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All Contents © 2020The Kiplinger Washington Editors
By Andrea Browne Taylor, Online Editor
| April 10, 2019
Every year, Costco attracts droves of new members looking to score bargains on everything from personal care products and paper towels to fresh and frozen foods in bulk. Exclusive perks such as deeply discounted gasoline prices, deals on big-ticket electronics and appliances, and access to coveted Kirkland Signature store-branded items are among the major draws of membership to the warehouse club. While these incentives are, indeed, used to reward card-carrying Costco members, many of them are also designed to get shoppers to spend more.
We asked several shopping experts about the various strategies the warehouse club uses to entice members to shop more frequently and more impulsively, as well as which Costco perks tend to be the most problematic. The retail pros also offered advice on how to avoid these spending traps and more. Here’s everything they had to say.
Regardless of where you buy your groceries, don’t shop on an empty stomach. When you’re hungry, you are more likely to overbuy, says Trae Bodge, a smart shopping expert at True Trae. At Costco, that advice goes a long way. If you’ve ever shopped at the warehouse club during primetime on a weekend, you’ve noticed multiple free sample stations situated throughout food aisles. Members can load up on unlimited (yes, unlimited) samples of everything from gourmet cheese to cold brew coffee while they shop. At a Washington, D.C.-area Costco location we visited, some of the free samples available included mini chicken wontons, kettle cooked popcorn and salmon.
It’s important remember that those delicious bites are there to get you to impulse-shop for food and beverage items you likely wouldn’t purchase otherwise, warns Kristin McGrath, editor and shopping expert at Offers.com. The big difference between impulse-shopping a sampled item at a traditional grocer versus Costco is that at the warehouse club you’ll likely have to buy it in bulk, McGrath adds. Those mini chicken wontons we spotted? They were available in the frozen food section -- in a three-pound bag.
If you’ve ever shopped at Costco and felt like you had to walk around the entire store to find everything on your shopping list, you probably did. The layout at the warehouse club is designed to lead members past prominent product displays over and over again with the hope they’ll make a pricey purchase spur of the moment, Offers.com’s McGrath suggests. “While you’re loading up your cart with bulk Kleenex, shampoo and freezer foods, you’re also constantly walking by giant TV screens with crystal-clear images and theater-quality sound,” she says, “or comfy sectionals and recliners that invite tired shoppers to sit down.” It’s Costco’s way of letting you try before you buy, McGrath adds.
Another tactic the warehouse club uses is moving go-to products around the store so shoppers have to hunt them down, says Heather Wheeler of TheKrazyCouponLady.com. As a result, members get exposed to dozens of new products they may not have seen during a previous store visit (and possibly buy them) while also looking for the items already on their shopping list.
A simple way to avoid overspending in either scenario is to stick to what’s on your list. “It’s key to harnessing Costco’s money-saving potential, while avoiding temptation,” McGrath says. If after picking up all your desired items you find that you’re under budget -- perhaps, several items in your cart were marked down -- then you can consider treating yourself to an impulse purchase.
While offering members an indoor food court and a cozy furniture display to kick up their feet seem like nice perks, they come with strings attached. “Stores like Costco put products they’re having a hard time selling near these areas,” notes TheKrazyCouponLady’s Wheeler. “The more you rest, the more [likely you are to] talk yourself into buying an item you don’t really need.”
At the Costco location we visited, there was an outdoor furniture display located in the middle of the store. Directly next to it were aisles filled with seasonal gardening tools, lawn sculptures and outdoor lighting fixtures. Near the indoor food court, which was located by the checkout lanes, there was a hodgepodge of toiletry products including razors and toothpaste. These were the types of items you might throw in your cart on a whim and not think twice about whether you really need them before leaving the store.
How do you avoid these spending traps? Simply put: Get in and get out. Chances are you wouldn’t sit down to take a break while perusing the aisles at your neighborhood supermarket or department store, so don’t do it at Costco. Also, keep in mind that by the time you’ve reached the line for the checkout, you’ve probably already filled your cart with the must-haves on your shopping list. Don’t get sucked in to buying last-minute items you don’t need.
A popular perk the warehouse club offers its members is discounted gasoline at locations with on-site gas stations. Other than price, there’s really no difference between Costco’s gas and what comes out of the pumps at name-brand gas stations. When we recently visited Costco, the price of their regular unleaded was $2.46 a gallon and premium unleaded was $2.85. At a nearby BP station, regular unleaded was priced at $2.63 (17 cents more per gallon) and premium unleaded was $3.19 (34 cents more).
