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Membership Warehouse Stores: Deal or No Deal?

Membership warehouse stores are definitely popular, but are they a good deal for the people who shop there?

by Jeff Yeager, Updated April 2011

When it comes to membership warehouse stores (such as Sam's Club, Costco, and BJ's Wholesale Clubs), people seem either to love 'em or hate 'em.

See also: The deal with outlet malls.

For warehouse-store shopping fans, nirvana is sitting in the snack bar enjoying a $1.89 jumbo hot dog and jumbo-jumbo soft drink, your overflowing flatbed cart next to you, with the smell of fresh rubber tires wafting your way from one aisle over. "Dessert?" you ask yourself. "I think I saw them handing out free samples of blueberry cobbler, right next to the display of hydraulic jacks on aisle 17."

Yep, I've been there.

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Membership-warehouse stores are literally a huge business. There are more than 75 million card-carrying members of America's big-box behemoths. Sam's Club, the nation's largest members-only warehouse club, has more than 500 stores nationwide, each at 110,000–130,000 square feet. In case you were wondering, 16 U.S. Pentagons, one of which is the world's largest office building, could be housed neatly beneath the combined corrugated steel shell of those combined Sam's Clubs.

Membership warehouse stores are definitely popular, but do they end up a good deal for the people who shop there? The answer is, as with most money matters—it all depends. Obviously a lot depends on your family size, proximity to a warehouse store, shopping and cooking habits, and the amount of storage space you have available.

Here are some things to keep in mind before you get out your checkbook to join a membership warehouse club:

  • Make a List and Stick to It: Impulse Buying Alert! Impulse buying can be a problem at almost any store, but at warehouse stores, the stakes are much higher. As a friend of mine says about his recent shopping experience at a warehouse store, "We went in for some hot dogs and walked out with a hot tub." Warehouse stores are notorious for tempting people to buy things—big-ticket things—they hadn't intended to buy. Always go in armed with a shopping list and jumbo-pack of shopping willpower.

 

  • Do the Math on Membership Fees: Many people are philosophically opposed to paying "for the privilege" to shop someplace, and when you put it that way, it is hard to swallow. But it's easy to do the math to figure out if and when you'd recoup your membership fees (generally about $30–$50 a year). You can go to most warehouse-store Web sites to compare prices on certain items to see how much you'd save. Warehouse stores sometimes offer free trial memberships or allow you to browse to get an idea of the potential savings. Here's a tip most people don't know: Warehouse clubs cannot require you to be a member in order to use their discounted prescription-drug services, since such drugs are regulated by the federal government.

  • Too Many Perishables: Overstocking on perishable items can quickly eliminate any cost savings if they end up spoiling and in the trash can, so be extra careful. And food products aren't the only things that can go bad. Lots of things, from batteries to baby powder, have a limited shelf life that you need to be aware of when buying in bulk. Make sure to check expiration dates.

  • Know Your Prices and Per-Unit Costs: In general, it's safe to say that warehouse clubs have very competitive prices on most products. You can still find some items for less at regular stores, but you have to be a smart shopper and spend time in order to do so. It's also worth noting that coupons are not always redeemable at all warehouse clubs. Warehouse prices are generally lower, because the package quantities are bigger (typically 20–200 percent larger than in other stores). So the most important price to compare is "per-unit cost" of all products. (Also look for "cost per ounce," "cost per 100 napkins," and similar signs posted on warehouse shelves.)

  • Quality Counts: If you've never shopped at a warehouse store, you may be surprised to find that many items these merchants stock are of at least slightly better quality than similar items at regular stores. In the case of meat, produce, and other food products, you'll often find more of a restaurant-grade selection than in typical supermarkets. Other warehouse products—from power tools to cleaning products to tulip bulbs—may be the commercial-grade version of brands you see in average stores. Consider this increased quality when evaluating warehouse prices.

  • Try Before You Buy: This is my wife's greatest warehouse weakness: She'll buy a jumbo-sized product at the warehouse store and then immediately discover that she doesn't care for it. Being the parasite in our marriage and hating to waste anything, I feel compelled to use up whatever she doesn't. In fact, I'm still nibbling away at a 40-pound barrel of cheese snacks she bought at a warehouse store during the Reagan Administration. To avoid such stale snacks and other wastes of money, try the small size of a product before you supersize it at a warehouse club.


Jeff Yeager is the author of the book, "The Ultimate Cheapskate's Road Map to True Riches." His Web site is www.UltimateCheapskate.com.