There's been a lot of talk lately about warehouse clubs and their ability to save you money. I thought I'd profile a few of the pieces written on the issue and offer my opinion as well.
We'll start with a piece I did titled How to Save Money on Grocery Purchases. It was from some research done by Consumer Reports that ranked four types of food shoppers. The second best shopper (lowest cost) was warehouse clubs with "store-brand shopper" coming in first. As I suggested, "store-brand shopper in a warehouse club" would probably have done even better. ;-)
On the other hand, Sound Mind Investing wasn't so sure that warehouse clubs really saved people money. Why? Because clubs make people buy in larger quantities than what they might buy in normally, spending money on an extra box of this, and extra piece of that, and so on that they really don't need or want. So they actually went to Sam's Club as well as two grocery stores (Kroger and Mejier) and compared the costs on 175 items. In the end, they found that shopping at club stores was cheaper. The summary:
After crunching the numbers, I found that a great majority of the items were indeed cheaper at Sam's. On average, the savings amounted to 31%, more than enough to easily offset the $35-45 annual membership fee.
To see if there were patterns to where the savings would be found, I broke down the data into categories: baby, can goods, cereal/bread, cooking/baking, dairy, frozen, health/hygiene, household (cleansers, paper and plastic products, etc.), snacks, soup/sauce, and other (peanut butter, stuffing, salad dressing, etc.). The big winners: cereal/bread, cooking/baking, snacks, and other averaged nearly 40% savings. Still not impressed? Buy some raisins, syrup, bottled water, and sandwich bags and you can save an average of 66%.
Finally, The Simple Dollar offered some thoughts on how to tell whether or not a warehouse club is worth its cost to you. Trent concludes with these thoughts:
The real trick with warehouse clubs is to know how to focus on the stuff you’ll actually use in good time and avoid the stuff you don’t actually use in large quantity. When we shop there, we basically only buy things we know we will consume in their entirety in the near future (i.e., a bottle of wine) or we use so consistently that we’ll get through it pretty quickly (i.e., dishwashing detergent).
If you don’t stick to a similar policy, you’ll end up with a cupboard full of unusable stuff - and that’s a huge waste of money. Focus on the staples, though, and warehouse clubs can likely save you quite a few dollars.
I agree 100%. Just like any other place you shop, you need to buy only what you want/need/will use, otherwise a warehouse club will be a waste of money for you. Overall, the best option for saving is to shop at a few different stores, taking advantages of sales, coupons, store discounts, rebates (ugh!), quantity discounts, store brands, and any other savings you can to pay the least amount you can. Of course, even this method this has a limit -- you can probably save the most money by shopping at 10 different stores, but who has the time to do that? If you simply pick a handful of places to shop and you buy there according to what's on deal at each, you'll get 80% of the cost savings for only a fraction of the work.
We shop at one grocery store primarily (Meijer) and supplement what we buy there with purchases from two local grocery stores, Costco, and Walmart (not a supercenter). Bring in the occasional purchase from Walgreen's, Target, and the like that we can hit conveniently while we're already out, and we have a pretty good balance between time and savings.
For some details on great deals I've found at warehouse clubs, check out these posts:
Gordon Food Service Marketplace stores give you warehouse club prices & restaurant quality food with no membership fee.
Posted by: Travis | April 29, 2009 at 01:04 PM
ALDI also isn't a warehouse, but saved me about 30% overall back when I was keeping track for comparison. Maybe not as cheap as warehouses, but they often beat Meijer/Spartan brand prices and I can buy in single-guy-with-compact-car quantities.
Posted by: DCS | April 29, 2009 at 01:30 PM
I have two kids and I joined Sam's club a couple years ago. I was going to opt out on renewing my Sam's membership this year to save money, because I'd found that most food bought at Sam's goes bad quickly. But first, I went through all my Sam's receipts and purchases from 2008 and calculated if I was getting savings shopping at Sam's vs buying those same things at my local supermarket chain or Target superstore.
I was amazed....even buying only the limited number of things I consider "safe" to buy at Sam's was saving me >$100 annually above the $40 annual membership fee! And that's not even counting office supplies and electronics.
Full disclosure--I prefer buying brand-name for many grocery items because it's not worth it to me to compromise on quality. The biggest per item savings I found were on coffee filters (60% off), gourmet coffee (42% off), and brand-name hand lotion (34% off). Brand-name peanut butter, strawberry jam, bottled water, and spaghetti noodles were each about 30% off. Paper products (TP, paper towels, and tissues) were a less impressive 14% off, about the same as other discount stores.
On the other hand, I never purchase perishables anymore from Sam's club because everything is sold very close to or on the sell-buy date: milk that will go bad in 1-2 days and overripe vegetables--worse than useless to me. Even supposedly non-perishable items can be a problem if purchased at Sam's: brand-name canned tomato paste (sold just before the "toss" date on the can) turned out to be weirdly colored and inedible the day after purchase, and some packaged crackers and potato chips (sold at the sell-by date) were stale.
If there was another warehouse club in my town, I'd probably use it instead. I'd like to get savings from buying in bulk, but I find it annoying and borderline sneaky that Sam's discounts seem to arise from selling people bulk quantities of food that are very close to going bad. You have to know that and examine the sell-by dates carefully to avoid getting ripped off. It's sneaky because most people buying a case of canned goods expect the food to be edible a few days or even months after purchase.
Posted by: MC | April 29, 2009 at 01:59 PM
The price difference between Sam's and Wal-Mart is very minimal (< 10%). Since I didn't need to buy a large quantity AND Sam's didn't eliminate my trip to Wal-Mart (just because it doesn't sell everything), I gave up my Sam's membership two years ago.
At last, I felt I bought more than I needed at Sam's...
Posted by: ss | April 29, 2009 at 02:34 PM