Costco rarely makes moves that anger its members because the company makes changes very slowly. If it’s going to change part of the in-store experience, it will test it in a few stores to gauge customer reaction.
For example, when the chain recently tried to use self-checkout in some locations, it learned pretty quickly that members did not want that. That made it easy for the company to mostly back off those efforts before any real damage was done.
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Sometimes, however, something members may not like actually allows the warehouse club to make other changes that they will. That’s a challenging dance because while Costco (COST) has a history of being honest with its members, many retailers do not.
The public is rightly skeptical when any company tells it that it is changing policies or adopting new practices. Usually, that’s code for “we’re taking something away while telling you we’re giving you something better.”
Costco has met with some customer skepticism over new technology it has been testing that will scan membership cards before people enter its warehouses. That’s a change in policy as those checks were generally done at checkout.
In theory, that allowed non-members to browse its stores and eat at its food court. The chain has expressly changed its food court policy so only members can buy items there and it’s making an effort to keep non-members from ever entering.
That’s not something all members are happy about, but there’s a hidden benefit to the change, according to CEO Ron Vachris.
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Costco’s checkout clerks check your membership in most cases right now.
Image source: Tim Boyle/Getty Images
Costco change has a secondary benefit
Vachris, who took over as CEO in January, spoke about his company’s growing embrace of technology during its third-quarter earnings call.
“We continue to look at technology. You know, we’re testing some front-door scanners that are going to start speeding up our registers significantly,” he shared.
Checking membership credentials this way has a benefit that many members may not consider.
“When we get all the scanning and memberships are verified at the front door, it has shown a significant improvement in our register speed. And so, that, in turn, turns over parking spaces much quicker,” he added.
Needing fewer parking spaces could allow Costco to do something else members will appreciate.
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“And so, those kind of things, along with, you know, strategic infills to help open up parking opportunities and gas expansions where those are needed as well. So, there are several different levers that we’ll continue to pull on how we can, you know, best serve the member in that building and where we need to make sure that we can look at throughput,” he shared.
Costco’s gas stations are very popular and, in some locations, they back up into the parking lot, causing gridlock. Expanding the gas stations could help limit those issues.
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Costco embraces (some) technology
Vachris talked a lot about the warehouse club’s increased use of technology during the call.
“We’re rolling out an expanded buy-online, pickup-in-warehouse. That is always going to be limited in scope based on the volume in our warehouses that we have,” he said. “We can’t expand to all categories, but we’re expanding as we currently speak in televisions and other electronic items that are there.
For Vachris, it’s a question of using technology to build on Costco’s relationship with members.
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“We see that as a real opportunity for us. Technology is going to be one of our key priorities moving forward. How do we improve that member engagement and the relationship we have with them in our brick-and-mortar warehouses, as well as online, and through other aspects such as travel and so forth,” he added.
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