[Elbyron]

Anyone who's had a Costco membership is probably familiar with the dreaded moment at the checkout when you find out how much you just spent . Many people have told me that their annual grocery costs actually goes up after joining Costco, and I've heard many arguments in favor of and against this wholesale giant. I'd like to know what others think, but to get things started I'll list a few of the frequently argued points:

Pros
- Buying in bulk is almost always cheaper (on a per-unit basis)
- Lower prices on big-ticket items
- Wide variety of products in one place
- Unique items that cannot be found elsewhere (especially in the frozen foods section)

Cons
- Many people end up buying way more than they need, either resulting in eating too much or food being thrown out
- The crowds and line-ups. They never seem to have enough cashiers!
- Poor customer service. I don't think you can phone them, and you'll never find anyone to help you find something or retrieve more stock. However, they never give you a hassle about returning things, provided you wait in the long line at the service desk.
- Membership cost - though I find that the $50 or $55 per year is relatively insignificant
- Buying bulk means you need a lot of pantry and/or freezer space
- Cannot use your VISA or Mastercard (to get points or cashback), unless you use it to pre-purchase cash cards on costco.ca, but then you won't get extended warranty or purchase protection. Of course there is the option of getting a Costco Amex, if you want to carry around yet another credit card.

Are there any other pros and cons to shopping at Costco?
Which points are most important to you?
Do you feel that a Costco membership is a good way to save money?



By the way, did you know that you don't need a Costco membership to shop at the Costco liquor stores (which have by far the best prices on booze)? Unfortunately very few Costco stores have an attached liquor store, at least in my city. For any other Edmontonians out there; the only one is the Sherwood Park location.

I also read that Costco members can buy the cash cards for their non-member friends to use. There's a 5% fee for the non-member to use it online at costco.ca, but I'm not sure if this fee also applies in the stores.

 

[ethos1]

Had a costco card about 10-years ago, held it for one year then dumped it & do not have a costco card now

Since there is only the two of us we do not see the need to shop at costco for grocery items, which based on weekly flyer specials I can shop way cheaper than going to Costco

A friend of mine has a card & we were in the NW Toronto location at noon this past Tuesday - what a zoo

As to your question in the OP, my response is that its not cheap, the membership fee IMO should be free since they sell everything in bulk anyway & buying bulk could create more waste which means a higher cost.

I suppose for large familes as well as restaurant owners costco may be seen as wholesale pricing

 

[CanadianCapitalist]

I talked about why I think a Costco membership is worth it in this post that elicited a lot of interesting comments. For us, Costco is still worth it because:

(1) We buy mostly groceries there. Toothpaste, Toothbrush, olive oil, milk, spinach and so on.

(2) I drop by on weekdays on the way from work. There is hardly any lineup and the store is practically empty.

(3) You could end up spending so much more at Costco; it is bad news for anyone trying to cut down costs.

(4) It is important to make sure that buying in bulk doesn't result in wastage.

Is a Costco membership worth it?

 

[Sampson]

My wife an I don't actually suffer from 'buy-too-much-itis' that seems common place at Costco.

I think part of the reason is because we are VERY price sensitive, with mental notes of what bargain prices actually are (e.g. $0.25 per roll of brand name toilet paper, vine-ripen tomatoes at $0.79/lb etc.).

Bulk does save you money, when compared to regular price elsewhere, but sales at Loblaws chains etc are always better than Costco.

Pros:
1 - meat is always top quality - they only carry AAA-graded beef. We're at Costco every week during BBQ season - wait, we do this year round
2 - manufacturer's coupons - lots of last year clear-out stuff going for very cheap ($500-off computers, etc.)

Cons: line-ups (in Montana, they have self-check outs, but the waits there are always just as long)

We don't view Costco as a place to save money, but just another alternative to shop... and eat hot dogs.

Here's a cheap-skates Costco tip:
Cheapest root-beer floats around - buy 1 ice cream cone ($1.99), buy one fountain drink ($0.79) - mix, and top up the pop if you need to.

 

[Elbyron]

Bulk does save you money, when compared to regular price elsewhere, but sales at Loblaws chains etc are always better than Costco.

I agree, it's usually best to watch for sales, but there's a lot of food items that just never seem to go on sale, such as baking goods. Even though there's only two of us, we can still save a lot of money at Costco as long as we're smart about it. I saved $500 vs competitor's sale prices by buying my plasma TV at Costco, using one of their coupons.

meat is always top quality - they only carry AAA-graded beef.

Interesting. Never really tried it since I get most of my meat through custom orders at a Sobey's meat department (where I also get AAA beef).

We don't view Costco as a place to save money, but just another alternative to shop... and eat hot dogs.

Yeah, I should have listed the hot dogs in the "pros". The only thing better than their taste is their price (you get a huge dog and a pop for $2).

 

[CanadianCapitalist]

Bulk does save you money, when compared to regular price elsewhere, but sales at Loblaws chains etc are always better than Costco.

At least in the Ottawa area, I've found that Costco has the lowest prices. Especially with the coupons they send out in the mail or give out in the store. Then again, I shop at a Loblaws store and it is possible the Real Canadian Superstore has lower prices. It's too far a drive, so I haven't checked it out so far.

 

[lb71]

Costco tends to put their low margin items in the back, forcing you to wander through the high margin merchandise to get there. This has caused me on many occassions to buy stuff I didn't plan on buying. Lately I have been forcing myself to ignore anything not on my list.

