Costco has built a loyal customer base by doing a lot of things right.
It’s not a secret that Costco excels in the area of pricing. Its bulk discounts are some of the best in all of retail. And at a time when grocery prices are up 2.4% on an annual basis, according to the most recent Consumer Price Index, that’s key.
Costco’s food court is another big hit with members. It’s hard to match some of the deals you’ll find there, from the $1.50 hot dog and soda combo to the giant pizza you can pre-order for just $9.95.
But there’s one part of the experience that has long tested shoppers’ patience — checkout.
Anyone who regularly shops at Costco knows the routine. You fill a cart (often a large one) and then brace yourself for a long, slow-moving line.
Unlike traditional grocery stores with dozens of registers or competitors that have shifted heavily into mobile scanning (ahem, Sam’s Club), Costco has historically relied on a more manual checkout process.
But when you’ve spent the past hour roaming a warehouse club store trying to load up on groceries and supplies, the last thing you want is another bottleneck.
As one Reddit user put it, “Costco absolutely is a nightmare to check out.”
Thankfully, though, the company is taking steps to change that.
Costco takes major step to address checkout woes
Costco is testing a new system designed to dramatically speed up checkout. And early results suggest it could be a game-changer.
Costco is piloting automated pay stations that can complete transactions in under 10 seconds, the New York Post reported. The key innovation is what happens before customers even reach the register.
Instead of unloading items onto a conveyor belt, employees scan products while shoppers wait in line. By the time a member reaches the front, everything is already logged in the system, which means they only need to scan their membership card and pay.
Related: Dollar Tree CEO shares upbeat pricing news
Costco CEO Ron Vachris highlighted the focus on checkout during the company’s most recent earnings call.
“In the warehouses, we are achieving meaningful improvements in the speed of checkout and employee productivity, both as a result of our mobile wallet enhancements, pharmacy pay ahead, and the rollout of employee pre-scan technology,” he said.
“We are also piloting automated pay stations that will allow members to pay for their pre-scan orders seamlessly with an average transaction time of around eight seconds,” Vachris added. “Early results show this is improving the flow of traffic, and we have received great member feedback.”
Shutterstock
Costco is making a key investment that could pay off
Costco’s push to improve checkout isn’t just about convenience. Rather, it’s a strategic investment in the company’s core business model.
Unlike many retailers, Costco makes a significant portion of its profits from membership fees rather than merchandise markups. That means keeping members happy is crucial.
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
- Lululemon struggles to reverse concerning customer behavior
- T-Mobile launches free offer for customers after major loss
During its most recent earnings call, Costco reported $1.36 billion in membership fee income. It also boasted renewal rates of 92.1% in both the U.S. and Canada.
Fixing checkout may seem like a small operational tweak, but it addresses one of the most visible friction points in members’ shopping experience. A faster exit can meaningfully improve how customers feel about their visit – and whether they want to come back.
The change could also improve Costco’s bottom line in ways unrelated to member retention. Faster checkout could also lead to more sales during peak hours. And if members get out the door quicker, they may be more apt to make a pit stop at the food court. The result? Added revenue.
For a company that famously sticks to what works, investing in new checkout technology shows a recognition that even a highly successful model can benefit from tweaks.
And if Costco can finally solve its checkout problem, it may remove the last major frustration standing between a good shopping trip and a great one.
Maurie Backman owns shares of Costco.
Related: Costco sees shift in member behavior
#Costco #tests #checkout #seconds