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Costco (NASDAQ:COST) stock has been on the rise lately as everyone’s favorite wholesaler trials a new way to keep non-members out of its stores. Indeed, Costco is currently testing card scanners at some of its stores as a means to insure only members make their way through its trusty gates.
What does this mean for the warehouse retailer?
Well, as it stands, only a few Costco locations are putting the new security measures into action. This includes a Costco store in Issaquah, Washington, where the company is headquartered.
While this isn’t the first time Costco has attempted to crack down on free riders (if you recall, the store has previously required customers to flash their membership cards both at entry and at checkout), this marks easily the most formal security method the company has used.
This change comes as a product of expanded self-checkout, with Costco apparently noticing a rise in non-members shopping at its stores. Last summer, the company announced that it would be asking for both membership cards and photo IDs at self-checkout.
“We don’t feel it’s right that nonmembers receive the same benefits and pricing as our members,” Costco said in a statement.
COST Stock Climbs on Membership Card Scanners
According to one GeekWire tester, when a member’s card is scanned, the tablet held by the employee then shows the member’s image and verifies that they are an active member.
While the new security measures may seem bothersome at first, according to Costco, the move could actually save time. That’s because shoppers will no longer need to show their membership cards when checking out.
“It speeds up the process at entry and speeds up the process at the checkout,” Costco Chief Financial Officer Richard Galanti told CNN. “That’s what we believe and we’re going to pilot it.”
It appears investors are tentatively pleased with this new verification pilot. Indeed, Costco has been on the rise both this year and in general. Year-to-date, the company is up almost 7%. The stock has also surged about 45% since January 2023.
Reasonably so, Costco boasts one of the highest membership renewal rates in the business, with 93% of members keeping their annual subscription to the chain, per its 2022 report. In 2023, the company earned $4.6 billion in membership fees from its roughly 128 million members.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.