Costco's introduction of membership card scanners in front of its U.S. stores is still being rolled out, but the move is already a big win for the wholesale club.
Morgan Stanley analysts said in a note this week that Costco warehouses have seen low-double-digit increases in membership since implementing the scanners, and high conversion rates among previously non-paying customers are helping the retailer. He suggested that it could lead to a “Netflix Moment.'' ”
The report, led by Simeon Gutman, acknowledges that Costco and Netflix have two very different business models, but says a new tool to check warehouse club membership numbers will help the streaming giant. suggested that this could lead to an increase in paying customers, similar to what Netflix saw after the crackdown. Password sharing.
Since restricting password sharing last year, Netflix is experiencing significant rapid growth With a new account.
In the first quarter of 2024 alone, the streaming company added 9.3 million signups. This is a 5x increase compared to the same quarter in 2023.
“Our base case suggests that Costco can gain an additional 4 million members through conversion of free customers in North America,” Morgan Stanley analysts said.
During Costco's fourth-quarter earnings call last month, CEO Ron Vacris said the company has been using card readers in storefronts in Europe for more than two years, and in the U.S. for about six months. He said the system is being piloted.
He pointed to several ways the scanners can help improve operational efficiency at Costco stores.
“This allows operators to see real-time traffic numbers throughout the day, so they can make adjustments to the front-end lines needed to open or close lines based on business fluctuations,” Vacris said. I explained.
“We can now monitor fresh produce a little better because we can see what the traffic numbers and things like are like,” he said. “We've also taken the hassle of membership verification out of the front-end register and moved it to the register. At the front door, we can check people's membership status.”
The Costco chief added that the scanners also let customers know if their membership is due for renewal before they arrive at the store's front end. membership card scanner The system, installed at the front entrance, achieved its goal of speeding up the checkout process.
“It has been very well received by our members.”
