Shopping at Warehouse Clubs: Frugal or Not?

Over the weekend we visited a nearby Sam’s Club, something we haven’t done in many months. My wife and I agreed it is something we should consider doing on a regular basis (maybe monthly) to stock up on a number of staple food items and paper products.

Naturally, we both wondered if shopping like this was really saving us money, or just saving us from more trips to the grocery store, which in turn would likely save us money.

The problem, for me, with shopping at places like Sam’s Club is that there are so many shiny things to distract you. If you manage to steer clear of the electronics section, bypass the rows of discounted books and outdoor equipment, you will eventually make your way to the food, where the occasional deal may be found.

We like to stock up on things like ground beef, which comes reasonably priced in big “family pack” packaging. Once home, we separate the ground beef into roughly 1 pound portions and freeze them for future use in various recipes and regular dishes (tacos, spaghetti, homemade burgers, etc).

We also typically like to stock up on certain non-food items – paper towels, toilet paper, kitchen trash bags, over-the-counter medicines and vitamins, etc. The bulk pricing is not always a deal here, and I’ve occasionally found that I can often save more by coupling a store sale with a manufacturer’s coupon.

Still, the idea of stocking up on paper products for the next month or two, and not having to contend with those items in your weekly grocery store trips is appealing.

Shopping at a warehouse club like Costco or Sam’s can drive down your unit costs for items you regularly use, but there is one thing to consider: storage space. I would not suggest shopping at a warehouse club if you are short on space, including plenty of freezer space.

For storing paper products, consider a closet shelf in an guest bedroom, or under-cabinet storage in a guest bath. Naturally, places like basements and garages make great storage locations, but consider fumes, humidity and temperature and only store items that may be safely exposed to those elements.

On the Way Out: Top Off the Tank

Before leaving Sam’s Club we typically top off our gas tank, as the cost of fuel is a good $0.05 per gallon cheaper than it is in our town. Obviously gas pricing is regional, and you may or may not experience similar results in your area. However, we have found the gas prices at warehouse clubs consistently beat those of surrounding stations.

Consider the Costs: Membership Fees

Though warehouse clubs do occasionally allow non-members to shop on special days, it does cost money to shop. Do a simple break-even analysis to make sure you aren’t giving away all of your savings in membership fees each year. Divide your annual membership costs by 12, and then estimate how much you are saving each visit over shopping at your local grocery store with coupons.

If the cost of the membership is more than the amount you are saving each monthly visit, then it probably doesn’t make sense to sign up. Remember, bulk shopping is not always cheaper shopping.

Comments

  1. We had a membership to BJs but couldn’t justify the cost with the savings. After the initial visit (and buying a gallon container of mustard that lasted over 2 years) we just didn’t go there much. I found it overall to be more economical to couple coupons with the store’s sale price. There’s talk of a Costco coming to our area, I always hear good things about them, so I’ll check them out if they do set up shop nearby.

  2. One warehouse you didn’t mention is BJ’s. Not only do they have their own published coupons (which depending on what you’re looking for can offer deeper discounts on bulk items…like Diapers, etc.) BUT they also accept manufacturers coupons as well.

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  4. I have been thinking a lot about this issue lately. They are building a Costco near our home and I wonder if it would be worth a membership. In the past I’ve never considered it as I find it hard to wrap my head around paying a company to be allowed to spend money at their store… however if the savings were greater than the cost of membership I suppose I would be willing to play. I don’t currently know enough about Costco to make a decision but it is something I will be looking into further as the store is nearer completion.

  5. I’m skeptical that I’m receiving a big benefit from my membership. The annual fee means that the fewer trips we make the less likely we will recoup the costs. My family generally makes a trip about once a month and we are only buying a dozen or so items to restock our supply.

  6. Warehouse clubs can be worth the membership, but like any shopping, needs to be planned properly. Here are some things that can help:

    1. Split the membership cost. Join as an executive for Costco and its $100. Between two neighborhood moms, that’s $50 each and you get the 2% cash back each year, meaning the next year’s membership (with proper planning) can be as little as free.

    2. If you go to a Warehouse club, make it worth your while rather than “Oooh Shiny!”. Plan your trip of what you need. Know what you will likely use in a month (ie don’t buy 3 dozen eggs if you usually use only a half dozen). Know the basic prices of your most frequent items (ie if you know steak is roughly $5/lb, buying 20 at $4.96 doesn’t make as much sense)

    Then…adjust accordingly to make more frequent trips worthwhile.

