Costco explains how it keeps shrinking low as retailers tighten security

Costco explains why theft stays low

Costco says its store system helps keep inventory losses far below those of most U.S. retailers. In its 2025 annual report, Costco describes “strictly controlling the entrances and exits” and using a membership format to reduce losses.

Costco does not allow general walk-in traffic the way many big-box stores do. Shoppers must show a paid membership, often with photo ID, before entry.

Costco requires a paid membership at entry

Costco requires shoppers to show a paid membership before they can enter the store. Customers often show photo ID along with the membership. Costco uses this membership gate to reduce anonymous traffic inside the building.

Costco’s approach contrasts with retailers like Walmart and Target, where customers can typically enter without a membership. Costco’s model focuses on controlling who comes in first, not only reacting at checkout.

Costco limits exits and checks every receipt

Costco emphasizes controlled entry and exit points, and it verifies receipts at the door, which adds friction for walkouts. Fewer entrances reduce blind spots that can make theft more complicated to detect. Costco checks purchases against a receipt before customers leave. This step makes it much harder to walk out with unpaid items.

Costco combines membership entry and receipt checks to reduce in-store theft. Every shopper has already paid to be there, which lowers the amount of anonymous foot traffic.

Costco model stands out amid 2025 losses

Industry surveys estimate U.S. retailers lost over $112 billion in 2022, a category that includes theft and other inventory losses. That broader pressure has pushed many chains to rethink store security and operations.

Costco has “largely defied” the broader surge in theft, the article credits store design and the membership system, not just security staffing. Other large chains have faced closures due to concerns about retail crime. Costco’s approach shows how store format choices can influence theft risk and shrinkage.

National Retail Federation reports theft rise

Shoplifting incidents rose 93 percent in 2023 compared with 2019, according to the National Retail Federation, cited in the article. The same source says dollar losses increased by 90 percent over that period.

Those increases help explain why retailers have changed store layouts and policies. The article frames the rise as widespread across the United States, not limited to one region.

Costco’s claim of lower losses matters more in this context. National Retail Federation data shows the scale of the problem competitors are facing.

Store closures linked to retail crime concerns

Several major retailers have cited retail crime as a factor behind store closures, according to the article. Target has explicitly cited theft and organized retail crime as a factor in specific closures. Other retailers have also pointed to safety and loss concerns in some locations, though closure decisions often reflect multiple factors.

The article presents those closures as part of the broader surge in retail theft. The closures also show how concerns about theft can affect where people can shop in some communities.

Richard Galanti says theft is not a big issue

Costco’s CFO said inventory shrinkage was not a significant issue for the company during a 2023 earnings call, contrasting Costco’s experience with retailers that report higher shrinkage pressure.

After the call, Galanti shared more details with the Daily Mail. Costco executives have said shrinkage is not a significant issue for the company, and Costco’s annual report credits its membership model and controlled entry and exit points for keeping shrinkage below typical retail operations.

Fun fact: Costco’s fiscal 2025 net income was $8.099 billion, highlighting how profitability can stay strong even with tight margins.

Costco’s theft rate is far below average

Costco’s theft rate of 0.1 to 0.2 percent is roughly 10 times lower than the retail industry average, according to the article. It connects that gap to Costco’s store rules and physical layout.

Costco limits entry with membership checks and limits exits with receipt verification. These steps reduce blind spots and reduce the chance of unpaid items leaving the store.

Fun fact: Costco’s U.S. renewal rate was about 92% at the end of fiscal 2025, showing how “sticky” that membership gate really is.

Costco’s shrinkage has improved over the decades

Costco says shrinkage has historically been low and has improved over time, according to the article’s reporting of executive comments. Shrinkage is described as an industry term for stock losses, including theft.

It says losses were more than twice today’s level, roughly 30 years ago. That comparison suggests Costco tightened its approach over a long period, not only after recent theft headlines.

Costco’s bulk goods are harder to steal

Costco’s bulk buying model reduces theft risk because large items are harder to steal, according to the article. Multi-packs of groceries and household goods are not as easy to conceal as small, high-value products.

The article contrasts this with other stores that sell many smaller items that are easier to target. Costco’s aisles and stacked bulk inventory also support a more straightforward layout with fewer blind spots.

Costco membership prices and perks in the U.S.

Costco membership costs $65 per year for a standard Gold Star or Business membership in the United States, according to the article. The article also lists an Executive membership at $130 per year.

Executive members get 2% cash back on most purchases, paid annually. The article also says Costco may offer earlier shopping hours for Executive members, depending on the warehouse, and that members should check local store details.

These fees and perks are part of the system that controls who enters the store. The article links paid entry to fewer anonymous shoppers and lower theft opportunities inside.

Costco fees support low margins and security

Costco uses membership fees to operate on thin margins while keeping prices low, according to the article. The article also says those fees help Costco invest in security without locking up everyday items.

That point connects finances and store experience. The article suggests that Costco can maintain a simpler shopping environment while still protecting its inventory.

For a closer look at what is becoming harder to afford at the grocery store, read more about 12 cheap grocery items that Americans can barely afford now.

Costco faced cargo theft, but stock rose

Costco was not immune to crime altogether, according to the article. In late 2025, Costco suffered a high-profile cargo theft involving a hijacked $400,000 shipment of live lobsters.

Financial results in early 2026 were described as strong in the same report. Costco shares were up more than 13 percent year to date, after a dip in 2025.

For more on how grocery chains are reshaping footprints, see the latest on Kroger’s plan to close about 60 underperforming stores over the next 18 months.

What do you think about Costco addressing rising theft as Walmart and Target close stores? Could you share your thoughts and drop a comment?

This slideshow was made with AI assistance and human editing.

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