You have to spend money to make money, as the old business axiom goes. But in some instances, you also have to spend money to save money.
At least, that’s the premise of belonging to a members-only warehouse store like Costco Wholesale, Sam’s Club or BJ’s Wholesale Club. Each store charges membership fees (Costco, $55 a year; Sam’s Club, $45; B.J.’s, $50), or you opt for a higher level of membership where you spend around double that amount and save more on purchases. The companies rationalize that consumers won’t mind paying an annual fee since their products are deeply discounted and sold in volume. And that rationale is paying off: According to the market analysis firm First Research, warehouse clubs are a $390 billion industry.
But as anyone who has frequented these stores knows, you can come out of the shopping experience feeling like a candidate for the poorhouse. If you aren’t careful, it can be a jolt to realize you just spent $150 on six items — even if your haul includes a pack of 250 coffee filters.
[Read: 7 Things You Need to Know About Costco .]
So if you’re thinking of joining a warehouse club, or if you’re already a member but feel as if you aren’t getting your money’s worth, here are some tips from veteran shoppers.
Always bring a list. It will keep you focused and help prevent overspending. “This is true for shopping anywhere, but in warehouse stores, it’s even more important,” says Adi Bittan, a longtime Costco member in San Francisco and co-founder and CEO of OwnerListens.com, a customer feedback company.
“The secret to warehouse stores is that you buy a large volume to pay a smaller per unit price,” he says. “This means you’re still spending significant money upfront. If you buy things on a whim and get tempted by shiny objects, your cash outlay will be larger than if you were tempted by the same item in a smaller package at a regular store.”
Beware the perishables. Be careful about stocking up on meat, milk or anything that will soon spoil. “Again, remember you’re buying in volume,” Bittan cautions. “With perishables, you run the risk of not being able to use everything you bought before it goes bad … If you can use the perishables in your cooking and freeze for later, you can get more value out of your purchase. Do the math on the volume you’ll actually use. Depending on how prices are at your alternative sources, you may find that even if you end up throwing half away, you still come out ahead — a sad truth about the state of the food business today.”
Not that you have to throw anything away — you can give extras to friends or family or split the cost with them.
Stock up when your favorite items go on sale. Just like conventional grocery stores, warehouse clubs issue coupons and mark down certain items. For instance, Sam’s Club offers promotions in which select products are discounted over a period of weeks, says Kendal Perez, a blogger at Hasslefreesavings.com. “I thumb through the list of offers I receive in the mail and circle the items we usually buy,” she says.
Recently, she bought a lot of face cleanser and moisturizer, saving $3 on each package and reducing the per-unit item cost to less than $4. “My drugstore sells the same product for close to $7 each,” Perez says.
Do your research. To really get your money’s worth at warehouse stores, you can’t shop blindly.
Because as Karen Volney, a regular bulk discount store shopper in Minneapolis, says, “Just because it is at Costco doesn’t mean it’s cheaper.”
Sometimes warehouse stores have better deals than traditional stores, and sometimes they don’t. And the more you pay attention, the more you’ll likely be rewarded. For instance, Kris Johnson, a San Francisco resident who writes the lifestyle blog SayYum.com and is a regular shopper at Costco, says items with prices ending in anything other than 99 cents or those with an asterisk on the price tag are likely being cleared out. In fact, if the merchandise continues to hang around, the price may drop further.
[See: 10 Kitchen Tools That Will Save You Money .]
And Bittan cautions that especially with electronics, “some of the items at warehouse stores are models that have less features than the fully loaded version of the same product elsewhere or that don’t sell as well for whatever reason.”
He adds that this doesn’t mean the product isn’t worthwhile. “In fact, it’s usually a better buy,” Bittan says.
Still, as he reasons, you should do your homework so you’ll know if there are any trade-offs you’re making for the reduced price.
Know which products are generally always cheaper in bulk. Some products are almost always a relative bargain compared with the same products at grocery stores and big-box department stores. “Generally, electronics, wine and food staples offer the best value,” says Mark Williams, a Costco shopper in San Jose, California. Again, go for food staples that won’t spoil, like cereal and pasta.
Carol Gee, an Atlanta resident who is a regular at Sam’s Club, says she and her husband go there “specifically for paper goods, toiletries, paper towels and facial tissues. For a family of two, these items last us several months.”
Stephanie Nelson, founder of CouponMom.com, says batteries are generally a good buy at wholesale clubs. Milk and fresh and frozen meat are also good buys, according to Nelson. Gee agrees and recommends dividing your meat into smaller packages if you buy a lot.
“A large, double package of ground beef can be separated into four packs of approximately a pound each and frozen,” Gee suggests.
And both Gee and Johnson recommend buying coffee in bulk.
[See: 12 Ways to Save Money at Home .]
Don’t be afraid to ask for a price adjustment. You can come out even more ahead. “A couple years ago, I purchased a 7-foot, 5- inch prelit Christmas tree from Sam’s Club a couple weeks before Christmas,” Perez says, who bought it for $75. “A week later, I passed by the same tree and it was marked down further, to $50.”
She took her receipt to the store’s customer service department and says she was immediately refunded $25. Bottom line: If you’re a smart and careful shopper, you’ll probably do quite well as a warehouse club member. If you dislike shopping and generally buy on impulse, you may still enjoy bulk discount stores, but this could be the beginning of a financial hangover.
If you aren’t careful, you could easily find yourself short on money and staring at 80 rolls of toilet paper, a 58-ounce box of Pepperidge Farm Goldfish crackers and 4 pounds of pork chops — and wonder if perhaps your money should have been allocated a little differently.
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6 Rules of Shopping at Warehouse Stores originally appeared on usnews.com
