Costco 2012 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 brand-
name 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 member loyalty and provide a continuing source of
membership fee revenue. Members can utilize their membership 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 approximately 89.7% in the U.S. and Canada, and approximately 86.4% on
a worldwide basis in 2012, 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 $55 for the primary card-holder, with add-on membership cards available for an
annual fee of approximately $55 each. Many of our business members also shop at Costco for their
personal needs. Gold Star memberships are also available for an annual fee of approximately $55 to
individuals who may not qualify for a Business membership. All paid memberships include a free
household card.
Our membership was made up of the following (in thousands):
2012 2011 20101
Gold Star ................................. 26,700 25,000 22,500
Business ................................. 6,400 6,300 5,800
Business, Add-on Primary ................... 3,800 4,000 3,300
Total primary cardholders ................ 36,900 35,300 31,600
Additional cardholders ...................... 30,100 28,700 26,400
Total cardholders .......................... 67,000 64,000 58,000
1Excludes approximately 2,900 cardholders in Mexico.
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 $110. This
program, excluding Mexico, offers additional savings and benefits on various business and consumer
services, such as check printing services, auto and home insurance, the Costco auto purchase
program, online investing, and merchant credit-card processing. 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 $750 per
year, on qualified purchases. At the end of 2012, 2011, and 2010, Executive members represented
38%, 38%, and 36%, 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.
Effective November 1, 2011, for new members, and January 1, 2012, for renewing members, we
increased our annual membership fee by $5 for U.S. Goldstar (individual), Business, Business Add-on
and Canada Business members to $55. Our U.S. and Canada Executive Membership annual fee
increased from $100 to $110 annually and the Executive Membership 2% reward annual limit
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