Costco’s New Membership Card Readers Streamline Store Access, Inventory Management

As part of its strategy to enhance customer experience and operational efficiency, Costco is rolling out membership card scanners at the front of its stores.

This initiative, already piloted in several locations, requires all members to scan their physical or digital membership cards — or QR codes — before entering the warehouse. The move aims to streamline the verification process, removing the friction of checking cards at the register and allowing store employees to focus on customer service rather than membership verification.

When the company announced its fourth-quarter and full-year results on Thursday (Sept. 26), Costco CEO Ron Vachris discussed the benefits of this new system, noting it provides real-time traffic insights throughout the day and improves inventory management. Early feedback has been overwhelmingly positive from both members and staff, leading to increased membership sign-ups.

“We’ve been using the card readers for two years in Europe and piloted them here in the past six months,” Vachris said. “It gives our operators real-time traffic counts throughout the day and helps them monitor our fresh foods better. It takes the friction of membership verification away from the front-end registers and moves that to the front door. They’ve allowed our managers to manage the businesses much better throughout the day.”

Vachris said Costco has rolled out the tech at about 350 U.S. stores.

“The reaction has been very positive,” he added. “We’ve seen some lift in signups from that, as well as improved productivity and improved interaction. Members know about renewals before they get to checkout.”

In the fourth quarter, Costco net sales reached $78.2 billion, reflecting a 1% increase from the previous year. eCommerce sales rose 18.9%, highlighting the growing trend of online shopping among its members. Total net sales for the fiscal year rose 5%, to $249.6 billion. Overall comparable sales increased 5.4% with U.S. sales up 5.3%, Canada 5.5% and other international locations 5.7%.

Costco, which recently raised its membership fees for the first time since 2017, reported a 7.4% increase in membership income, totaling $1.512 billion, with a renewal rate of 90.5% worldwide.

In line with its digital strategy, Costco is enhancing not only its membership card readers but also its mobile app to improve user experience. Recent upgrades have cut app loading times from eight seconds to under two, Vachris said, addressing consumer demands for speed and driving increased online traffic as the app now represents a substantial share of eCommerce sales.

Chief Financial Officer Gary Millerchip remarked on the importance of balancing membership fee increases with value offerings, ensuring that the retailer continues to invest in lowering prices and improving employee wages.

“We continue to invest in members and lower prices for our members and invest in our employees to support top-line growth in the company,” he said. “It’s very clear that quality and value have never been more important to our members. The encouraging thing for us, as we have seen inflation has dissipated, is members have started to spend more on non-food items.”

Costco has 891 warehouses globally and plans for continued expansion, including 30 new openings slated for fiscal 2025.