Every year, more than 70 million consumers pay a fee for the privilege to shop in big warehouse-type stores such as Costco and Sam’s Club. A membership card gets them in the doors of endless warehouse style shelves piled high with bulk items. Is that really worth a fee of $55 or more? Many online reviewers and consumers have done the research for us.
In general, the big warehouse stores can’t match the large variety of products in competing niche stores, like Best Buy, but club membership offers you plenty of benefits, mainly low prices and one-stop shopping. However, bulk shopping isn’t for everyone; if you have a large household, buying cereal in bulk makes sense, but in a small family, you may not be able to finish the food before it spoils or goes stale.
Most consumers and reviewers agree that warehouse stores are not the best on prices or quality when it comes to fresh food, most recommend to get your perishables at a normal grocery store. Also, the large package size deters some consumers from buying groceries at warehouse stores if they don’t have the space or need for it. Fortunately, they don’t only offer food.
Warehouse club stores stock everything from diamond rings, winter tires, flat-screen TVs and diapers. For comparisons sake, a 32-inch Philips HDTV was $100 cheaper at Costco than the same model at Best Buy. The warehouse stores regularly and quickly cycle through this special kind of inventory to make the consumer feel like they’ve found a treasure.
Another surprising bonus is the wine section, in which most consumers claim to save around $5 per bottle. Warehouse giant, Costco, is rapidly growing their selection while keeping prices low.
Is there enough variety?
Most consumers recommend that if you’re looking for tons of choices on brands, you may want to look to a niche store. For example, Best Buy boasts more than 60 options of TVs, compared to 16 on Costco shelves. Warehouse shopping appeals to consumers who aren’t picky about the specific item, brand, or quantity they buy. Most warehouse stores also offer their own brand of certain products.
Although you can recover the membership fee with a single big-ticket item, there’s always the temptation to buy something you don’t need simply because it’s a great deal. In order to keep your wallet happy, make sure you make a list and stick to it. If you don’t find exactly what you’re looking for in the store, don’t panic, just go online and take advantage of your club’s low prices and free shipping.
With paying members, low overhead and high volume, warehouse clubs can tolerate lower margins of profit than the competition. Costco’s markup is about 15 percent, according to stock analysts at Trefis, compared to 25 percent or more at a supermarket or department store.
A membership can save you a good amount of money if you plan correctly. Some members even split the annual fee with friends or family. Overall, it seems like a smart investment, and according to the company’s most recent annual report, nine out of 10 customers in the U.S. and Canada renewed their memberships.