Several social media accounts dedicated to covering Costco (COST 0.75%) have shown images of signs claiming the chain will no longer accept returns on toilet paper, paper towels, rice, water, sanitizing wipes, and Lysol, Women's Health reported.

The chain has not commented on any official policy change and the change may be being implemented on a store-by-store basis rather than nationwide.

The exterior of a Costco.

Costco has been making changes to its policies as needed during the coronavirus pandemic. Image source: Costco.

Dealing with shortages

Costo, like many other retailers, has struggled to keep up with demand for essential items. It has modified its hours and worked to improve its supply chain in order to keep up with surging demand.

Not taking returns on these key items may discourage customers from buying more than they need, "just in case." The warehouse club has also placed limits on the items that have been most heavily in demand in order to make sure more customers get what they need.

Costco has essentially prevented future hoarding with its item limits and it's not going to reward customers who overbought by taking returns. That does, however, also have the effect of not putting those supplies back into the pipeline (though health considerations may impact the chain's ability or willingness to put returned items back into circulation).

Costco is adjusting on the fly

This is a fast-changing situation that no retailer has ever experienced on a national level. A typical run on supplies due to a weather problem or other natural disaster generally only impacts one region, allowing chains to ship goods from non-impacted areas.

In this case, Costco has to handle high demand on a national level. There's no playbook for this, but the warehouse club has done an admirable job making things up as it goes in order to keep its customers supplied.