Costco makes major investment to fix member problem

Certain retailers make it pretty obvious that they value their customers. Trader Joe’s, for example, makes customer care a priority, as evidenced by its extremely friendly workforce.

Costco, too, cares a lot about its customers. And there’s a reason for that.

Costco gets a large chunk of its revenue from membership fees. Those fees currently stand at $65 a year for a basic Gold Star membership and $130 per year for an Executive membership.

But Costco is well aware that consumers have choices when it comes to where they shop. And if they decide they’re not getting great value out of those fees, they’re going to stop paying them.

That’s why Costco, like Trader Joe’s, goes out of its way to offer outstanding customer service. And that’s reflected in everything from its quality control to its low prices to its more than reasonable return policy.

Crowded Costco warehouses are a sore spot for members

Costco is, not surprisingly, a popular store. But while that’s good for Costco, that’s not always good for members.

One major gripe members tend to have is that the store gets overly crowded. This is an especially big problem on weekends, when in some locations, you might have to wait 10 or 15 minutes just to get a spot in the parking lot.

Then, once you’re actually inside the store, you have to battle crowds to fill your cart with the essentials you came for and wait in endlessly long lines just to pay.

And forget about snagging free samples on a Saturday or Sunday. Those are usually scooped up the second they hit the tray.

Of course, you could try to do your Costco shopping at a less popular time. But if you work during the week, it’s hard to shop during off peak hours.

Costco promises to address key member gripe

Costco recognizes that crowded warehouse club stores lend to an unpleasant shopping experience. And if members get too fed up, they’re going to cancel. That’s why the company’s management team is taking steps to address the problem.

During Costco’s most recent earnings call, CEO Ron Vachris said that improving the member experience at high-volume warehouse club stores was “a strategic priority for all of us.” And to that end, Costco has a plan.

First, Vachris said, Costco plans to strategically open new warehouse club stores near some of its most popular locations to try to draw some traffic away from those hotspots.

Vachris said the company would also look at extended warehouse club hours as a way to ease crowds and make the shopping experience more convenient.

Costco already expanded gasoline hours earlier this year — a move Vachris called “successful.” Extending regular hours isn’t such a big stretch.

Vachris also said that the company is experimenting with different technology that could get customers in and out the door more quickly, including the use of “scan and go” technology to avoid long checkout lines.

“We’re working through some of these different systems to speed up the front end experience and get that moving, flowing quickly” he explained.

All told, Vachris said, “We are very mindful of the high-volume warehouses we have, and we’re strategically working on many different fronts.”

With some meaningful tweaks, Costco can alleviate some of the stress and hassle of shopping at its busiest locations. And at a time when consumers are spending their money more carefully, you can bet that the company will do as much as it takes to retain members rather than risk losing them.

Maurie Backman owns shares of Costco.