Bold claim: Costco is quietly redefining how retail theft is handled, insisting its two-pronged approach is both highly effective and deeply controversial. And this is exactly where the discussion gets interesting...
Costco has reaffirmed that it will continue with its two main strategies to deter shoplifters, a move that contrasts with ongoing challenges faced by rivals like Walmart and Target. Reports from The Street and other outlets highlight that theft remains a significant concern for major U.S. retailers, with some estimates suggesting billions in annual losses for Walmart alone. Against this backdrop, Costco asserts that shrinkage is kept far lower than industry norms due to its security practices.
What are these practices? First, Costco now requires members to demonstrate their membership at the entrances, typically by scanning a membership card (physical or digital) and sometimes presenting a government ID. Second, the company emphasizes exit receipt checks to verify that everything scanned at checkout aligns with what customers leave with. Costco frames these measures as essential for inventory control and accurate billing.
How does the system work in practice?
- Primary membership: Only the cardholder can use the membership for purchases; sharing the card is discouraged, as the card’s photo should match the person using it.
- Household cards: A primary member can add one free household cardholder living at the same address, who then receives their own card and can shop independently.
- Guests: Members may bring up to two guests per visit, but only the member can complete purchases, with guests accompanying them.
- Authorized cards: For a fee, an additional cardholder (not living at the same address) can shop independently with their own card.
Beyond the cards, Costco offers various member benefits—such as travel, cleaning, and vision services—that help justify the membership fee and generate revenue beyond product sales.
The reception to these measures has been mixed. Critics argue that entrance checks and exit receipts create bottlenecks and can lead to customer frustration, including reports of employee stress or confrontations in some cases. Proponents say fewer entrance points reduce blind spots and, along with receipt checks, make theft more difficult. Costco itself cites a shrinkage rate of roughly 0.1–0.2% in its latest annual report, noting that this is well below typical retail levels.
Costco’s expansion continues, adding new locations in the U.S. and Canada, while keeping its operating model lean: low prices, a limited product assortment, and high sales velocity powered by members who rely on value rather than a broad catalog.
Why this matters beyond Costco: Many other major retailers have responded to theft by increasing product security and cabinet-locking, which can hamper the shopper experience. In the broader market, U.S. retailers reportedly faced substantial losses from shoplifting in 2025, prompting debates about which security measures strike the right balance between deterrence, efficiency, and customer relations.
Thought-provoking questions for readers: Do you think membership-based entry and exit checks are fair and effective, or do they create undue friction for ordinary shoppers? Should retailers prioritize speed and convenience over strict verification, or is stronger verification essential in today’s retail environment? Share your views below.
