Are warehouse clubs like Costco or Sam’s Club worth it?
Back in college, since I had no car and ate cheap take-out 5 days a week, I never went to warehouse clubs. But since getting married, my wife’s family extended their “business” membership to us, and we now go to Costco once every 2-3 weeks. These stores are enormous, and always seem to be located on the edge of town. Our is about a 20 minutes drive away. At first, I thought it was pretty cool, being able to buy soap and toilet paper once a decade. But after my last run, I’ve been analyzing it further…
There are definitely pros and cons to shopping at warehouse clubs. First, the cons.
- You have to pay a membership fee, about $45 a year, so you’re already behind when you start.
- Instead of splurging on a pack of gum at Safeway or Publix, you go out and buy a 7 lb tub of nacho cheese (see pic). Yes, that’s right, I bought me a 7 lb can (6 lb. 10 oz. to be exact) of fake processed plastic bright yellow cheese. Mmmm. I actually allow myself one “splurge” every time I go. Last time it was a 2 lb. jar of kalamata olives that was $4/lb instead of $10/lb at the specialty grocer. For next time, I’m eyeing a huge vat of buffalo wing sauce.
- In addition to the forementioned 20 minute drive, you often end up parking a mile from the entrance. And then you have to pilot these huge carts around the 100,000 other people looking for that 20 lb sack of salt for 2 bucks.
- There’s never any employees to help you. If you can’t find something in the vast stack of pallets, too bad.
- There’s only one brand of anything, besides the fake coke. And they don’t sell fake Diet Cherry Coke. Bummer.
But on the flip side, there are many pros:
- If you need a big ticket item, like a TV or laptop or large appliance, you can get your membership back immediately and then some.
- There are now some things I only buy at Costco. Examples include sandwich meat and cheese. It’s good quality, cheap, and I just freeze what I can’t use. Their flash frozen chicken breasts/tenders/thighs are great too. They even don’t have any preservatives or anything, just chicken, salt, and water. The tenders are my favorite, with easy portioning and they last forever in the freezer.
- At certain locations you can justify the drive with super-cheap warehouse gas. Alas, mine does not have this, and I ain’t driving an hour to get it.
- Less employees = lower prices. And once you go a couple times, you start to get a feel for the place.
- They offer certain services like tire shops, pharmacies, and eyeglasses for cheap. I checked out their prices and plan on getting my next set of glasses from them.
- Nope, Costco simply needs to make a good fake Diet Cherry Coke. Please?
I’d love to hear y’all’s thoughts on warehouse clubbin’. What do you get and why?
Find more in Frugal Living | 3/13/05, 5:05pm | Trackback
March 13th, 2005 at 6:37 pm
Just came back from my grocery shopping.
I usually go there because I am single and I eat pre-cooked chicken food of ‘Lean Cuisine’ brand. I buy it in bulk in Costco and it’s really cheap.
Once in a month, I buy dry fruits which I eat throughout the month. On occasion, I buy those AA/AAA batteries in bulk at a really low price!
And yes, bottled water (Poland Spring) and Red Bull energy drink. I think I save around 25$ on each visit to Costco compared to say other normal grocery store. I have been to Costco 4 times now, so my membership fee is well recovered.
JD
March 13th, 2005 at 6:48 pm
The problem I have with these clubs is that they convince you to buy in bulk when you don’t need to, producing a mentality of “the more you spend, the more you save”. Looking at the olives - did you actually want to spend $8 on olives? You probably wanted to spend less than that, which means you’d have been better off buying the lesser quantity of olives at the higher unit price. It’s a matter of determining which is more important to you - spending what you want to spend, or getting the lowest unit price possible. These clubs make you think the goal is always the latter. It sometimes is, but not always.
One other interesting point - sometimes, the higher quantity container isn’t always cheapest by unit. This doesn’t happen too often, but it does happen, esp during a sale. It’s something to keep an eye out for if you’re looking to save some money.
March 13th, 2005 at 6:58 pm
Hi, Nice Blog. I was referred here by a wall st journal online video.
As a 20-something law student living on loans, I must admit that Costco is where the majority of my shopping gets done. Buying in bulk is great, so long as you are buying stuff you are actually going to use. Despite the $45 membership fee, I am saving 100’s of dollars a year versus shopping at my local grocery store.
