March 2009

I have read several arguments against shopping at warehouse clubs and for the most part, I would agree that bigger is not always better. Costco, Sam’s Club and BJ’s are the three most popular warehouse clubs and each requires a membership to join. In California we have both Sam’s Club and Costco, which do not accept manufacturer coupons. I understand BJ’s policy is to allow coupons so they might offer even better savings. Occasionally Costco offers a store coupon booklet but I have found they tend toward larger purchases- such as a mattress or patio set.

One major argument against the club stores is the annual membership fee. Costco charges $50-100 a year depending on what membership options you select. This fee should be factored in to your purchases annually to ensure you are really getting the best price. I am fortunate that my father owns his own business and has a corporate membership. This membership includes two other complimentary memberships per year. For no additional cost, I am included on his membership. I understand a regular membership also includes either discounted rates for additional card holders or might include one other complimentary membership. The cards are specific to the individual so the complimentary membership is typically for the spouse. Although I have a card my husband does not. He can’t do any shopping on his own. If you have single family members that belong to Costco you might want to inquire about piggybacking on their cards or sharing the annual cost.

You can also accompany a member when they shop and enjoy the savings. Costco does not accept credit cards other than American Express (which they have a partnership with)- you must pay with debit card, cash or check.

Another argument against the club stores is the temptation to overbuy. Even the most frugal person will experience overwhelming temptation once they enter the doors. There are sample stations at most aisles offering a taste of something wonderful you had no idea you needed. There is also a subtle peer pressure as these stores are constantly packed and the majority of the people in the stores have carts overflowing with a variety of items. Costco has a bakery and depending on the time of day- the aroma of fresh cookies, breads and pies lofts through the air. Temptation is everywhere- not just food but clothing, household items, specialty goods, books, electronics- they have everything. I am the first to admit shopping warehouse is not for the faint of heart. I prepare myself mentally before I set foot in the store. I have a specific list of items I need and I rarely deviate. My other tactic is to shop without a cart. This ensures a quick trip and I am limited to what I can actually carry.

I have also found there is a common misconception that bigger equals cheaper. Couponers in particular know that the smallest size combined with coupon almost always offers the best value. A great example of this is the cereal aisle. My buy price for brand name cereal is .50 or less per box. This is easy to accomplish with coupons at most stores and is exemplified in my post here.

At Costco the average price of cereal is $5.99- $7.99 for what amounts to two packages. By combining sales, promotions and coupons I typically pay less than $1.00 for the same amount on the same brands.

The last issue with warehouse stores is the overall chaos. These stores are constantly packed. It can take ages to get a parking spot (think the mall on Christmas Eve), there is typically a long wait regardless of how many registers are open. And even if you have one person ahead of you, they likely have a gigantic cart full of items. I have noticed people treat Costco shopping as a form of entertainment which means they take leisurely strolls through the aisles, stop abruptly to look around, hit every free sample station and can drive a focused person over the edge.

Now you may be asking why anyone would bother. Our family continues to shop at Costco for the following reasons:
· Gas. We used to live in an area where the cheapest gas by far was at Costco. The pumps were easy to get in and out of and in extremely convenient locations. Purchases were not required you simply scan your card at the pump and go. The gas savings alone would have justified the membership.
· Cheese. We love cheese and I can never find a good price for cheese. We go through about 32 oz every 2 weeks and the best price I can get at my grocery stores is typically .19/oz. I can only get this price every 6 weeks or so and my budget is too small to stockpile during these sales. Costco has 32 oz of Mozzarella cheese for $3.59 or .11/oz and Cheddar for $3.59-4.59 (price varies week to week) or .11/oz-.14/oz. These are better quality cheeses than the store brands I usually get- particularly the Walmart brand.
· Milk. We go through about 3 gallons of milk a week. I almost fainted once when I paid $9 at my grocery store for 2 gallons of milk. Lately Safeway has had 2 gallons for $3.98 which is a great deal but Costco is still cheaper at $3.59. If the price goes back up at Safeway you can bet we’ll be in line at Costco every week.
· Butter. Butter is another staple I never find deals for. Since I bake a lot we go through a lot of butter. Costco offers (4) 1 lb cartons of butter for $6.59 This is a few dollars cheaper than I can get at my store and is better quality.
· Flour. I recently purchased 25lbs of flour for $6.99. This is a ton of flour but since I bake fresh goods weekly I can go through that amount within a few months. The overall savings isn’t that significant but for me it is worth it to always have flour on hand.
· Tortillas. 30 large flour tortillas are $2.79 at Costco. Whole wheat are $4.99. This is what I pay at my store for 10.
· Produce. I always buy giant containers of fresh sliced mango when it is in season at Costco for a fraction of what other stores charge. I have also purchased large bags of sweet potato fries for $2.99 that last for weeks. Today I got 3 lbs of bananas for .90. Yes .30/lb for bananas.

Other items I have found to be priced extremely well include plants/trees. We are in the market for citrus trees and I found great looking orange and lemon trees today for $17.99. Many people prefer to buy from Lowe’s or Home Depot since they offer a 1 year replacement guarantee but I have found the size of the plants and the price to be much better at Costco. Plus are you really going to dig up your tree and take it back to get your replacement? They also have fantastic prices on flooring- tiles, hardwood etc.. My husband and I purchased beautiful white marble tiles for $1 a tile two years ago.

Things move quickly at Costco. The citrus plants I mentioned will likely last a week or two and will be gone. Outside of the staples, you are not guaranteed to find the same thing on every trip. I have also noticed prices do fluctuate. Over the past 3 trips I purchased cheddar cheese for $3.59/ 2 lbs, then $3.99/ 2 lbs and today $4.59/ 2lbs.

My final words of wisdom for surviving the warehouse clubs is to find a spot and park there every time. I have a particular row I aim for every single trip- I never get the same spot of course but I instinctively head for my aisle. There is nothing worse than having an armload of groceries and wandering the endless parking lot looking for your car.

Go at off hours. I have the flexibility to hit Costco a few minutes after it opens. I can get the few items on my list and be out the door in 10-15 minutes. I have also been in the store around 8-9pm and found it to be very quiet. It would take a lot of convincing and perhaps a free slice of their incredible pizza to get me into the store on the weekend. (Think Walmart the day after Christmas.)

Here are a few more great articles on the Costco experience:

http://www.itsfrugalbeinggreen.com/2009/03/buying-meat-in-bulk-at-costco.html

http://www.chieffamilyofficer.com/2009/03/costco-vs-trader-joes-vs-ralphs.html

Note Chief Family Officer links to a great post from Common Sense with Money that details why these clubs do not offer the best bang for your buck. make sure you check it out if you are trying to decide if a membership is the right option for your family.

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