Do Warehouse Clubs really Save You Money?

Aisles of a warehouse club with logos of Bjs, Sam's and Costco over them.

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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?

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.

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.

Today the three biggest players in the Warehouse Club market are:

Other smaller warehouse type stores include:

Smart & Final – with 315 Locations in the Western United States and northern Mexico. (October 2018 update)

Aldi – with 9221 worldwide Locations in 8 countries. They have more than 1600 stores across 35 states in the United States. (August 2018 update)

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.

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Advantages of some Warehouse Clubs

Return Policy

  • 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.

Quality

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.

Additional Services

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.

Free Samples

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!

Specialty Products

One of the best deals for people suffering from Lactose Intolerance is Kirkland brand Lactase Pills. They are twice as powerful and Lactaid and cost about 66% less. Read our review and breakdown of the costs here.

 

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.

Pharmacy

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.”

Liquor Store

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.

Do Warehouse Clubs Really save you Money?

6 thoughts on “Do Warehouse Clubs really Save You Money?

  1. Selina

    Costco executive membership here. Dinner rolls, muffins, produce, cheese, and a few select things here and there is what I get at Costco. I do make note of costcos prices for some of my other staples and compare them to the other stores I shop at and go with the best deal. 🙂 We get our refund check from them every year and its usually at least the membership fee if not a bit more.
    (Im in MT and price compare with Albertsons, Walmart, Target, CVS, Walgreens, and a few locally owned stores for the best deals on groceries. Single mom, of 4, full time CNA, and college student)

  2. 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.

  3. 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.

  4. Connie

    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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