Costco 2011 Annual Report Download - page 13

substantial disruption of our business. We also purchase private label merchandise, as long as quality
and customer demand are comparable and the value to our members is greater as compared to name
brand items.
Certain financial information for our segments and geographic areas is included in Note 12 to the
consolidated financial statements included in this Report.
Membership Policy
Our membership format is designed to reinforce customer loyalty and provide a continuing source of
membership fee revenue. Members can utilize their memberships at any Costco warehouse location in
any country. We have two primary types of members: Business and Gold Star (individual). Our
member renewal rate was 89% in the U.S. and Canada, and approximately 86% on a worldwide basis,
consistent with recent years. The renewal rate is a trailing calculation that captures renewals during the
period seven to eighteen months prior to the reporting date. Businesses, including individuals with a
business license, retail sales license or other evidence of business existence, may become Business
members. Business members generally pay an annual membership fee of approximately $50 for the
primary and household membership card, with add-on membership cards available for an annual fee of
approximately $50 (including a free household card). Many of our business members also shop at
Costco for their personal needs. Individual (Gold Star) memberships are available to individuals who
do not qualify for a Business membership, for an annual fee of approximately $50, which includes a
household card.
Our membership was made up of the following (in thousands):
2011 2010 2009
Gold Star ......................................... 25,000 22,500 21,500
Business ......................................... 6,300 5,800 5,700
Business, Add-on Primary ........................... 4,000 3,300 3,400
Total primary cardholders ........................ 35,300 31,600 30,600
Additional cardholders .............................. 28,700 26,400 25,400
Total cardholders .................................. 64,000 58,000 56,000
The numbers for 2010 and 2009 exclude approximately 2,900 and 2,800 cardholders of Mexico at the
end of those years.
Executive membership is available to all members, with the exception of Business Add-on members, in
the U.S., Canada, Mexico, and the United Kingdom for an annual fee of approximately $100. This
program, excluding Mexico, offers additional savings and benefits on various business and consumer
services, such as merchant credit-card processing, auto and home insurance, the Costco auto
purchase program, check printing services and a high yield savings program. The services are
generally provided by third-parties and vary by country and state. In addition, Executive members
qualify for a 2% annual reward (which can be redeemed at Costco warehouses), up to a maximum of
approximately $500 per year, on qualified purchases made at Costco. At the end of 2011, 2010, and
2009, Executive members represented 38%, 36%, and 33%, respectively, of our primary membership.
Executive members generally spend more than other members, and the percentage of our net sales
attributable to these members continues to increase.
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