Costco is overhauling the part of the shopping experience its members complain about most. The warehouse giant is piloting automated pay stations capable of processing a transaction in around eight seconds, and rolling out employee pre-scan technology designed to cut queue times before customers even reach the till.
Costco CFO Gary Millerchip described the progress in the company’s second-quarter earnings call, outlining a series of technology investments that are beginning to show measurable results. “In the warehouses, we are achieving meaningful improvements in the speed of checkout and employee productivity, both as a result of our mobile wallet enhancements, pharmacy pay ahead and the rollout of employee pre-scan technology,” Millerchip said.
Under the new model, staff will pre-scan items before customers reach the register, streamlining the handoff and reducing bottlenecks. The automated pay stations then handle the payment itself. “Early results show this is improving the flow of traffic, and we have received great member feedback,” Millerchip added.
Costco has dabbled with self-checkout before, but the format didn’t appear to take hold in the same way it has at some of its competitors. This new approach is different — rather than asking members to do all the work themselves, it blends employee involvement with automated payment, keeping the human element where it’s most efficient while letting technology handle the transaction itself.
A Generational Divide at the Register
Appetite for self-checkout varies considerably depending on who’s shopping. Data from the NCR Voyix Digital Commerce Index shows that while 43% of consumers overall now prefer some form of self-checkout, that figure rises to 53% among shoppers aged 18 to 44. Among those 55 and over, the picture is different — older shoppers tend to prefer staffed lanes, often citing the volume of items in their trolley as a reason to stick with traditional checkout.
Costco’s hybrid model — pre-scanning by staff, payment by machine — may be well suited to threading that needle. It preserves the human touchpoint that older members value while delivering the speed that younger ones increasingly expect.
Digital and AI Ambitions
The checkout overhaul is part of a wider digital push under new CEO Ron Vachris and CFO Millerchip. The company is also investing in personalisation capabilities on its digital platforms, which it says are beginning to have a measurable impact on e-commerce sales. “As consumers embrace AI in their shopping habits, we believe our commitments to providing the best value on great quality items can make us a beneficiary of these shifts,” Millerchip said.
The Numbers Behind the Strategy
Costco’s competitive position remains built on its famously tight margins. The company caps product margins at roughly 14% to 15%, compared with the 25% to 35% typical of conventional grocers — a gap that keeps its pricing highly competitive and its membership base loyal. Net sales in the second quarter surged 9.1% to $68.24 billion, with net income reaching $1.36 billion, up 13.6% year over year following a membership fee increase.
Faster checkouts won’t change that fundamental value equation — but they could meaningfully improve the overall experience for the millions of members who shop at Costco warehouses every week. If the pilot results continue to hold up, a broader rollout looks likely.