Costco heavily pushing Executive Memberships in store?

[Super S]

I wonder if there is a good way to quantify how much they are losing with "shared memberships" at self checkout. They should do some tests on that. Basically require verification of photo on the card at a location or two's self checkouts for an entire day and see how much membership sharing takes place and also pay attention to how many carts get abandoned when the customer notices someone is checking the photo on the card because I think those abandons could safely be assumed as membership share attempts. This type of monitoring would measure just how often this happens. Is it happening 5 times a day out of 1,000+ transactions (I have to assume there was membership sharing happening at full service lanes before too; the photos on the cards are awful and if Bob Smith in his 50's with grayish hair balding gives his card to Ed Jones who looks rather similar and comes in and pays cash at a cashier nobody is going to detect that either...) or is it happening 50 times in a day with very pervasive attempts like a female customer shopping alone trying to use Bob Smith's card... or people scanning pictures of other people's cards and not even having a card...

Costco is probably not looking at cards as closely as in the past. During Covid, they changed to a policy where they scan the card with the scan gun from a distance. To this day they are enforcing that and I have been told by cashiers that they are still not allowed to physically touch the cards. Costco's card pictures are terrible and look like a bad convict mugshot in their best form. In theory, somebody could get away with using someone else's card in self checkout if they (computer or manager) aren't monitoring cameras and somebody is paying cash. And then you have the fact that membership is not required with a gift card.

[BillyGr]

For some TVs it was extending the warranty up to 7 years at no extra cost, a tremendous bargain when you see shady practices at other electronics stores that want more than 1/3rd of the price of the TV for a couple of extra years (and now some of those extended warranty plans come with deductibles and have a cap on claims! They're definitely not a... best buy... If you purchase one of these new low end plans from certain unnamed unscrupulous retailers). But how often does the customer need a new TV or refrigerator?

Hmm, the "unnamed" retailer may not be quite as unnamed as it was supposed to be?

[ClownLoach]

Did want to mention the shock effect of $7/gallon gas in California and what it is doing to Costco. I visited three Costco stores yesterday and saw the first broken store I've ever seen at Costco, along with two others desperately struggling. One store, Irvine, was literally boxed in and overflowing with pallets of freight staged down all refrigerated valleys, and even stacked on the sales floor all over. I saw that they have pallets of paper products and other stuff that can sit outside stacked in a mountain outside visible from I-5. They had every senior manager working and they were trying to figure out where to put all the freight. Every single pallet rack bay was completely full to the rafters. Clearly the issue is that they have experienced a sudden and drastic drop in sales - the store was not busy at all - and the ordering of merchandise did not drop off quickly enough so this smaller warehouse was completely inundated with freight with nowhere to go. There were literally hundreds of pallets awaiting homes.

I went to Yorba Linda later that day and saw similar, but not quite as bad, and they were busy. This is a much more upscale area not quite as impacted by the near $7 gas. Later that evening I went to the Cypress location, a much larger warehouse than the previous two mentioned, and they were also inundated with freight but were being more careful in how they were hiding it (such as pulling all the pallets of chips out into the aisle and hiding unsold outside heaters behind them in the same bay). This was prime time and I've never seen the parking lot in Cypress so empty - no waiting at all for self checkout as literally nobody was using it when last time I visited that store there was a long queue that nearly reached the pharmacy.

Clearly all three stores took a sudden and drastic reduction in sales and the gas price shock being up nearly $2 in two weeks has had a nasty impact on the market. I'll see what I find today at Lowe's, Target and Sam's.

[SamSpade]

Off Topic

Luckily, according to GasBuddy's analyst

Spot prices are what influence retail prices... what happens today in the spot market dictates where retail prices go in the days ahead.

OHHHH MY!!! California spot gasoline prices absolutely collapsing, down nearly $1/gal... hold off on filling up in California, #gasprice relief IS COMING.

Good news, Cali! The worst appears to be over for California... price differentials are plunging, with #gasoline values down some 45c/gal. This will take a few days for stations to start getting the cheaper fuel, but lower #gasprices are coming!