In the rare circumstance that Costco doesn’t have what I am looking for, I can usually find it at Trader Joe’s (another low-price wonderland–especially good for imported beer).
March 13th, 2005 at 9:01 pm
The main problem I have with Costo is that you end up spending $100 on five or six things. A 6 pack of chef boyardee, the new cd, some detergent, 18 pck of beer, and there’s your $100. My wife and I have set a costco budget of $100 per month that help to regulate the expense (since one trip always equals $100)
March 13th, 2005 at 10:34 pm
Fruits are also cheaper at costco and you dont have to worry about waiting for sale. I spend ~ $10 a week on fruits there
March 14th, 2005 at 4:37 am
I find that the more I have in the house the more I consume than normal.
March 14th, 2005 at 5:26 am
A topic near and dear to my heart! I love “the costco” but we found we were spending about $200 each visit if we didnt pay attention. We got a lot of value for that $200, but that’s a lot on impulse buys. So we reined it in.
Meat is great and cheap, produce is good too. We stick to things like canned chicken (for quick chix salad), biscotti, frozen taquitos, gum and the usual paper goods. Less often, we pick up things like batteries, “air dusters” and printer ink cartridges. And of course the occasional bigger ticket item at a good price (all-in-one printer, etc).
Their rotisserie chicken is mouth-wateringly good and I think it’s under $6…cheaper than a whole raw chicken at our store. This feeds the 2 of us for a couple of meals and snacks and does not have to be piping hot to enjoy.
For a while we had “date-night” at Costco on Friday nights…the place was nearly empty by 7:30 so that’s when we go to avoid the press of the masses.
March 14th, 2005 at 6:34 am
our costco is actually closer than the grocery store I like (I can’t resist driving a little further for double-coupons)… the key to costco is knowing the prices of the items you like to buy and whether you can do better getting them on sale at the regular store… we buy the 1 lb of spring mix (lettuce) and it’s just $3.50… compared to $5.99 a pound or more in other places… we also buy most of our meats (I prefer to freeze my own chicken breasts bought there in bulk)… and we recently became fans of the rotisserie chicken — several meals (for 2 of us) for just $4.99, i think… I used to go nuts and end up with weird bulk items, but now I generally know exactly what i’m there for and just hit those aisles and avoid impulse purchases…
March 14th, 2005 at 11:02 am
Don’t make too much of the supersize mystique; Costco is just a big honkin’ supermarket — and of course you gotta know your prices. If the quantities are overwhelming, find a friend or neighbor to help divvy the stuff up. (But I will say that their Kirkland jeans [that's the Costco house brand] are a high-quality steal at about $12.
If you shop there during lunch — especially on weekends — you can practically fill up on the demo products. (Perhaps the one time it might not be a bad idea to food shop when you’re hungry.
Finally, look for items priced with 77 cents (like juice at $4.77); they’re on closeout, and often marked half-off or more from their original price.
March 14th, 2005 at 12:07 pm
Well there are some good to these Costco & Sam’s clubs but if you ain’t buying hardware, the grocery shopping might be best at your neighborhood grocer’s. Technically, market merchants sell goods to make profits. Charging a membership fee for purposes of restricting benefits to members only makes good sense. The down side of what I once felt was occurring, was that these stores were charging membership fee onto the customer for the privillege of shopping in their center. Plus, they’re making a profit on your purchases - this has an affect of reversing the role of grocery store/market center.
March 14th, 2005 at 2:22 pm
Warehouse shopping is not for everyone. With two kids on diapers and formula, it is for me. Then add on fruits, bread, fish and chicken and the occasional clothes, computer accessories and you have a nice package.
I am a costco business member, so pay a $100 and earn 2% cashback..which is typically between 55 - 70 dollars. This way, I pay less than the $45 membership fee.
March 14th, 2005 at 3:58 pm
The Costco by me has the cheapo gas (it also happens to drive down the Exxons nearby to more reasonable prices though, so the savings aren’t as extreme) and I love it’s flash-frozen meats like the aforementioned chicken and salmon. I split my membership with my roommate so it’s only $22.50 a year and on gas alone it’s saved me a ton of cash (though now less with a 5% on gas rebate card).
Even better is when I drive through Delaware (I live in Maryland) and stop by the Costco and pick up a couple bottles of wine or liqour tax-free.
