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Costco hikes membership fees for first time in 7 years
Costco's long-anticipated membership fee hike has finally come into effect.
As of September 1, the warehouse-based retailer's standard membership has risen by $5 a year, taking it from $60 to $65.
The Executive level - which offers a 2 percent rebate on all Costco purchases made that year up to a total of $750 - will increase by $10 to $130 a year.
The changes, which affect members in the US and Canada, represent the first increase in fees since June 2017.
Costco said the rise will hit 52 million memberships, around half of which are the top level.
Costco has charged between $60 and $120 a year for membership since June 2017
Costco membership allows customers to shop for discounted groceries and electronics in store.
It also gives access to services such as hearing tests and home insurance.
Many Costco fans had been expecting a rise in rates - since the retailer normally increases fees every six years or sooner.
Costco's stock, which is up more than 37 percent this year, has been rewarded by investors who have been keen for membership price hikes.
In the three months ending February 18, Costco generated $1.11 billion in membership fees - almost 2 percent of its total revenue for the quarter.
It means Costco nets around $4 billion-plus a year from the fees - a figure that will likely go up with the increase.
Until this latest rise, there had been seven membership fee hikes since Costco's founding in 1983 - each time by $5 for the standard membership. On average they took place once every five years or so.
The longest period over which the annual membership fee has remained unchanged was between 1983 and 1992.
Its $25 annual fee in 1983 would be about $78 today, according to US Bureau of Labor Statistics inflation data.
After 1992, the periods between rises were around two and three years. However, after 2006 they have been between five and six years.
Richard Galanti - who had been CFO since the early 1980s - left earlier this year.
He had vowed to keep membership flat as Americans battled with rising costs and stagnant wages in recent years.
His replacement Gary Millerchip took over in March - and was widely expected to raise prices.
The increase is likely driven by years of inflation and Costco's desire to maintain a steady income stream through fees.
Costco CFO Richard Galanti (pictured) left the company earlier this year
Costco has recently announced a crackdown on those trying to access its stores without a valid membership card.
The retail giant recently announced that shoppers will have to scan their physical membership card as they enter its stores.
In addition they will also have to visually match the photo that will come up for the scanned card.
The scanners, which have already been spotted in some California locations, are an attempt to stop bargain-hunters borrowing a friends membership card without paying the annual fee themselves.