Costco Just Made a Big Change to Its Perks, and It Affects Many of Its 79.6 Million Paying Members

Core Insights - The global retail industry is projected to grow from $27.3 trillion in 2023 to $36.9 trillion by 2030, indicating a significant market opportunity for retailers [1] - Costco has introduced a new exclusive shopping perk for its executive members, allowing them special access to its warehouses, which is expected to enhance member satisfaction and drive upgrades from lower-tier memberships [9][10] Company Overview - Costco operates over 900 warehouse locations and has a membership model, with approximately 79.6 million paying members as of May 11, 2025 [5][6] - The membership structure includes 42 million gold star and business level members at $65 annually, and 37.6 million executive level members at $130 annually, who contribute significantly to sales [6][7] Membership Dynamics - Executive members account for 47% of total memberships but are responsible for approximately 73% of sales during the fiscal third quarter, highlighting their importance to Costco's revenue [7][8] - The new exclusive shopping hours for executive members are designed to maintain high renewal rates, which are above 90% [8][17] Competitive Advantages - Membership fees are crucial for Costco's business model, providing a buffer against low margins on groceries and enabling competitive pricing [12][14] - Costco's ability to buy in bulk allows it to reduce per-unit costs, which can be passed on to members as lower prices [15] - The company enjoys a high membership renewal rate, with over 90% globally and 92.7% in the U.S. and Canada, indicating strong customer loyalty [17] Market Position - Costco's stock trades at a forward-year earnings multiple of 47, reflecting investor confidence in its competitive advantages and customer loyalty [18] - The introduction of new perks for executive members is expected to attract more customers to upgrade their memberships, further solidifying Costco's market position [18]