Don’t tell the Feds!
March 17th, 2005 at 6:10 pm
Yeah, Costco is defintely best when shared between friends and family. I can’t buy veggies at Costco, there’s no way I can go through it before it spoils. It’s either got to be non-perishable or freezable.
I love Trader Joe’s as well - I love their frozen pizzas, I don’t know why.
March 23rd, 2005 at 7:39 pm
Maybe you should do a cost benefit analysis of similarly stocked grocery stores like, aldi’s, etc.
April 16th, 2005 at 9:25 am
I have made a complete analysis of these “club stores” over the last 20 years.
My conclusion is that they “catch” the non discriminatory shopper.
I have never, I repeat never seen anything in anyone of the stores in my area that I could not buy at a better price in a regular store when the particular item is on “sale” in the regular store.
Of course if you just “must have something” right now you might find it cheaper in a club store if you only compare the price with one local store and decide not to look any further.
Bargains can always be found.
Example a software proam that I wanted was priced at $89.99 in the regular stores and at $69.99 in the local club stores.
I waited and finally bought it at a local store for $49.99 and also got a $20. manufacturer rebate.
Meanwhile the program is still for sale at the local club stores for $69.99.
You want to save money then you should wait and seek.
Justthefactsman@aol.com
October 23rd, 2005 at 5:33 pm
i never seen sam’s club or casco’s
February 26th, 2006 at 5:06 pm
Costco is the place we shop every week. Give an example. We drink organic milk (OM) for years. We used to buy from Harris Teeter, then switch to Whole Foods. When I found it in Wal-mart, I bought it from there. If I remember it correctly, the half-gallon OM cost ~$3 at Wal-mart while it only costs $7.49 (was $6.99) for 3 half-gallon OMs. Since we drink 6 boxes / week, it saves a lot in a year. Another good example is supplements, which we use regularly. It’s much cheaper than any other stores. Also the clothes have good quality and good price, too. We also like the bottle-water, too. Sometime ago I saw an article comparing the price/quality of wines, Costco is among the top places.
March 30th, 2006 at 7:52 pm
If you keep track of the sales at various grocery stores close to you, you can almost always beat Sam’s and Costco’s prices. The butcher at grocery stores will mark down meat as it gets close to its “sell by” date. If you can learn when the butcher does this each week (most of it is done on Sunday nights at my local store), you can score great deals (we got 7 boneless pork chops last week for $1.29, they tasted great). There’s a store that specializes in produce, and runs specials each week like 5 pounds of oranges for a dollar.
If you are EXTREMELY smart about couponing, you can reduce your grocery bill to almost nothing, see this site for how to get started: Dealagogo. It does take time and effort, though, but even if you want to do it at a small level, the site is useful for tips.
April 25th, 2006 at 7:55 pm
Wonder how many drugs that Costco rotisserie chicken had? I’m betting it wasn’t an organic chicken
January 14th, 2007 at 4:20 am
[...] Over a year ago, I asked the question: Is Costco worth the money? In the end, we kept our membership. You know you’re getting a fair price (if not necessarily the best) on great variety of products, the customer service is great, and you gotta love their food court. So after spending another few hundred dollars on food and gifts today, amongst all those banners pronouncing “2% Cash Back for Executive Members“, I started to ponder if I should upgrade my membership level too? Executive membership costs $100, regular is $50. At 2% back, basic math says you’ll need to spend $2,500 a year to break even. I probably don’t spend that much. Then I remembered a rumor I kept hearing and was reminded of recently at HustlerMoneyBlog/a>. I asked customer service and… it was true! If you don’t profit with the Executive Membership, Costco will give you back the difference. Say you only get $20 in rebates. Bring in your rewards check at the end of the year and they’ll give you $30. So there is no risk.* [...]
June 4th, 2007 at 6:22 pm
In a household of 6, it really does save a lot of both money and time. There have been times when we’ve gone to Costco and spent close to $1000 just buying food and things. By the end of the year, that’s a lot of saving. It’s great that Costco has everything from food to socks to games and books to laptops and appliances. If you’re single, I don’t know, but for a larger family thing go fast, even when you buy in bulk. In my family, we drink about a half gallon container of organic milk a day and not only are the prices cheaper than those of my local grocery store, but also the milk is weeks fresher. And sometimes the smaller items at my local store is more expensive than buying the bulk item at Costco.
