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Case study · Retention and loyalty · Costco

What Costco's 92% renewal rate shows about designing for renewal

By BREME · · 5 minute read

In short

Costco renewed 92.3% of its US and Canadian members and 89.8% worldwide, according to its 2026 annual report, and membership fees brought in US$5.9 billion. The renewal is not won at the renewal notice. It is earned across the year through price, product quality, generous returns and a refundable fee. Costco's recent dip among members who joined online also shows that how someone joins shapes whether they stay.

Who this is for: CX leads, membership managers, operations managers and executives in associations, professional bodies, subscription brands, clubs and any organisation that relies on members renewing each year.

What the numbers show

Costco is a US warehouse retailer that only sells to paying members. Its annual report for the year ended 30 August 2026 lists 939 warehouses in 14 countries and territories, including Australia, and 84.1 million paid members, up from 81.0 million a year earlier. Of those, 42.3 million hold the higher-priced Executive membership.

Membership fees brought in US$5,907 million in 2026, up 11% on US$5,323 million in 2025. Costco attributes the growth to new sign-ups, fee increases and upgrades to Executive membership. It raised fees in the US and Canada from 1 September 2024; the Seattle Times reported the standard US fee went up US$5 to US$65 and Executive from US$120 to US$130. Costco says that increase accounted for about 30% of membership income growth in 2026 and 40% in 2025.

The renewal rate was 92.3% in the US and Canada and 89.8% worldwide at the end of both 2025 and 2026. In Australia the membership page lists Gold Star and Business memberships at A$65 a year and Executive at A$130.

Know what your renewal rate actually measures

Costco publishes how it calculates the figure, which most organisations never write down. It is a trailing measure covering memberships that came up for renewal between seven and eighteen months before the reporting date. Memberships that expired in the last six months are left out, whether or not they renewed, because most members renew before expiry and late renewals mostly come within six months.

That detail matters for anyone comparing their own number. A renewal rate can shift a lot depending on when you count late renewals, which members you exclude and how you treat lapsed members who rejoin. Before you design anything, agree on one definition, write it down and report it the same way every time.

Renewal is earned in the aisles, not at the notice

Costco's annual report states that membership loyalty and growth are essential to its business. It describes the drivers of that loyalty in plain terms: consistently competitive prices on quality goods, consistent quality and availability of its own Kirkland Signature range, and a returns policy under which it generally accepts returns of merchandise. It also warns that damage to its brand could reduce member trust and renewal rates.

None of those are renewal campaigns. They are what the member experiences on every visit in between. By the time the fee falls due, the member has already decided, based on a year of evidence.

The Executive tier adds a visible return. In the US it pays a 2% reward on qualified purchases, and the Australian membership page lists the same 2% on warehouse and online purchases. Executive members generated about 75.2% of worldwide net sales in 2026. On the September 2026 earnings call, chief executive Ron Vachris said rising Executive penetration was likely to help improve renewal rates in future, and chief financial officer Gary Millerchip said Executive members spend at a higher level than standard members.

Taking the risk out of joining and renewing

Costco Australia's member conditions say it will refund the membership fee in full at any time for any reason if the member is dissatisfied. The same page offers change-of-mind refunds on most merchandise, with a 90-day window for electronics and listed exceptions, and notes the policy does not limit rights under the Australian Consumer Law.

The renewal rules are also forgiving. A membership renewed within two months after expiry is extended twelve months from the original expiry date, so a late renewal is welcomed back rather than treated as a new join.

Together these remove much of the risk from the decision. A member who doubts the value has a clear exit, which is a strong signal that the organisation expects them to stay.

How a member joins shapes whether they stay

The one soft spot in Costco's recent reports is useful for every membership organisation. Its 2025 and 2026 annual reports both say a higher share of memberships sold online, including through digital promotions, has weighed on renewal rates because those members renew at a slightly lower rate on average. The 2026 report adds that growth in certain international markets also affects the worldwide figure.

Reporting in October 2025, the Seattle Times quoted Mizuho Securities analyst David Bellinger saying nearly half of new sign-ups were under 40, that newer members tend to join online and have modestly higher churn, and that management expected renewal rates might dip in 2026.

Costco's response was not a bigger renewal reminder. In June 2026, CX Dive reported Millerchip describing targeted digital communication and retention strategies for these members, which he said more than offset the negative impact of the change in membership mix. Costco also pointed to quicker access to digital membership cards in its app and personalised product recommendations. By the fourth quarter, Millerchip reported the US and Canada rate was up 0.1 percentage points on the previous quarter and said the targeted work was making progress.

Costco has not published the detail of those communications, so we will not guess at them. The principle is clear enough: members who join through a lighter, faster channel need deliberate onboarding to reach the same commitment as those who joined in person.

Lessons for associations, subscription brands and member organisations

Most member organisations cannot match Costco's prices or scale. They can borrow the design logic. These are the questions we would put to a membership team:

  • Is our renewal rate defined once, written down and split by how members joined? Online, event, employer-paid and promotional joiners often behave differently.
  • What does a member experience between joining and renewal that proves the value? If the answer is mostly the renewal notice, the work is in the middle of the year.
  • Have we reduced the risk of the decision? A clear refund or pause option and a grace period after expiry can make renewal feel safe.
  • Does our premium tier give a return the member can see and count, not just a list of benefits?
  • Do members who join through a fast digital channel get an onboarding path that brings them to their first real use quickly?
  • Before a fee rise, do we know which cohorts are most at risk, and are we tracking them separately afterwards?

Sources

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