I often see the suggestion made to join a warehouse store to save money on food and paper goods, because it’s assumed that it’s going to be a cheaper option.  I used to shop at warehouse stores, but now I seriously question if it’s a financial savings for most shoppers. 

First of all, there’s the membership fee of about $40 for a year.  That doesn’t sound like much, right?  In a year, of course you’ll save lots more than that!  Or will you?  So let’s start by looking to see if you can recoup your fee, which you’ll have to do to break even.  (There’s no savings unless you can do more than break even, obviously.)

Saving money in a warehouse store is an art, but most people think that all they have to do is shop there to save money!  They walk around dumping oversized packages of whatever strikes their fancy into their carts, positive that it’s lots cheaper than they could buy it for in a regular supermarket.  Everyone knows that buying in bulk will save money, and seemingly, when you’re in a warehouse store, you’re buying in bulk.  But things aren’t always what they may seem, and that’s an assumption that will cost you money.  My hesitations about endorsing warehouse stores as money saving options are below.

1) First of all, the majority of food items sold in warehouse stores are processed items.  When you buy processed foods, you’re buying foods that are full of additives, GMOs, high fructose corn syrup, plus bad fats like cottonseed/vegetable/soybean oil.   And you’re paying significantly more than the cost of ingredients themselves, for the convenience of not having to make the food yourself.   Right off the bat, I’d tell you to cut your convenience food consumption and that will make a much bigger dent in your food budget than shopping at stores like these.  But I know that many people enjoy these foods and don’t want to give them up, and are happy to get them a little cheaper.  So once you’ve determined the item you’re considering is a value for you to purchase, look at the unit pricing.  How much is it per ounce?  How does it compare to the per ounce cost of a smaller box at your supermarket?  You need to know this information to be an educated shopper.  It might be a little less expensive than the regularly priced item (or not – the Sam’s Club here is in the same complex as Walmart, and I often can find the same thing cheaper at Walmart – and you don’t need a membership to shop at Walmart).  But once you start comparing the sale prices of the supermarket items to warehouse items, the super-sized boxes stop looking so appealing! 

2) Then, most of the foods in the warehouse store are brand names, with the exception of the one store brand.  Name brand companies have spent plenty on advertising to make people think they’re offering top value, but in reality, there’s not much difference between most of the companies.  Recognizing this makes it easier to stay away from name brands, and choosing the less expensive labels is another good way to save money (not including fantastic sales or couponing, which can make it possible to spend less on name brands, but which only apply in regular supermarkets). 

3) What about when it’s not less expensive to buy in the larger package?  Don’t make the mistake of thinking that because you’re buying a fifty pound bag of something, it by default must be cheaper.  I haven’t found this to be the case at all.  On a regular basis I find it less expensive to buy items in the smaller packages – for example, it’s significantly cheaper for me to buy 1 lb bags of beans or rice than to buy it in 25 or 50 pound bags.  It may be counterintuitive, but it’s true.  Again, you need to know what the unit pricing on the item is.

4) So you’ve determined the item is a good value, and you bring it home.  Do you use it in the same quantities you would otherwise have used it?  When I shopped at these stores, I found myself buying larger amounts of things than needed because ‘it was such a good deal’.  But if you’d usually use a standard box of Cheerios for your children’s breakfast, and you end up using a mega sized box (ie, double) instead because you feel it was so cheap, you haven’t really saved anything.  You’ve just spent almost double what you would have otherwise, without even realizing how you’re draining your budget – because you’re busy feeling so good that you bought your Cheerios cheaply.  People do the same thing when being extravagant in the use of paper plates or paper napkins, because they bought so much. That’s fine if your goal is to increase your quantities, but don’t fool yourself and think that you’ve saved money. 

5) I also found myself buying things that I didn’t really need, just because it seemed like a good price.  So you need to be sure that you won’t fritter away whatever savings you think you’re gaining by buying things that you don’t really need.

I found that there were only about three items that were money savers for me, and none of them justified the cost of membership – 40 lb bucket of powdered laundry detergent, instant yeast, and dishwashing liquid.  At the end of my membership period, I bought enough of those items to last for six months.  I had initially planned to renew after six months passed (thereby getting 18 months of shopping out of my 12 month membership), but then realized that it would be more worthwhile to put some energy into finding cheaper alternatives or better sources for those items.  And that’s what I did.  I’m able to easily find every single item I ever used to buy at the same price or less without ever entering a warehouse store.

(Obviously, if you live where there are several large supermarkets, there will be more competitive sales on food and paper goods than for someone who lives in a very rural area and has only one small local store.  In that case, they’d probably save money at the warehouse store.  I don’t think the majority of shoppers fit into this category, though.)

To sum up, psychologically warehouse stores are very effective, because people really believe they’re saving money. And if their prior option was to shop at regular supermarket prices for name brand processed foods, they will save money.  But for the careful shopper, she’d be hard pressed to save enough to cover her membership fees in the course of a year.

Avivah