Costco Plans to Raise its Membership Prices

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Costco has a very loyal customer base with an over 90% membership renewal rate worldwide and 92.5 percent in the US in its most recent quarter.

 The chain's members have been switching to the more expensive offer with 2% cashback up to $1,000 on qualified orders for over five years.

Executives are becoming more important. 76% of the chain's sales come from 43% of members in the more expensive class.

The company's CFO has been answering questions about price increases in recent earnings calls. He hasn't said much, suggesting the company hasn't decided.

The next membership price increase is expected in January 2023. He stressed that the timetable was flexible, but an increase was coming.

The CFO stated that while the company was aware of Americans' economic concerns, a struggling economy would not be a reason to hold prices.

He suggested that if the company raised membership fees, it could use the extra revenue to maintain prices on items where costs have increased.

The "when not if" line twice during the call and added If we have to wait a few months that's fine. I won't say when.

Costco had seen some fresh food prices drop, particularly proteins (chicken, beef, and fish), which had reduced customer trading down.

Because fresh chicken and fish prices rose last quarter, he saw more people buying canned. To maintain historical prices, the company has taken less margin on some food items.

Big-ticket and discretionary purchases slowed, the CFO said. He said TV sales had increased overall, but larger-screen sales had dropped.

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