As a surge in shoplifting across the United States has led to widespread store closures and inflicted billions of dollars in losses on major retailers, one industry titan stands out for its resilience. Costco has largely avoided the retail theft epidemic plaguing chains like Walmart and Target, thanks to a fundamentally different operational approach.
A Model Built on Control
In its most recent annual report, Costco detailed how its unique business model minimises losses. The report for 2025 stated: 'By strictly controlling the entrances and exits and using a membership format, we believe our inventory losses are well below those of typical retail operations.'
Unlike competitors that allow unrestricted public access, Costco requires shoppers to present a paid membership card, often with photo identification, before entering. Stores typically feature a single controlled entrance and exit, with every purchase verified against a receipt upon departure.
The Cumulative Effect of Security Measures
These practices collectively create a formidable barrier against theft. Limited entry points reduce blind spots where shoplifting can occur unnoticed. Mandatory receipt checks significantly decrease the likelihood of customers leaving with unpaid items. Furthermore, the membership requirement ensures that nearly all shoppers are identifiable, eliminating the anonymity that frequently enables retail crime.
This strategic advantage emerges against a grim backdrop for the retail sector. US retailers are estimated to have suffered over $47 billion in losses due to shoplifting in 2025 alone. According to the National Retail Federation, the average number of shoplifting incidents soared by 93 percent in 2023 compared to 2019, with financial losses increasing by 90 percent over the same period.
Industry Comparisons and Financial Impact
Numerous prominent companies, including Target, Walgreens, Whole Foods, and Nordstrom, have previously cited retail crime as a contributing factor behind store closures. In stark contrast, Costco has consistently maintained that shoplifting presents a minimal challenge.
During a 2023 earnings call, then Chief Financial Officer Richard Galanti informed investors: 'Thankfully, it's not a big issue for us.' In a subsequent discussion with Daily Mail, Galanti revealed that Costco's theft rate ranges between 0.1 and 0.2 percent—approximately ten times lower than the retail industry average.
'Our shrinkage has historically been low,' he noted. 'And we've gotten better with time.' Shrinkage, an industry term encompassing stock losses from theft and other factors, was more than double current levels about three decades ago, demonstrating the company's continuous refinement of its anti-theft measures.
Additional Factors in Costco's Favour
Beyond store design and access control, Galanti highlighted the role of Costco's bulk-buying model. Large, bulky items such as multi-packs of groceries or household goods are inherently more difficult to conceal and steal compared to the small, high-value products frequently targeted in other retail environments.
Membership fees, which cost $65 annually for a standard Gold Star or Business membership and $130 for an Executive membership, provide a crucial revenue stream. This allows Costco to operate on thinner margins while maintaining low prices and investing in security without resorting to locking up everyday items. Executive members also receive 2 percent cashback on most purchases and enjoy early shopping access.
Not Entirely Immune, But Financially Robust
While Costco experiences notably low levels of in-store theft, the company has not been completely exempt from criminal activity. In late 2025, it faced a high-profile cargo theft incident involving a hijacked shipment of live lobsters valued at $400,000.
Financially, the retailer remains on solid ground. By early 2026, Costco shares had risen more than 13 percent year-to-date, recovering from a dip in 2025. This rebound was supported by strong January sales growth of 7.1 percent, underscoring the company's robust market position despite industry-wide challenges.