The quality of Costco goods tends to be good and at lower prices than elsewhere. (You may find cheaper products, but usually not of the same quality.)

The meats are great. Even the fish. As a new parent I find the deals on huggies to be fantastic (when on sale, you can get a box of ~200 diapers for $35).

Based on the fact that they scan your card on every purchase, they must have a wealth of knowledge of your spending habits. Anyone know how they use it?

 

[michika]

I find it actually helped us cut down some of our household spending. Then again, I'm a firm believer in having a list. I found it was helpful to buy things we go through a lot of, toilet paper, dried fruits and vegetables, bread, granola bars, etc. I also find the price to be significantly better consistently on juice, cereal, and milk.

One of the other reasons we shop there, about once a month, is because of some of the foods they offer are hard to find. I can find a bag of gluten, milk, casin, and egg free pretzles (yay for dietary restrictions!), for $3-4, vs. the healthfood stores (the only other places to buy this from around here) I'm easily looking at $8-$12 for the same bag.

 

[splitmind]

We exclusively buy our meat there. Slightly better on price, but much higher quality than any of the grocery stores. Peoples biggest complaints with Costco seem to source from their own lack of will power. Personally if that helps Costco's bottom line and keep what I need down in price I have no complaints. Consumer reports recently ran a short comparison of Costco to Wall Mart with Costco having done much better.

 

[FrugalTrader]

I also read that Costco members can buy the cash cards for their non-member friends to use. There's a 5% fee for the non-member to use it online at costco.ca, but I'm not sure if this fee also applies in the stores.

Great post Elbyron, it rings true with me. I'm a big fan of costco but usually only use it to buy clothing, chicken ($6.99!) or sometimes a book. If we buy fruit or other bulk food, we simply eat it faster.

Oh, i just called Costco about the gift card thing for non-members. The answer is yes, non members can use a gift card instore without the surcharge.

 

[ethos1]

do you believe that this discussion would have been better using the now defunct Sams Club as a comparison to Costco?

Walmart IMO is smart & smart enough not to have the club stores along with all of the running costs, also maybe knowing the recession was about to hit or in matching or beating Costco's best price for item at Walmarts regular stores by adding the grocery section

 

[Mintycake]

I think it's really easy to overspend at Costco. So many things look so great, and the samples! mmm! My mom has a membership and on rare occasions I'll go with her, but I prefer to walk to my local Loblaws and just buy what I need. When there are sales at Loblaws and I combine it with coupons, I get a good deal.

 

[moneygardener]

Oh boy, my Costco obsession is well documented...

http://themoneygardener.com/2007/10/costco.html

http://themoneygardener.com/2008/05/costco-enigma.html

I would be confident debating anyone on this.....

This is the best retailer ever, period!

 

[nick24]

Membership is $55. A 4l bag of milk is generally $1 cheaper than in regular stores. We go thru a bag each week. So the cost of membership is almost covered by the amount we save. Throw in other items and we end up saving money.
Not everything is cheaper than the big box stores or supermarkets. I was in the market for an LCD TV at new year and ended up purchasing it at Sears. Chicken always seems to be expensive too.
You are right, however, in saying that it is very easy to spend big bucks. It's not uncommon to drive away with a receipt for over $100 in my pocket!

 

[Brad911]

Oh boy, my Costco obsession is well documented...

He's an addict...trust me!!

This is the best retailer ever, period!

Ever?....I'll say the best retailer currently and they don't compete on price because of a brilliant business model

 

[lb71]

Brad must be very modest since he did not mention his excellent review of Costco.

 

[Brad911]

Brad must be very modest since he did not mention his excellent review of Costco.

Meh...I can't link to everything I've written about that's relevant to discussions on this forum. MG was the motivating factor behind that analysis which I think surprised a lot of people once they realized how brilliant Costco's business model really is.

There are very few businesses that can operate on this cashflow system which makes barriers to entry very difficult (see Sam Club's success in Canada). Add in a membership program that encourages loyalty and very well positioned locations and its easy to see how they are the best retailer.

I missed purchasing the stock recently under $38, but it remains on my watchlist.

I look at this as a classic "Buffett" investment and something he wouldn't hesitate to invest heavily in if there were ever any problems. Trades at too rich of a valuation I suspect for him, but if he had the opportunity I think you could expect him to take it.

 

[CanadianCapitalist]

I think surprised a lot of people once they realized how brilliant Costco's business model really is.

I'm not surprised at all that Costco is a brilliant retailer. I mean how many mass retailers are there who can show Wal-Mart, a thing or two? And if I recall correctly, Charlie Munger, Buffett's partner is on the Costco board of directors.

That said, I have no idea if Costco is a good investment and if so at what price

 

[Sampson]

In addition to the great business model (which I absolutely agree, is amazing), Costco has an advantage highlighted by this thread - customers who are fanatics.

Similar to the 'brand loyalty' displayed by Apple users - I think this is why they started allowing non-members to use the gift cards.

Don't you remember when you were a naive, Costco-virgin. When people talked about it, it irked my interest, 'what's this Costco place all about'

 

[CanadianCapitalist]

In addition to the great business model (which I absolutely agree, is amazing), Costco has an advantage highlighted by this thread - customers who are fanatics.

And that too fanatics among a bunch of (excuse me saying so, I count myself as one of the members) folks who are probably much thriftier than average and who would save rather than spend. Can you imagine how fanatic Costco's regular customers would be?