Retail Smackdown: Costco Versus Sam's Club

In May's issue, Consumer Reports wrote about Sam's Club versus Costco. As a past shopper at Sam's and a current fan of Costco, I was interested in seeing what this trusted source of consumer information had to recommend.

If you're like me and just want the bottom line (which on is better?), you can head straight to the Consumer Reports Press Room that summarizes their findings. The highlights:

The result: The deals are great day in and day out from both, but there are differences that can guide people’s choice if they haven’t joined, or lead them to switch clubs.

CR’s findings — based on data from reader surveys, expert interviews, its own shopping at both clubs, and price comparisons with competitors — revealed several pros and cons for both clubs. Among them: Readers gave higher overall scores to Costco for groceries, electronics, small appliances and eyeglasses. Sam’s Club’s return policies for electronics are rated more generous; at Sam’s customers have six months to return a computer and can return anything else anytime. At Costco, customers have 90 days to return most electronics and can return anything else anytime.

“Both have strengths and weaknesses, but the bottom line with a warehouse club is that they can be worthwhile even if you’re not necessarily buying for a business or a large family,” said Tod Marks, Senior Editor at Consumer Reports. “The beauty of shopping at the clubs is not having to wait for a sale, because everything is sold at really good prices every day, unlike your local supermarket, where only specific items are on sale.”

Ok, so the answer is "it depends." What a cop-out. But I guess it's a fair answer. Maybe.

Personally, I LOVE Costco. For details on why, see some of these posts:

• Health and Beauty Aids: Walmart versus Costco, Kirkland Brand versus Equate Brand -- Which is the Best Deal?

• Costco versus Walmart, Round 2

• Smoothie Product Face-Off: Dunkin' Donuts versus Costco

• Money Saving Tip: Excellent Presents from Costco

• Why Costco Is All Pumped Up

• Great Buy at Costco

In addition, I'm not too impressed with Sam's Club's attempts at marketing. So I guess you know who I'd list as the winner, huh?

But to be fair, I went to Google and entered "Costco vs. Sam's Club" and selected the first five articles (not videos or forums) I found on the subject. Here's a summary of them:

• News Target - The bottom-line verdict here is that Sam's Club gets a definite thumbs down for wasting your time and hiring employees who seem totally clueless about how to make things go faster, whereas Costco gets an enthusiastic thumbs up for having intelligent employees and a highly efficient checkout process that gets you in and out of the store in no time. From now on, you can guess where I'll be going when I need to buy something from a members-only discount warehouse retailer.

• MCC Media - Costco's performance is far superior to that of Sam's Club. Costco's stores generate more than 50% more annual sales on average than Sam's Club stores, and its comps usually outpace its
  peer's. How does Costco do it? By matching Sam's Club on price, while offering far superior customer service.

• USA Today - "I'm a big admirer of Wal-Mart, but I admire Costco more," says Charles Munger, Warren Buffett's longtime business partner at Berkshire Hathaway (BRKB) and a Costco board member. "Virtually none of the sins of modern capitalism are at Costco."

• Business Pundit - Costco is known for putting employee and customer interests first. It picks up much of the cost for employee health plans. And to the benefit of customers, it doesn't sell goods at more than 14% above the price it paid for them. While such efforts are popular, shareholders end up paying a price, says Tryka, in the form of lower profit margins. "Management is focused on consumers and employees to the detriment of shareholders. To me, why would I want to buy a stock like that?"

• The Budget Fashionista - Comparing Sam's Club to Costco is like comparing Wal-Mart to Target. Sam's club is located in areas where customers HAVE to budget shop and Costco tends to be located in wealthier suburbs, where customers have the luxury of choosing to budget shop. One offers less selection and better quality, while the other offers more selection and a little less quality. One is the biggest seller of fine wines and the other is part of the company that is the biggest seller of well, everything. From a budget fashion perspective, Costco is obviously the better store offering major discounts on big name brands like Calvin jeans for $22.99 and a great no questions asked return policy. Even its own house brand Kirkland, has clothing like men's dress shirts that are comparable in quality to major department store brands like Marshall's Fields and Nordstrom, with one exception- the Costco brand shirts cost 50% less. However, what attracts budget shoppers like myself to the store is that Costco caps their markups at 14% over the price they paid for an item- significantly less than department stores (up to 50%) and yep, even less than Sam's Club/Wal-Mart.

It appears to me that there's a clear winner here, but I'll let you decide. It's now up to you -- which is your favorite between Costco and Sam's Club?

Comments

I like shopping at Costco better.

What's interesting about the Business Pundit blurb is that it was written in 2003 and the author had never been in a Costco. They seemed dissappointed that Costco was serving consumers and "wished the company well" in the future but they didn't think the company could maintain growth...well, Costco has done exceedingly well indeed.

[MoleOnABull]

Looks like popular opinion (with some NaCl) favors Costco. I only have Sam's where I live... haven't been to a Costco, so I can't comment about them, but I've also never really had any complaint about Sam's. Perhaps I'm just not that particular about this sort of thing ;-)