COST
When you think of Costco Wholesale (NASDAQ: COST), the first images that likely come to mind are mouthwatering deals on hot dogs, budget-friendly gasoline, and bulk purchases of household essentials. However, according to the company’s CEO, there is one element within their expansive big box stores that surpasses all others in importance: the membership card.
During a recent conversation, Costco CEO Ron Vachris shed light on what he considers to be the cornerstone of the Costco experience. "The most important item we sell is the membership card," Vachris explained. "Everything we do supports that transaction."
Costco offers two main membership types: Executive and Gold Star. The Gold Star membership, priced at $60 annually, grants members access to both online and in-warehouse shopping, includes two membership cards, and offers a satisfied-or-refunded guarantee. This means members can cancel their membership and receive a refund at any point if they are not satisfied.
Now, if you're keen on amplifying your savings, the Executive membership might catch your eye. Costing $120 per year, this premium option includes all the benefits of the Gold Star membership plus additional perks and discounts. Members also receive an annual 2% reward on their qualified purchases, capped at $1,000, that can be used on Costco and Costco travel purchases. Imagine getting about $110 back annually on typical spending patterns—an impressive return for families.
According to the CEO, the gold mine lies in these memberships. Vachris illustrated an example where spending roughly $300 monthly on groceries, apparel, and paper products, combined with annual expenses on various other categories, could yield a significant cashback reward, based on the company’s calculator.
It's not just monetary rewards that make Costco memberships desirable. Members also enjoy everyday deals on popular items like the legendary $1.50 hot dog and drink combo—an offering that has delightfully retained its price tag since 1985.
Vachris, who became Costco's CEO on January 1, 2024, brings decades of experience to the table. His journey began at merely 17 years old as a forklift driver for Price Club, a company that eventually merged with Costco. Over the years, he ascended through various key roles within the organization. Before becoming CEO, he served as Costco’s president and chief operating officer from February 2022, succeeding Craig Jelinek.
Costco's latest annual report paints a picture of thriving membership growth, showing a near 128 million members with a remarkable 90% renewal rate. Last year, membership fees surged by 8%, reaching a total of $4.6 billion in revenue. It’s no wonder Vachris emphasizes the value of the membership card—it’s the ultimate key to unlocking Costco’s treasure chest of deals.
