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?
We’ll discuss the pros and cons of shopping at the warehouse clubs AND we’ll tell you how you can do it without buying a pricey membership.
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.
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.
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.
Today the three biggest players in the Warehouse Club market are:
- Costco – with 759 Locations (August 2018 update)
- Sam’s Club – with 597 Locations (January 2018 update)
- BJ’s – with 215 Locations (January 2018 update)
Other smaller warehouse type stores include:
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.
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Advantages of some Warehouse Clubs
- Costco is known for a no-questions-asked return policy. You can read Costco’s Return Policy here.
- BJ’s is quite helpful with their return policy, but they do have some limits. These include electronics and computers – 90 days. Read BJ’s Return Policy here.
- Sam’s Club is return policy looks similar to Costco and BJ’s but appears to have stricter time limits. Read Sam’s Club’s Return Policy here.
Costco and BJ’s are known for only selling top quality items. Years ago we read that Costco regularly stocks items that were rated “Best Buys” from Consumer Reports.
Most of the warehouse clubs offer optical and pharmacy services which are usually less expensive than grocery or drug stores.
They also offer home services, and travel and rental car discounts.
This may sound strange, but Costco even sells caskets. Sam’s Club and BJ’s do not list caskets on their websites.
Strolling the aisles and enjoying free samples of food is one of our favorite perks of warehouse club shopping. We even found that if we took our kids to the bakery section, one of the workers would give each child a large cookie!
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How to Shop Warehouse Clubs Without A Membership
If you only shop at a club store once in a while, you might be able to get by without buying a membership. Try these 4 ideas and see if they fit your lifestyle and budget.
Go to Costco, Sam’s Club or BJ’s with a Friend who is a Member
We’ve done this many times. We get a great deal and get to spend time with friends. It’s a winning combination. Some club stores won’t accept card payments from non-members. Check the policy before you go, and bring cash if necessary.
Use a Costco Cash Card
If you have a Costco Cash Card (their version of a gift card, you can shop without a membership.
The Costco website says, “Members and non-members may use the Costco Cash Cards to shop at any Costco location in the United States, Puerto Rico, Canada and online at Costco.com.”
Anyone can shop at a Costco if you have their version of a gift card — the Costco Cash Card. Just know that if you choose to shop at Costco.com with your gift card you’ll be charged 5% more than the list price.
Eat At the Food Court
Non-members can buy and eat at Costco’s Food Court and at Sam’s Club Cafe. One of Annette’s Dad’s favorite meals is the Costco Hot Dog and soda for $1.50. We love their Pizza and the price.
Non-Members can get prescriptions filled at Costco and Sam’s Club. But you can’t buy eyeglasses at Costco without being a member. We were told that it is because you are purchasing something that is “off the shelf.”
This seems strange, but Sam’s Club website says that you don’t need to be a member to purchase liquor from them. Costco also allows non-members to purchase alcohol.
Eyes and Ears Checked
You can also get vision and hearing screenings without being a member at either Costco or Sam’s Club. But as we mentioned above, you’ll need to use a gift card or have a friend with you if you want to purchase eyeglasses, contact lenses, or hearing aids.
So you really don’t need to pay for a membership if you just do a little advance planning.
If you want more detailed reasons why we don’t like shopping at warehouse clubs, check out these links.
- AARP Bulletin—Do you save money at warehouse clubs
- 7 Ways Warehouse Clubs Make You Spend More Money
- In our book, Cut Your Grocery Bill in Half, we present research we did between grocery store sale prices and warehouse club prices on some commonly purchased grocery items. The savings at the grocery store were staggering—between 17 to 50 percent cheaper! Do your own research and let us know what you find.