There are many extra steps Costco takes in order to retain members — and understandably so.
The company reported that during its most recent quarter, it took in $1.37 billion in membership fee income. Costco also boasted a 92.2% membership renewal rate across its U.S. and Canadian markets.
On top of offering amazingly low prices on bulk grocery items and household staples, Costco is constantly finding ways to add valuable new services. You can get new tires at Costco, schedule HVAC installation, and plan your next vacation.
Costco has also invested heavily in its Kirkland Signature brand as a means of member retention.
Shoppers have come to rely on Kirkland for quality products at a lower price point than national brands.
Costco sometimes faces hard choices
Costco members don’t tend to have too many complaints. But some feel that the store’s operating hours aren’t as generous as they could be.
Granted, Costco recently added an extra shopping hour on Saturdays for all members.
The company also brought back early shopping hours for Executive members, who pay twice as much as regular members for warehouse access.
Still, weekend hours at Costco tend to be limited. And Costco also sometimes needs to make the tough choice to close its doors on certain holidays for the sake of its employees.
Costco won’t open on Labor Day
Costco doesn’t close that often. And there are certain holidays where the company remains open so that members can access the products they need.
But Costco will not be open this year for Labor Day, which falls on Monday, Sept. 7.
The logic is that Costco feels its employees deserve certain holidays off to be with family and get a break.
The good news for members is that Costco only closes seven times a year. The other closure dates are:
- New Year’s Day
- Easter
- Memorial Day
- Independence Day
- Thanksgiving Day
- Christmas Day
- Source: Costco
Of course, not every major retailer and grocer is closed on Labor Day. Costco knows this, but it’s still willing to give up revenue seven days a year.
The reality is that Costco is in a strong place financially. So the company can afford to see shoppers go elsewhere once in a while.
As CEO Ron Vachris said during Costco’s most recent earnings call, “All three four-week fiscal periods of the quarter set successive all-time company volume sales records, with the final five weeks of the quarter becoming our top five volume weeks ever.”
More Retail:
- Costco sees major shift in member behavior
- Retail chain shuts all locations as legal changes hit industry
- Costco makes major investment in online shopping for members
In other words, Costco isn’t a company that’s hurting for business. And closing up shop for major holidays to throw employees a bone is a strategic decision that generally works out well in the long run.
If employees at Costco are happy, they’re less likely to leave. Less turnover equals a better shopping experience for members, making those annual fees more worthwhile and making renewals more likely.
Maurie Backman owns shares of Costco.
