The allure of shopping at big warehouse stores like Costco or Sam’s Club is undeniably strong. It’s not only loved by money-conscious consumers who are trying to stretch their budget, but also shoppers who are simply obsessed with perusing the two-football-field-sized warehouses. In fact, more than one-third of Americans hold a membership with a warehouse club. It seems a little crazy, and a little counter-intuitive, for someone to spend money on a club membership for the privilege of saving money—or even just to walk in the door—but millions of people do it. Let’s take a look at exactly how it works and if it really does save you money.
How do warehouse clubs work?
In spite of the strategically designed, no-frills environment, warehouse clubs are retail stores. They offer a wide variety of items, from Waterford crystal to cell phones, and from flat screen TVs to paper plates, at discounted or wholesale pricing.
Aside from the plethora of products available, the main difference between warehouse clubs and traditional retail stores is that warehouse clubs don’t make most of their profits from marking up prices on products. Instead, customers pay a membership fee to access the store and these discounts. Plus, members have access to other deals and discounted services like travel, car buying, insurance, and financial services, to name a few.
Paying a reasonable annual membership fee that can, at the very least, be recouped in savings over the year doesn’t sound like a bad deal. But, there are some pitfalls that need to be considered, and they’re not quite as evident as the savings you see on your receipt.
Big boxes, large quantities
Another reason warehouse clubs can offer lower prices is that they buy in bulk, and then they pass the bulk discounts onto their customers. While you may eventually use the 45 rolls of toilet paper, the twin pack of ketchup will likely be expired before you’re halfway through the first bottle. The fresh produce has the same fate. Who can eat 24 apples before one decides to spoil the bunch? We all love the party-size bags of chips, candy, and cookies, but sadly, they don’t stand a chance of expiring, which leads us to a whole other problem. That said, if you’re stocking up on items for your office on a consistent basis, bulk buys may be a great option.
Limited quantity items
You’re pondering the purchase of a particular item, and then see that it’s marked “Limited Quantity.” Two words that set off the alarms in your head and kick your hoarding tendency into full gear. You’re not even sure if you need it, but the pressure of missing out, or the fact that this may be your last chance to bring it home has you tossing three or four of them into your cart.
Can warehouse clubs save you money?
Impulse buys
Grocery stores are notorious for impulse buying. You’re waiting in line at the checkout, and the candy and magazines on the end rack start calling your name. But impulse buys aren’t limited to traditional retail stores. Take five steps into any warehouse club, and you’ll likely see a giant flat screen TV on sale. Need the new iPhone or maybe an Apple Watch? They’ll be there, too. If you make it through the entrance, you’ll also want to steer clear of the center aisles—that’s where all the impulse buys are waiting for just the slightest glance. Does your kid need a giant Squishmallow for only $20? While you’re at it, maybe you should treat yourself, too. I bet you didn’t know you wanted a Vitamix blender or a new set of mixing bowls. Oh look, a 120-pack of Kirkland K-cups!
Free samples
The free samples at warehouse stores are the perfect snack while you’re wandering the aisles. Hit enough of them, and you can call it lunch. The samples are not necessarily there, however, to keep your belly full. We all know that tasting the product could encourage shoppers to purchase the item on the spot. But, interestingly enough, free samples also work on a customer’s psyche. Ever feel a little guilty just walking away? Yep, a lot of other people do, too. Out of a sense of obligation or the fear of looking like a freeloader, they head to the checkout with a monster-size box of Annie’s Cheddar Bunnies in their cart.
Be a smart shopper
These danger zones don’t necessarily have to spoil your next trip to the warehouse club. Free samples can be good. It’s nice to know that you need to stock up on an item if it won’t be restocked. And, sometimes you do need a new blender.
How to pick a wholesale club
Because every family shops differently, there’s no definitive answer as to whether a warehouse club membership is worth the money. But if you do want to pursue a membership, how do you decide which club to go with?
The first things you need to consider are your local options and what their prices are for membership. If one club is a little further but the membership is cheaper, it may not be worth the extra gas to get there and back. On the flip side, you may have two warehouse clubs across the street from each other, so the next thing you may want to look at are the return policies. Warehouse clubs typically offer great customer service but return policies vary by store—some clubs even offer refunds on your membership if you decide it’s not for you, so you’ll want to read the fine print.
Lastly, you’ll want to look at the prices and discounts available. This will take a little work to calculate unit prices, but can help you see how much money you would actually save. Additionally, depending on where in the country you’re shopping, discounts may not be as significant as they are elsewhere.
Key takeaways
- Warehouse clubs are retail stores that charge a membership fee to access their discounted or wholesale pricing.
- Membership typically includes access to other deals on things like travel, car buying, insurance, and financial services.
- Be sure to consider location and drive time, return policies, and unit prices when deciding on a warehouse club membership.
Warehouse clubs can be a great place to shop and save money, but it’s not a one-size-fits-all answer. You’ll definitely find some deals that will save you money, and balanced with your traditional grocery store shopping, your budget should stretch a little further each month. Regardless of where you shop, continue to compare prices, don’t buy what you don’t need, and be wary of impulse buys.
