It is not unusual for stores to make changes to policies and practices over time. And Costco is no exception.
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In recent months, Costco has installed membership card scanners at the front of its stores. And the general consensus is that Costco’s goal in doing so is to end membership sharing.
Costco has cracked down on non-members by banning them from its food courts. This change appears to be in line with that strategy.
But actually, there’s another important reason why Costco chose to install membership card scanners. And it is one that you as a regular customer can greatly benefit from.
It’s a matter of managing Costco’s inventory
If you’ve ever shopped at a Costco store before, you’ve probably encountered a lot of people. Costco stores generally have a lot of foot traffic. But sometimes that traffic can be inconsistent, making it more difficult to ensure adequate inventory.
During the company’s most recent earnings call, president and CEO Ron Vachris explained that the purpose of the new scanners isn’t just to keep non-members from sneaking in. It is also to maintain inventory based on the number of customers who enter the store at different times.
As he said, “It gives our operators real-time traffic numbers throughout the day. So we can adjust the front-end lines that we need to open and close lines based on the fluctuations of business. We can make our new food a little better, because we know what the traffic numbers look like and so on.”
Another reason behind the decision to install scanners is to see if memberships are up for renewal. If so, Costco can direct members who need to renew their subscription to customer service so they don’t wait in line at the checkout. And considering the store’s notoriously long lines, that’s a good thing.
As Vachris said, the scanners have “taken the friction of membership verification away from the front-end registries and moved it to the front door, where we can view people’s membership status. We let them know if their renewal is needed before they enter the front reaches.”
There could be a better customer experience coming
It is understood that Costco has made changes in recent months, including implementing a rate increase that has increased the cost of a Gold Star membership from $60 to $65 per year and the cost of an Executive membership from $120 to $130 per year. But ultimately, even that change has the potential to lead to a better customer experience.
Costco uses membership fee revenue to offset its costs and offer the low prices it is known for. Costco can also use that revenue to expand its product line and services. And that, combined with better inventory management, could even make for a better experience for members.
After all, there’s nothing more frustrating than going to Costco and discovering that a few items on your list are out of stock. With this new system the chance of this is smaller.
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The lesser-known reason why Costco installed new membership card scanners in stores was originally published by The Motley Fool
