Costco's New Controversial Policy Change Is Hitting the Mark, and Management Couldn't Be Happier

Core Insights - Costco Wholesale's recent changes to membership policies have sparked controversy among some members, but management and investors are pleased with the outcomes [10][13][15] - The global retail industry is projected to reach a $52.7 trillion addressable market by 2035, with a compound annual growth rate of 4.44% [2] - Costco's membership-driven model provides high-margin revenue, which is crucial for its competitive pricing strategy [8][15] Membership Changes - Costco increased annual membership fees for Gold Star/Business and Executive cardholders from $60 to $65 and $120 to $130, respectively, marking the first fee increase in seven years [10] - The introduction of special early shopping hours for Executive members has caused dissatisfaction among Gold Star members, as they cannot access the stores during these times [11][12] - A $10 monthly credit on qualifying Instacart orders for Executive cardholders has been introduced, alongside a 2% cashback on purchases [13] Financial Impact - The new shopping hours for Executive members are estimated to have added about 1% to weekly U.S. sales, translating to nearly $3 billion in additional annual revenue [14][15] - Executive cardholders, while making up 47.8% of total memberships, accounted for 74.2% of net sales in the fiscal fourth quarter, highlighting their importance to Costco's financial performance [15]