If living with others, Costco can save you both money and time.
July 8th, 2007 at 8:01 am
But how do you feel about a ?regular? store that normally rips you off 50 weeks of the year only to put something on sales for 2 weeks of the year?
Clearly they are not losing at the sale price either!
And why should I wait? What happens if my need clearly is before the sale?
I still shop at ALL stores but I take advantage of ?Club? shopping as much as I can for the larger sizes as it means less trips to buy the same goods.
Plus Costco gives you a rebate of 2% on ALL of your purchases in a year maximum $ 1,500 that?s enough to gain my loyalty plus that usually drives the net cost of the items to below the sales price of many ?regular? stores without waiting for the ?sale? prices.
September 23rd, 2007 at 7:41 pm
I have piggybacked on family and friend’s Sam’s Club memberships for several years to purchase various preferred cleaning supplies (I have worked most of my life in restaurants so I’m kinda weird on my choices).
I finally decided to splurge and spend the $40 on a membership, and saved more than that the first trip, so I figured that first time I broke even. I purchase cleaning supplies, mainly “professional quality,” paper goods like bulk bathroom tissue and paper towels in “generic” brands, as well as some personal hygiene products, and some groceries but not much. It is just myself and my 8 y/o, so we’re unable to utilise a lot of the bulk food except for items that store decently like sugar, flour, and stuff that we can freeze.
IMHO, if you stay away from the name-brand items and look for the items that are marketed toward businesses, you can save quite a bit of money, but if you watch your prices you can even save on some name brands as well. Some things you can purchase cheaper elsewhere, however.
November 19th, 2007 at 8:50 am
If you want to save money, Costco is not the answer. You will always find lower prices if you comparison shop with other stores. You may have to visit 2 or 3 stores and buy their sale items and you will save huge. Costco will dupe you into thinking that because it’s a institutional sized product that the price is always cheaper. It really isn’t. You can always find a regular sized version on sales somewhere for less.
Most people don’t factor in the $45 membership fee. Figure if you were to spend $1000 in groceries you are actually paying $1045 (4.5% more). Also figure that Costco brings in about $2 Billion just of membership fees. The membership fee is another way to trick you into thinking that you are saving money. It’s just there to pad their pricing.
November 27th, 2007 at 12:27 pm
I am an executive member, and have going to costco’s for 20 years. I’ve learned a couple of things that might be useful that haven’t been said above.
- If you do not use all of the food product you are buying, it is cheaper to buy smaller quantities at the grocer. My family of six all have discriminating, and dissimilar palates, so when I walk down the aisle, I think about how much of it will be eaten, by when, and how much will get thrown away. I there is any possibility that it won’t all be used, I don’t buy it.
- Some items are not worth the loss of space to store it. This has become a bigger concern as product sizes have grown. I do not need 1000 paper plates when I might use, maybe, 20 per year.
- “Once a decade” purchases tended to get thrown away when I moved. As it turns out, it costs more to move the stuff than replace it.
- Most of the hard goods, ie TVS, computers, appliances, furniture, etc. are not the models or have the features that I, as a discriminating shopper, want. It is worth it to do the research and buy the merchandise that has the features I want, rather than the stuff that shows up on the floor at Costco.
- The prices on hard goods are easily beatable. I’be bought plasmas, receivers, computers… everything online for less than at Costco… even with paying shipping.
And lastly,
- do not go to Costco when you are hungry. The samples being peddled are not real food, and I end up with bags of crap that I’ll never eat again, and no one in my family will even try.
But, that said, I retain my membership and keep going back:
- book prices are good,
- underwear, socks, towels, some sheets, tools, and some fruit… all worth quantity shopping.
Costco is here to stay, but I’ve learned to be very careful before buying anything there that I haven’t researched.
December 18th, 2007 at 9:23 am
I’ve been a Costco member off and on for a while now. I also have a BJ’s membership, for those nights when Costco closes early (which is every night). Anyway, while I love buying a 35 pack of Poland Spring for 5 bucks, does it taste funny to anyone else or is just me? And the big pack of Bounty papertowels, does it not hold up like it’s supposed or is it just me? I feel like while I’m spending less by buying bulk, my products lose quality- someone has to be cutting manufactuing costs somewhere. Either way, I guess I really don’t care, because I’m going back tomorrow.