    When DH & I go, we:
    1. Pick up our prescriptions (with price checks, all cheaper than regular drugstores).
    2. Get our tires rotated (free with tire purchases).
    3. Pick up bulk medicines (like off-brand Prilosec, which if there’s no good coupons that month is better priced than other places, for example).
    4. Take advantage of loss leaders like inexpensive gallons of milk.
    5. Pick up our list of items.
    6. Try out all the samples (hey, you don’t know what you might like until you try it…).
    And have some willpower here. I see way too many people who buy every sample out there, even if it doesn’t make sense for them. Just because I found I liked the Chihuahua cheese at Costco doesn’t mean I’m going to buy 6 lbs of it, but it will mean I’ll pick up the more appropriate 1 lb container at my local store.
    7. Look at what’s the latest “unknown” services they’re offering.*
    8. Have a cheap meal in the cafe.
    9. Pick up our photo prints (or discs, depending on what the photos are).

    *An “unknown” service is what I like to call all the invisible things that a warehouse club offers that doesn’t make their ads each month. Things like check printing, travel planning, car buying, house renovation items like gutters or carpeting, financial planning, etc. Those things can save one a lot of money and make your membership more worthwhile.

    3. Jason, I saw you’re getting into couponing a bit. I have a basic 12 week schedule of when OTC meds go on sale at a decent rate, so I know if I need something in between, Costco is probably the better deal. At the same time, sometimes its better to buy the larger container and not have to deal with 6 containers of 25 tabs of Advil, for example.

    Again, price lists/promotion schedules are key here.

    • Connie – Good point about prescriptions, we used to live near a Sam’s Club, they had by far the cheapest price on medication and you didn’t need to be a member to use their pharmacy or optical service (not sure if that’s still the case, haven’t been to one in years).
      and thanks for the “executive” tip, I’m sure I could get a 2 or 3 neighbors to split the cost, I’ll definitely check Costco out if they build nearby.

  7. We joined Costco so we can buy Kirkland formula. Now that the kid is weaning off bottle, we’ll probably cancel the membership soon. We don’t spend enough to justify the $50 membership fee.

  8. We’re members of Sam’s and love it. The savings on diapers alone justify the membership costs, but we get most of our groceries there, too. The meat is very inexpensive, and it’s hard to beat those prices at the supermarket, even with a sale.

  9. We have maintained out Costco membership even though they are no longer convenient to where we live because we save literally hundreds of dollars on eye glasses and contact lenses in their optical department. Anything else is just gravy.

  10. My wife and I were just commenting last weekend that our Sam’s Membership paid for itself on a single visit. We have two young boys at home – ages 3 and 5. Here’s where we notice the savings:

    * Apple Juice – buying the pre-made juice is cheaper than any other option we’ve seen, including frozen.
    * Diapers (thankfully out of those now) – savings here was also huge
    * Our boys love the fairly new Special K Fruit Crisps for a quick breakfast snack on the way out the door. Sam’s just started carrying them, and I want to say they were like 1/2 price from grocery

    In short, we find savings on the staples we use regularily. And I have to be very wary of electronics and the other gotchas, but if we stick to our shopping list, the savings can be huge.

  11. My wife and I were gifted a basic membership to Sam’s Club ($40). If we maintain self-control and compare unit prices to our normal shopping, we end up saving a few bucks on each visit. It’s when we get distracted by the “deals,” or some doo-dad that we do not need that the membership becomes a curse!

    We found that the savings on in-house brands for baby items pay for the Membership over the course of a month (buying the Simply Right formula over the Simillac formula and buying SR diapers over Target’s brand). As long as we can curb our enthusiasm about the other stuff in the stores, it works for us.

  12. Our grocery bills were highest the year we had a Costco membership. It seemed counterintuitive that buying in bulk for a lower per-unit price would in the end increase our grocery expenditures rather than lower it, but that’s exactly what happened. Part of it is that the more you have, the greater quantity you consume. Marketing researchers have figured this out — supersize packages get you to consume a greater quantity than you would with limited size packages, thereby requiring you to “refill” sooner rather than later. It certainly proved true in my home. Add to that the bulk of convenience foods I bought: prepackaged snacks and such, which I normally make myself and the cost goes up exponentially from homemade to factory-made. Meats at Costco in Canada are certainly not a bargain. They might be quality cuts, but they are extremely expensive and were never an option for us. Eliminating Costco from our shopping routine cut my grocery expenditures in HALF. Just that one thing!

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