Do warehouse clubs really save you money?

Do Warehouse Clubs Really save you Money?

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The concept of shopping in a warehouse and buying directly from a distributor is an appealing idea for money saving minded people. But do today’s warehouse clubs really save you money or are they merely a carefully marketed retail store that has lots of stuff in it, designed to separate you from your money?

What is a Warehouse Club?

Warehouse clubs are in truth a retail store, that has been strategically designed to look like a warehouse. They utilize tall heavy duty shelving, high ceilings, wide aisles and simple cement floors. a

They carry a wide range of merchandise from mega-sized groceries to computers. The stores are designed to make customers think they are getting wholesale pricing. In truth, some prices are warehouse clubs are less expensive, however, there are other drawbacks . . . keep reading below to learn what they are.

Warehouse clubs are able to keep their prices low because they offer fewer frills than smaller retail stores. And the biggest difference is that they charge a membership fee, which generates much of the club’s profits.

The History of Warehouse Clubs

Warehouse clubs have been around since the 1970s.

Price Club – Sol and his son Robert Price founded Price Club in San Diego in 1976

Sam’s Club – Discount mogul, John Geisse established The Wholesale Club in Indianapolis in 1982, and in 1991 sold it to Sam’s Club

Costco, Pace, Sam’s and BJ’s – In 1983 the warehouse club market became more crowded as three more players entered the marketplace: Costco Wholesale, Kmart’s Pace Membership, and Sam’s Club all opened their doors. BJ’s Wholesale Club was found the next year in 1984.

Each year more than 460 billion dollars are spent at warehouse clubs, while spending at 38,000 U.S. grocery stores stands at around 606 billion dollars.

How to Shop strategically at Warehouse Clubs

Warehouse clubs have been referred to as the $200 clubs because many people can’t get out of there spending less than $200.

Warehouse Clubs versus Grocery Stores

We’ve done a price comparison of several items at the club stores and have found that we could save 17 percent to 55 percent by purchasing the same items, on sale, at the grocery store. When factoring in the annual membership fee, the savings at a grocery store are even greater.

If you are a careful hunter and have a select few items that you purchase at warehouse clubs, you might save a little money. But for the vast majority of people, the club stores will cost more because of impulse buys and because it takes a long time to “earn” back the $50 membership fee.

The Danger of Impulse Buys and Limited Availability

At the grocery store, you might pick up a $1 to $3 item impulsively. But at the warehouse stores, the impulse buys are more expensive: $5 to $100.

The clubs also prey on impulsiveness by stocking lots of seasonal or limited quantity items. This causes the average consumer to think that they have to purchase it now or it will be gone.

Plus most folks a very reluctant to take something back once it leaves the store.

While it’s true you may miss that deal on a fancy foosball table, you will miss the cash in your bank account even more. Shop around and you’ll find better deals and greater savings.

If you want more detailed reasons why we don’t like shopping at warehouse clubs, check out these links.

4 thoughts on “Do warehouse clubs really save you money?

  1. lisa

    Warehouse clubs offer larger sizes of items. For example, Snapple tea comes in 20 oz bottles. Not the 16 oz in stores. So, you have to factor cost per oz. Not cost per item…… Costco’s beef is a higher quality as well. USDA Prime is what you’ll find and the organic ground beef is $5 per pound. WHERE can you find that?? Supermarkets can’t come close. We see eggs at $1.80 for 18 count. That’s incredible. A shredded 5 lb bag of mozzarella is about $10. For us, we have looked at prices, quality and size and find that Costco has some real bargains.
    A membership at $55 is still worth it to us. Just like Connie said, gas is cheaper per gallon. I’d say about 10 cents a gallon or more.
    We used to have a membership to Sam’s Club. For us, the selection was limited and didn’t carry items we typically use. The best deal for us was the pork shoulder for something like $1.50/ lb. And a 5 lb bag of egg noodles for a few bucks…. The membership is cheaper but we just don’t use a lot of their items.

  2. Margaret

    My husband and I really like the warehouse club, Costco. We have been given memberships for Christmas the last couple of years and we go there once a month. We save a lot of money on batteries, nuts, snack crackers, cheese, bathroom tissue and paper towels to name a few. Every month, Costco also gives small rebates on different items which make the items an even better buy. I wish the Costco was closer (45 minutes away) but even considering that, we save enough money to make it worth our while. It is an outing for us and something we look forward to. It is true you have to be careful about buying things you don’t really need simply because they’re interesting and things you might not have seen anywhere else. Also, I will go as far as to say, Beware the snack vendors. The snacks don’t ever seem to be as good at home as they were in the store. All that said, we’re pleased with the Costco experience.

    1. Steve Economides

      Sounds like you’ve found some great specific items that save you a ton of money!

  3. Connie Post author

    The grocery clubs are great when it comes to getting a break on your gasoline purchase. I agree most people are tempted to buy the larger packaging thinking they are getting a savings. Sometimes it is true, but most often the unit price is more than you might find other places. There is lots of tempting merchandise and it takes a lot of will power to avoid the hooks. For me it is a long walk to get a few well priced items like bulk cheese and I usually don’t shop there even for that. My membership was a gift, I would not have purchased one for myself.


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