of sense.
“And so we added an incremental benefit where the member can now get 5% rewards on gas. We also updated and modernized the card itself. We’re also pleased so far with the member response and continued growth in this program,” he added.
The 5% savings on gas benefit is a significant change that not only increases the value of the card but also the value of the Costco membership.
5% cashback In Costco gas, 4% on other gas/EV charging (up to $7k per year)
3% related to restaurants and travel (including Costco Travel)
%2 For Costco and Costco.com purchases
1% on all other purchases
No annual fee (with paid Costco membership)
No foreign transaction fees
Doubles as your Costco membership card
Purchase, travel and rental car protection
Citi Entertainment access (concerts, events)
Annual award certificate Available for cash or Costco purchases
Must have an active Costco membership
Rewards can only be redeemed once a year (in store or for cash)
1% base rate on most purchases
5% gas bonus limited to $7,000 per year
No sign-up bonus or introductory APR
High regular APR
Requires excellent credit
Fewer travel/purchase benefits than before
In addition to providing new benefits to Executive members by making changes to its credit card, Costco also invested in technology. GlobalData Managing Director Neil Saunders thinks this is a smart idea.
“Costco can improve in areas like in-store pickup, checking what’s in stock at the warehouse, and streamlining the e-commerce process. But all of this will be selective: Costco won’t offer every item for collection because some of its bulkier products don’t lend itself to this type of service, and most customers like to visit the warehouse. So I’d say this is a gentle technology evolution rather than a major transformation,” he said. RetailTel.
Melissa Minkow, another ReailWire Brain Trust member, thinks Costco needs to make backend changes to keep its members happy.
“Investing in technology doesn’t mean you expect tons of growth through digital channels; investing in technology can also/instead mean improving backend systems for a better in-store and/or omnichannel experience. It’s important for Costco to evolve with the times, and investing in technology is synonymous with that,” he shared.
