Dive Brief:
- Costco is piloting scan-and-go technology to expedite transactions and lower checkout wait times, CEO Ron Vachris said on a Q3 2025 earnings call last week.
- The scan-and-go pilot is part of the retailer's broader efforts to improve the in-store experience, reduce crowding and turn over parking faster.
- Scan-and-go tests have been “extremely successful,” Vachris said. “Our operations team is really focused on the front-end, and we know there's many benefits to that part of the Costco experience of moving people through much better.”
Dive Insight:
Costco faces a problem not many retailers are lucky enough to have: High-volume warehouses threaten to deplete the member experience, as customers face overcrowded parking lots, busy stores and long checkout lines.
The retailer hopes new warehouses will help spread out where its customers shop. It opened 9 warehouses in the quarter and plans to open 27, including three relocations, by the end of the year.
“As we speak about the fourth quarter openings, about 80% of those warehouses we're opening are going to cannibalize some high-volume locations for us,” Vachris said.
By pulling away some members to shop at another Costco location, Costco hopes to improve the member experience.
Despite tariff concerns, Costco beat expectations in the third quarter. Net sales increased 8% year over year to nearly $62 billion, while U.S. comparable sales increased 6.6% year over year, according to an earnings report. Traffic continued to rise during the quarter, increasing 5.2% year over year worldwide and 5.5% year over year in the U.S.
The retailer is investing in digital and technology for future growth. In May, Costco partnered with Affirm to offer members the ability to spread out purchases over multiple payments through its buy now, pay later offering. While still early days, executives are pleased with the initial sales results.
“We believe it's an opportunity for us to be able to deliver more value for the member by having exclusive pricing there while also giving them more options in the way in which they can buy the product,” CFO Gary Millerchip said.
Costco also launched a personalized product recommendation hub for members that showcases items based on recent browsing history, relevant items and best-selling products in their geographical area.
These investments are paying off in digital growth. More than half of Costco members have downloaded the app, and digital sales, excluding gas, account for around 12% of total sales, according to Millerchip. Costco also increased its share of big and bulky items sold online, driven by investments in Costco Logistics, which will install new items and haul away old items.
However, membership renewal rates dipped in the third quarter. U.S. and Canada had a 92.7% renewal rate and Costco reported a 90.2% worldwide renewal.
“Higher penetration of online sign-ups entering the renewal rate calculation also contributed to the lower renewal rate,” Millerchip said. “These new digital memberships are a net positive as they grow the overall membership base and are generally younger members, but they also renew at a slightly lower rate.”
