To Warehouse Club or Not? That IS the Question! (Part 2)

May 30

Image sourced by Eduardo Soares @eduschadesoares

If you’ve been following Budget and Grow Rich®, you probably recall that I live alone most of the time and my children are living on their own. So warehouse club membership didn’t seem to make much sense.

If you happened to miss Part 1 of this series, click here.

There are compelling reasons to join a warehouse club and there are considerations why you should not join a warehouse club.

Needless to say, to make a sound economic decision, you should consider the pros and cons of warehouse club membership in light of your family, household and eating habits and the items you buy.

Me?

I live alone most of the time so I’m shopping for one, so a warehouse club membership isn’t that economical for me. Even though my daughter Rita has the second membership card.

The other day Rita texted me that has used the membership card once or twice during the year, but she’s overdue for a Costco visit.

Since I purchase food for one, I don’t use Costco all that often. I don’t buy all that much because the packages and portions are too large for me. In fact, I have to make a concerted effort to get myself over there. So I downsized my Costco membership from Executive to Gold Star.

That reduced my annual membership from $130 to $65.

With the Costco Gold Star membership I don’t receive the 2% rebate. Which means that to recover my membership cost, I have to spend enough money at Costco so that the savings on the items I buy (as compared with supermarket prices) exceed the annual membership fee.

But if we do the math calculation, to receive a $65 ($130 minus $65) Costco rebate check at 2% rebate, I would have to spend $3,250 during the year.

That’s $65 divided by 2% (or 0.02).

I have a small 5.5 cubic foot refrigerator freezer and there’s not tons of room for a whole slab of steak or a side of beef or a great big whale of a fish. Besides, by the time I got to eating the whole thing, it would spoil or have freezer burn.

Not in the cards for me, unless I start having dinner parties regularly and/or using the Costco travel agency, Costco pharmacy and Costco optometrist.

Given my lifestyle and hectic schedule, that’s unlikely.

For the moment, I’ll keep test-driving the Costco Gold Star Membership and reevaluate when my membership comes up for renewal.

Even if you don’t run the math for your household, you can get a decent feel for whether warehouse club membership is beneficial for you and your family.

Another option for me would be to cancel my Costco membership and tag along with my buddy Frankie who has a Costco membership and treat him to breakfast at the diner every so often.

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Why Join a Warehouse Club:

Attractive Savings: the prices tend to be attractive as compared to the supermarket – You often pay less per unit when buying in bulk, especially for non-perishables.
Quality House Brands for Less: Costco and other warehouse clubs offer their own brands, for example, ‘Kirkland Signature’.
Discounted Gasoline: many warehouse clubs offer inexpensive gasoline.
Discounts on Pharmacy: most of the warehouse clubs have their own pharmacy which offers attractive prices.
Food Court: my local Costco has a food court which sells hot dogs, pizza, fountain drinks and a number of other items.
Discounted Electronics and Discounted Home Appliances. Warehouse clubs offer many major items – hard goods – at very attractive prices. Last year, I purchased a gamer chair which I use as a desk chair. High quality for less and delivered right to my door.
Extended Warranties and Favorable Return Policies: when I returned the dishwashing liquid, NO questions asked. Be sure to read the rules of the road to ensure that you receive your money.
Discounted Office Supplies: many businesses I work with purchase office supplies, pantry and breakroom items at Costco and save money.

Why Skip Warehouse Club Membership:

Annual Membership Fee: annual membership fees run between $40 and $150. You should estimate whether you’ll save enough money on the savings on the items you purchase and the annual rebate. This will give you a sense of whether warehouse membership is beneficial for you and your family. As my example above illustrates, membership wasn’t worth the cost.
Spoiled Food: warehouse clubs offer big packages – super size. I purchased a box of Kellogg’s® ‘Cracker Collection’ for approximately $8.00 – a bargain. The Cracker Collection contained 13 stacks (mini-packages) of four varieties. For me, the problem is ‘binge eating’ where I snack and eat more crackers than I should. I’m confident I’ll consume all the crackers before the expiration date. But I don’t really need to eat them in the first place.
Overspending: warehouse club aisles are loaded with goodies – products at attractive pricing staring us in the eye. For most of us, it’s very easy to buy more than you need.
Waste of Time: As I mentioned, I find the Costco shopping experience to be overwhelming. The parking lot is packed and drivers are nutty. Lines are long and I find it difficult to shop efficiently, especially compared with my local Trader Joe’s and Stop ‘n Shop supermarkets where I know the location of the items I want to purchase. While Trader Joe’s and Stop ‘n Shop’s products may cost more than Costco’s, I can navigate the stores easily and efficiently. And Stop ‘n Shop rarely changes the location of the products. Trader Joe’s does rearrange the store every so often but their staff is very friendly and helpful.
Select Products and Brands: I find that warehouse clubs offer fewer brand choices than my local supermarket. Although Trader Joe’s offers their house brands only with a few exceptions – products they don’t manufacture or commission.
Distance from Home: warehouse clubs require more space than the typical supermarket so it’s likely you’ll have to travel a bit. My local Costco warehouse club is a 10-minute drive from home. Plus I have to travel on I-95 interstate highway a bit.
You have to be a Member: Although, you can go shopping with a friend who is a warehouse club member.
Upfront Cash Outlay: since warehouse clubs offer bulk packages and supersize packages, you are making a cash investment upfront and getting products that you can use for a period of time. Given I live alone most of the time, some of the groceries I buy spoil before I consume them.

The decision to join a warehouse club or not depends on your eating habits.

If you have a big family full of hungry, growing children, you can save a lot of money on food and staples.

Under the right circumstances, a warehouse club membership can save you bank!

But you have to do the math and monitor your spending vs. savings.

Or go with your gut.

Let us know how it goes.

To Save More Money on Groceries Every Day – click here.

See you next week.

Arthur V.

ISSN: 2992-9296

Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!