December 20th, 2007 at 9:40 am
I like buying meats, seafood and frozen things like pizza, pierogies, in bulk and freezing them for months….the teenagers and friends are always looking for a quick snack. If I am having a party I like buying the fresh produce, but sometimes it is just too much to use quickly to warrant buying it.
Large quantities of water, soda, chips, pretzels, cleaning aids and basically any non-perishable is worth it IF you need and use it!! You can be led astray by the 10 lb box of Giardelli chocolates that you probably did not need…and once I purchased the 5 pack of flashlights (I didn’t need one) because it seemed like such a bargain and the baby flashlights were so cute.
If you stay on task and focus only on your list and the specials, I think it’s great because it eliminates my need to shop for groceries weekly. I shop at Costco about once every six weeks, spend about $300 and then just make little runs to my local grocery for fresh produce and the staples…cuts my grocery bills in more than half. I think it’s worth it.
June 3rd, 2008 at 10:49 am
I went through Costco and our local HEB grocery and compared about 25 like items. Costco’s Kirkland brand was actually more expensive per item or per square foot of paper towel, etc on several things. Paper cups were more expensive per cup at Costco. I will say that the wine I buy was $2.50/bottle cheaper and the roasted chickens were $3 cheaper per chicken. I’d save 25 cents per can of coke. I would save 10 cents per bottle on the water I buy. There were similar small savings per ounce of cleaners, etc, but not enough to add up. All in all, it was not worth it for me to pay Costco to get to shop there when buying in bulk was actually more expensive than my HEB brand for several items, like toilet paper. Looks like in the end it’d cost the same once you factor in the yearly cost. I was shocked. I expected Costco to be significantly cheaper and it wasn’t.
October 27th, 2008 at 3:04 pm
[...] hugest fan of ShareBuilder, but it seems to be pretty successful. Right now, in partnership with Costco, they are offering a $50 bonus and 10% rebate on transaction fees to Gold/Business Members, and a [...]
June 8th, 2009 at 4:03 pm
I live in the Rocky Mountains of Colorado where the groceries are ridiculously expensive because of transport costs. I have cut an embarrassing $$$ from our monthly bill by shopping at Costco. I have three skinny teenage boys and an athlete husband who all eat like Godzilla. I compared the per unit price on everything from meats to paper products with our local King Soopers. No comparison. Costco was cheaper by sometimes $2-$3 a pound on meats. Paper products and cleaning supplies are scary expensive up here. So, once a month, I drive down I-70 to the nearest Costco. We have cut our grocery bill by 2/3. I don’t buy the prepared food, or the junk food; just meat, vegetables and household cleaning products. BTW, a lot of the meat we buy at Costco is organic.
October 25th, 2009 at 3:33 pm
Well most of the people here must in the states. we are from up here in canada. Our costco are NOT all there are cracked up to be. i am not going to renew my membership again as i have went thru a few products and found all of them more exspensive. For example right now play station 3 is being sold for $299 at every retail location in canada. Except costco it is being sold for $349 Exact same unit. So having said that i feel that costco has pulled the wool over millions and millions of people.
November 7th, 2009 at 6:50 am
I’ve had my Costco membership for almost a year now, and it’s time for me to decide if it’s worth the fee to renew. I’m going to go out and some cost comparison between it and my grocery store (which, admittedly, had great prices compared to most). That being said, I know for a fact that I got my money’s worth this past year. And it is all thanks to Costco’s awesome return policy.
With the exception of electronics, which must be returned within 90 days, Costco let’s you return things whenever. This greatly influenced my choice to buy a treadmill from them. The treadmill had gotten great reviews, but I was planning on using it for running a lot more than most people. I wanted to make sure that, even once the warranty ran out, my purchase would be covered if something broke. Well, four months of good treadmill usage passed, and my husband and I decided to buy a condo. With a fitness center. This rendered my treadmill useless. So on moving day I brought it back to Costco, and they refunded my money (in cash!!), no questions asked. Essentially I got a four month gym membership for free.
We’re going to buy a TV from Costco this weekend. It will only have a 90 day return policy, but Costco extends the warranty to two years. Typically they have better customer service than the manufacturers, so it’s always nice to be able to deal with them rather than someone on the phone.