Costco’s business model is markedly different from that of most retailers.
Any consumer can walk in the door at Walmart, Target or a traditional supermarket without having to flash or scan a membership ID card at the door.
But at Costco, only members can access the stores. And while nonmembers can shop online, extra charges apply to their purchases.
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The reason Costco requires customers to buy memberships is simple: It uses membership-fee revenue to offset other costs. By doing so the warehouse-club giant is able to offer the remarkably low prices it’s known for.
The fact that Costco makes so much money from membership fees also enables it to offer superior customer service.
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Ever notice that you can take back just about anything to Costco without a hassle? That’s because Costco doesn’t need to nickel-and-dime its customers – not when it’s raking in billions of dollars a year in membership fees alone.
But while it makes sense for a frequent Costco shopper to buy a membership, occasional shoppers might not love the idea of shelling out money for Costco access – especially not at a time when inflation is rampant and money is tight.
Plus, in September Costco raised its membership fees for the first time in more than seven years. The 8.3% hike brought the basic Gold Star membership to $65 a year from $60 and the Executive membership, which comes with 2% cash back at year-end, now costs $130, up from $120.
Customers do have a way to shop at Costco in person without a membership card. But it may require some finagling.
There’s a way to shop at Costco without buying a membership.
How to shop at Costco without a membership
Costco’s guest policy is more than reasonable. All members are allowed to bring children in their household, as well as up to two adult guests, to the store with them.
Now, the guests cannot make purchases on their own at the store register; only members.
But there’s a little-known exception to that rule.
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Anyone with access to a Costco Shop Card, the store’s version of a gift card, can both enter a store without a membership card and make purchases.
So if you don’t want to pay for an annual Costco membership but you also don’t want to have to tag along with a friend or neighbor just to get in the door, a Costco Shop Card may be the solution.
There is a catch, though.
While anyone can use a Costco Shop Card, only members can purchase a Costco Shop Card.
So if you’re not a member, you’ll need to arrange for a member to buy a Costco Shop Card for you if you want to be able to shop alone without paying the $65 or $130 annual fee.
Once you have a Costco Shop Card, you not only get full access to the store, you can also fill up your car at a Costco gas station, where members get discounted prices on high-quality fuel.
Don’t write off the idea of a Costco membership
The nice thing about Costco Shop Cards is that you can use one card repeatedly across multiple visits as long as your card still has a balance, since Shop Cards don’t expire.
If you’re making a purchase that exceeds your Shop Card’s value, you’re still fine – you can just pay the difference using a method Costco accepts.
But Shop Card balances can be reloaded only in person by a member.
Most stores don’t have a cover charge, so to speak, to walk in the door. And it’s easy to see why some consumers just can’t get on board with the idea of paying money to spend money at Costco.
But rather than write off the idea of a membership, it’s important to understand the benefits that come with it.
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In addition to competitive prices on everything from groceries to health-care items to apparel, a Costco membership gives you access to a budget-friendly food court, an optical center, a tire center, home installation services, and travel packages. And that’s just a smattering.
Of course, if you figure to shop at Costco only once or twice a year, then it might pay to tag along as a guest or have a member buy you a Shop Card for solo access.
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But if you plan to shop at the store even somewhat regularly, you may want to sign up given the minimal financial risk.
Because Costco is so committed to customer service, it stands behind its memberships. And it will refund yours if you decide it’s not working for you.
Maurie Backman owns shares of Costco.
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