Thursday, June 13, 2013

Bigger box is not always better

Costco is great, right?  Everything anyone could possibly need all under one enormous roof.  Food, clothing, electronics, jewelry, even a gas station and auto repair center!  Who doesn't like a one stop shop?

Also, you have this cool membership card that allows you access to all these great deals on bulk items!  Who doesn't like being part of an exclusive club that saves money?!

What a great package!

I love Costco and its other big box companions up to a point.  Don't get me wrong, I shop there from time to time for things like rice, flour, sugar, and canned goods (I go through an ungodly amount of these cooking from scratch all the time), but I always have to do some serious math while shopping because not everything is a good deal.  I am a huge bargain shopper, and I can tell you off the top of my head how much general canned goods, dairy of various types, and meats should cost, on sale, at least for my part of the country.  That serves me well, because I can calculate how much the items at Costco are costing me per unit and compare to my grocery store deals.  And guess what.  Costco is often NOT cheaper.  Not by a long shot.

Here's the rub.  Costco carries name brand products.  Buying in bulk means they don't carry a wide selection of items.  Sometimes they also have their Kirkland store brand, which is often times cheaper, but if not, you are stuck paying name brand prices.  Grocery stores carry name brand, store brand, and off-brand products.  Especially with store brand stuff, they can deeply discount and still make a huge profit margin because they don't have distributors to pay or minimum prices to meet as set by the company.  Therefore, you, the consumer, can pick them up for cheap on sale.  Costco stuff doesn't go on sale.  Costco prices are lower than regular grocery store prices on brand name items.  But don't go blindly assuming that you can do better at Costco than at your local grocery store.

When you add in the cost of the membership, unless you are buying big ticket items like electronics, are doing a lot of catering via their deli, or buy a LOT of things in bulk, its hard to justify doing much shopping at Costco.  You have to save more than $50 per year to just break even. I also think people go bulk happy and get overly excited about buying 6 tons of canned beets, so maybe some of the purchases are a little unnecessary.  Its hard to ignore all the cool stuff, especially when you are "saving so much!"

However, Costco has its place.  It does offer cool stuff like organics and uncommon items like quinoa, bulgur, etc.  It does offer a break on things that seldom go on sale, like flour, sugar, some produce items, etc, and buying those in large quantities really does beat the grocery store prices, if you use it all up in time.  The Kirkland brand stuff is good quality and you can save a bundle over the national brands.  If you already buy a lot of brand names and packaged foods, you can save some money.  For things I don't like to sacrifice quality on, such as toilet paper and paper towels, I like the Kirkland brand because it is still reasonably priced.

Some tips for getting out with your wallet in tact?
1) STICK TO A LIST! Costco is very alluring, but unlike the grocery store where an impulse buy may cost you $5, Costco can easily hit you at $20 or more.

2) Know your prices.  If you know how much a sale price for cheese or meat is before you shop, you can make the best selections and skip the not so great deals.  Keep a calculator handy if you need to!

3) Shop with friends and family.  I piggyback off of my in-laws' membership so I'm not out the annual fee, otherwise I don't think the savings would amount to much.  We also split large boxes of some stuff so we can cut the cost in half and are less likely to waste items that have gone stale or spoiled.

4) Only go periodically and buy products you know.  I wait till I am out of several items before I make a Costco run.  I come home with less unnecessary items if I go less frequently, plus my grocery budget has a chance to build up before I drop $150 on one grocery trip. Also, I try to avoid lots of new items so I am not stuck with a huge case of something I don't like.

Well, there you have it!  Big box stores can be a great way to save for your family, but be careful and compare prices. These tips also apply to dollar stores, so know your prices, stick to a list, and you will be okay!  Happy shopping!

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