December 26, 2009

December 26, 2009
Membership Warehouse Stores: Deal or No Deal?

Welcome to another day in my life. Today is Saturday and the day after Christmas. I hope you are having a safe and great weekend so far.

Well the packages are opened, my belly is stuffed from way too much food and now it is time to get hopping on all the after Christmas specials at the store. Which leads to today's topic.

When it comes to membership warehouse stores (such as Sam's Club, Costco, and BJ's Wholesale Clubs), people seem either to love 'em or hate 'em.

For warehouse store shopping fans, nirvana is sitting in the snack bar enjoying a $1.89 jumbo hot dog and jumbo jumbo soft drink, your overflowing flatbed cart next to you, with the smell of fresh rubber tires wafting your way from one aisle over. "Dessert?" you ask yourself. "I think I saw them handing out free samples of blueberry cobbler, right next to the display of hydraulic jacks on aisle 17."

Yep, I've been there.

Membership warehouse stores are literally a huge business. There are more than 75 million card-carrying members of America's big box behemoths. Sam's Club, the nation's largest members only warehouse club, has more than 500 stores nationwide, each at 110,000130,000 square feet. In case you were wondering, 16 U.S. Pentagons, one of which is the world's largest office building, could be housed neatly beneath the combined corrugated steel shell of those combined Sam's Clubs.

Membership warehouse stores are definitely popular, but do they end up a good deal for the people who shop there? The answer is, as with most money matters it all depends. Obviously a lot depends on your family size, proximity to a warehouse store, shopping and cooking habits, and the amount of storage space you have available.

Here are some things to keep in mind before you get out your checkbook to join a membership warehouse club:

* Make a List and Stick to It: Impulse Buying Alert! Impulse buying can be a problem at almost any store, but at warehouse stores, the stakes are much higher. As a friend of mine says about his recent shopping experience at a warehouse store, "We went in for some hot dogs and walked out with a hot tub." Warehouse stores are notorious for tempting people to buy things big ticket things they had not intended to buy. Always go in armed with a shopping list and jumbo pack of shopping willpower.

* Do the Math on Membership Fees: Many people are philosophically opposed to paying for the privilege to shop someplace, and when you put it that way, it is hard to swallow. But it is easy to do the math to figure out if and when you would recoup your membership fees (generally about $30$50 a year). You can go to most warehouse store Web sites to compare prices on certain items to see how much you'd save. Warehouse stores sometimes offer free trial memberships or allow you to browse to get an idea of the potential savings. Here is a tip most people do not know: Warehouse clubs cannot require you to be a member in order to use their discounted prescription drug services, since such drugs are regulated by the federal government.

* Too Many Perishables: Overstocking on perishable items can quickly eliminate any cost savings if they end up spoiling and in the trash can, so be extra careful. And food products are not the only things that can go bad. Lots of things, from batteries to baby powder, have a limited shelf life that you need to be aware of when buying in bulk. Make sure to check expiration dates.

* Know Your Prices and Per-Unit Costs: In general, it is safe to say that warehouse clubs have very competitive prices on most products. You can still find some items for less at regular stores, but you have to be a smart shopper and spend time in order to do so. It is also worth noting that coupons are not always redeemable at all warehouse clubs. Warehouse prices are generally lower, because the package quantities are bigger (typically 20200 percent larger than in other stores). So the most important price to compare is "per unit cost" of all products. (Also look for "cost per ounce," "cost per 100 napkins," and similar signs posted on warehouse shelves.)

* Quality Counts: If you have never shopped at a warehouse store, you may be surprised to find that many items these merchants stock are of at least slightly better quality than similar items at regular stores. In the case of meat, produce, and other food products, you will often find more of a restaurant grade selection than in typical supermarkets. Other warehouse products from power tools to cleaning products to tulip bulbs may be the commercial grade version of brands you see in average stores. Consider this increased quality when evaluating warehouse prices.

* Try Before You Buy: This is my greatest warehouse weakness: I will buy a jumbo sized product at the warehouse store and then immediately discover that I do not care for it. But I feel compelled to use up whatever she doesn't. In fact, I am still nibbling away at a 40 pound barrel of cheese snacks I bought at a warehouse store during the Reagan Administration. To avoid such stale snacks and other wastes of money, try the small size of a product before you super size it at a warehouse club.

Until we meet again; here's wishing you health, hope and happiness.

big bear hug,

Daddy Dab