[storewanderer]

Off Topic

Luckily, according to GasBuddy's analyst

Spot prices are what influence retail prices... what happens today in the spot market dictates where retail prices go in the days ahead.

OHHHH MY!!! California spot gasoline prices absolutely collapsing, down nearly $1/gal... hold off on filling up in California, #gasprice relief IS COMING.

Good news, Cali! The worst appears to be over for California... price differentials are plunging, with #gasoline values down some 45c/gal. This will take a few days for stations to start getting the cheaper fuel, but lower #gasprices are coming!

Yet, here in Reno today, our good friends at Maverik went up another .06 to 5.95 at all locations. Various others will follow them up. Many others price off of Maverik. They seem to have later in the day moved one site up to 5.99 and one site down to 5.89.

[HCal]

Did want to mention the shock effect of $7/gallon gas in California and what it is doing to Costco. I visited three Costco stores yesterday and saw the first broken store I've ever seen at Costco, along with two others desperately struggling. One store, Irvine, was literally boxed in and overflowing with pallets of freight staged down all refrigerated valleys, and even stacked on the sales floor all over. I saw that they have pallets of paper products and other stuff that can sit outside stacked in a mountain outside visible from I-5. They had every senior manager working and they were trying to figure out where to put all the freight. Every single pallet rack bay was completely full to the rafters. Clearly the issue is that they have experienced a sudden and drastic drop in sales - the store was not busy at all - and the ordering of merchandise did not drop off quickly enough so this smaller warehouse was completely inundated with freight with nowhere to go. There were literally hundreds of pallets awaiting homes.

I went to Yorba Linda later that day and saw similar, but not quite as bad, and they were busy. This is a much more upscale area not quite as impacted by the near $7 gas. Later that evening I went to the Cypress location, a much larger warehouse than the previous two mentioned, and they were also inundated with freight but were being more careful in how they were hiding it (such as pulling all the pallets of chips out into the aisle and hiding unsold outside heaters behind them in the same bay). This was prime time and I've never seen the parking lot in Cypress so empty - no waiting at all for self checkout as literally nobody was using it when last time I visited that store there was a long queue that nearly reached the pharmacy.

Clearly all three stores took a sudden and drastic reduction in sales and the gas price shock being up nearly $2 in two weeks has had a nasty impact on the market. I'll see what I find today at Lowe's, Target and Sam's.

How do you know they had a drop in sales? It could easily be an ordering error, or excess inventory that the distribution center needed to get rid off. Even if it was a drop in sales, it may not be due to gas prices. Costco sells a lot of essentials (like food and consumables) that people still have to buy and can't really cut back on, so I wouldn't expect an economic downturn to impact Costco as much as a clothing or electronics store where purchases are more discretionary.


But in any case, California's "inflation relief" checks are going to start rolling in soon, so maybe that will boost sales.

[storewanderer]

How do you know they had a drop in sales? It could easily be an ordering error, or excess inventory that the distribution center needed to get rid off. Even if it was a drop in sales, it may not be due to gas prices. Costco sells a lot of essentials (like food and consumables) that people still have to buy and can't really cut back on, so I wouldn't expect an economic downturn to impact Costco as much as a clothing or electronics store where purchases are more discretionary.


But in any case, California's "inflation relief" checks are going to start rolling in soon, so maybe that will boost sales.

That isn't how Costco typically works; Costco ships items to the warehouses in a manner to get the items in and out quickly. They do not hold backstock for long. There is not much space for them to store a ton of excess inventory at the warehouses (beyond the top shelves) and when you look at the top shelves it is the very very fast moving items stored up there, not random stuff. Though Costco did do an expansion on the Reno location a number of years ago that allowed for a very small "back room" of sorts (it is just a blocked off aisle) and sometimes that space is opened up for customers to shop from. I notice when that space is used for storage it is usually cases of water, pet food bags, and paper products. All those super high velocity type of items that they sell through pallets of each day.

Reno got its gas price spikes starting 2-3 weeks ago so we are sort of already going through this shock price hike. Stores were very slow at the end of September. On 10/01 I went to various general merchandise type stores and traffic was much less than usual but the Wal Marts were very busy (and look part way through a store closing sale with all the empty shelves and pallets everywhere).

I was in Reno Sam's Club twice in the past week, the first visit gas was 5.25 and I've never seen such a line up of cars at Sam's gas before (nearby 7-Eleven at 5.59 for comparison that day, 5.99 today; nearby Chevron is the 6.89 station and nearby Shell is the 6.78 station). The next visit gas was at 5.39 and despite it being mid day the station was almost deserted. Now their gas is at 5.59. The store had traffic but it was almost all groceries in the carts and the carts were not overly full. Even less full than usual at Sam's.

I think these club stores lost a load of money trying to sell gas at or below cost back in July/August in an effort to keep customers coming to the lot in hopes they'd enter the club to make purchases. Now at least out west with the current sudden price spike they are not doing that again and fewer customers are going out of their way to buy gas from them.

The "inflation relief checks" about to be issued in CA may well be why the gas is going up so much. When you pay people for something like this and throw money around, demand tends to go up and of course this oil group will spike prices for any reason. I took a look at my receipts from Colorado back in early September and priced out those gas stations today and their gas prices today are the same or within .05 as they were in early September at almost every one of those stations (lowest I paid was 3.19 and it was a Shell at that; highest I paid was 3.79 in an area outside Denver that had higher prices in general). I've also been looking at the station locator at www.maverik.com as its map shows each location as a pin of the current regular unleaded gas price and I have had my eyes on a station out west of Stansbury Park, UT which priced fuel at 3.85 for the past 4-5 weeks, then briefly went to 4.09 yesterday, and is back down again today below 4. So this spike is seriously only happening in parts of NV (the parts served from CA refineries), OR, and WA for some reason. Something is rotten.

[veteran+]

"When you pay people for something like this and throw money around, demand tends to go up and of course this oil group will spike prices for any reason."

What does that mean?

[ClownLoach]

How do you know they had a drop in sales? It could easily be an ordering error, or excess inventory that the distribution center needed to get rid off. Even if it was a drop in sales, it may not be due to gas prices. Costco sells a lot of essentials (like food and consumables) that people still have to buy and can't really cut back on, so I wouldn't expect an economic downturn to impact Costco as much as a clothing or electronics store where purchases are more discretionary.


But in any case, California's "inflation relief" checks are going to start rolling in soon, so maybe that will boost sales.

That isn't how Costco typically works; Costco ships items to the warehouses in a manner to get the items in and out quickly. They do not hold backstock for long. There is not much space for them to store a ton of excess inventory at the warehouses (beyond the top shelves) and when you look at the top shelves it is the very very fast moving items stored up there, not random stuff. Though Costco did do an expansion on the Reno location a number of years ago that allowed for a very small "back room" of sorts (it is just a blocked off aisle) and sometimes that space is opened up for customers to shop from. I notice when that space is used for storage it is usually cases of water, pet food bags, and paper products. All those super high velocity type of items that they sell through pallets of each day.

What all these stores had in common was that there were not high velocity items staged in the freezer valley/back endcaps etc. but a complete general variety of goods. All overstock of goods from every department. The high velocity items like the toilet paper and paper towels and water are literally stacked as high as a forklift can physically stack them in the back parking lot. The stores are literally broken with freight because they quite simply have more pallets coming in than going out. They are very, very, very slow. Cashiers standing for minutes at a time waiting for a single customer. Totally dead at rush hour. It was a rather shocking comparison.

[storewanderer]

"When you pay people for something like this and throw money around, demand tends to go up and of course this oil group will spike prices for any reason."

What does that mean?

It means when you throw free money at people, causing demand for items in this case oil, to rise, the producers of said product just increase their prices.

Yes gas is 6.59 in CA now but everyone quit complaining because the state just sent out relief checks for hundreds of dollars to many people. Remember gas at 6.59 vs. gas at 4.59 is really only costing you an extra $60 or so a month assuming you consume 1 gallon of gas per day.

So in CA's eyes they've more than made their citizens whole with these relief checks. The folks in Utah paying 4.59 for gas didn't get any relief check.