Many shoppers are also drivers, of course, so Costco’s cheap gas is a great incentive to get new members in the door. Just be warned that you might end up paying in unexpected ways. Long lines are common -- especially on weekends. Some people have reported wait times of up to 30 minutes. When we visited Costco late on a Saturday morning, the line to fill up snaked around the parking lot. That’s a lot of time spent (and fuel wasted) idling behind the wheel.
And since you might run low on gas before you run low on groceries, you could find yourself shopping at Costco before you really need to just because you’re already there to get gas. On the other hand, if you only join Costco for the cheap gas, it’ll take numerous fill-ups before you break even. An annual membership to the warehouse club costs either $60 or $120, depending on the level of benefits.
It’s no accident that there are loopholes to Costco’s membership policy that allow non-members to shop at the warehouse club. After all, what better way to lure in new members than offering a free glimpse of the benefits of paid membership.
The simplest way to shop at Costco without a membership is to accompany a card-carrying member, who is allowed to bring in up to two guests. While you can’t pay for your own purchases as a non-member -- Costco checks membership cards when you enter a store and when you check out -- the member can pay for the purchases and you can pay back the member later. Alternatively, if you live at the same address as a Costco member (perhaps a family member or a roommate), the member is entitled to a free “household” card that allows you to shop on your own. Remember the cheap gas? Note also that non-members can fill up their tanks at a Costco gas station as long as they have a reloadable Costco cash card, which must be purchased by a member, to activate the pump. Finally, depending on state laws, non-members may be allowed to fill prescriptions and buy alcohol at select Costco locations.
Costco.com is a different story. While non-members can set up an account to shop online, they must pay a 5% surcharge on top of the listed sale price on all items except prescription drugs. For example, 1,000 200-mg tablets of Kirkland Signature ibuprofen costs $8.99 for members, while non-members will pay $9.44. To reward loyalty and encourage new memberships, some items sold on Costco.com are only available to paying members.
Costco’s Kirkland Signature store-branded products are known for quality and affordability. While prices on many Kirkland products do, indeed, beat out prices on name brands, that’s not always the case. In fact, TheKrazyCouponLady.com’s Wheeler notes that you can sometimes even find better deals on name brands on Costco’s very own store shelves, so never assume the Kirkland line is always the better deal.
Consider this: At the D.C.-area Costco location we visited, we compared the prices of Kirkland shampoo and Kirkland ground coffee against name brands. Here’s what we found: A 33.8-ounce bottle of Kirkland Signature’s Moisture Shampoo cost $9.99. A 38.2-ounce bottle of Pantene Advanced Care 5-in-1 Shampoo cost $7.99. You get over four extra ounces with the name brand for $2 less. A 48-ounce container of Kirkland ground coffee (both regular and decaf) cost $8.99. We found the same-size container of Maxwell House Original Roast Coffee priced at $8.69 -- 30 cents less. There was also a 48-ounce container of Chock Full O’Nuts Original Ground Coffee for $6.89. That’s nearly 25% cheaper than Kirkland.
Fastily via Wikimedia Commons
Anyone who’s shopped for big-ticket electronics at Costco (especially during the holiday season) knows the warehouse club’s prices can be brag-worthy. However, some of the most notable bargains are often store exclusives or can only be purchased at other warehouse clubs. This means shoppers can’t compare Costco’s prices with those at popular big-box retailers.
For example, we spotted a TCL 65-inch 4K UHD Roku Smart TV priced at $479.99 at the Costco location we visited. An online search revealed that this particular model wasn’t available at Best Buy, Target or Walmart. After checking the manufacturer’s website, we discovered that in addition to Costco, the television set was only available at BJ’s and Sam’s Club priced slightly higher at $489.
It's important to note that some electronics manufacturers create products specifically for warehouse clubs that have limited features. Since they lack the latest bells and whistles, Costco can sell them at what seem like bargain prices. What can electronics shoppers do to vet the deal? Avoid making an impulse purchase, for starters. Even if you can’t compare the exact model of TV or laptop across multiple retailers, at least compare similar models with similar features to get a sense of value. Then, if the Costco model meets your needs at your price, buy it. Otherwise, move on.
Some shoppers become Costco members specifically to take advantage of the bargain prices on bulk items. If you have a large family and are making multiple trips to the grocery store every week, footing the bill for an annual membership may pay off. Instead of buying a small bottle of olive oil that can quickly run out, for example, you can get a three-liter bottle of Kirkland Signature Spanish Extra Virgin Olive Oil at Costco for $13.69. The same size bottle of Colavita Extra Virgin Olive Oil sells for $39 (plus $12 shipping) on Amazon -- that’s 65% more.
On the flip side, if you’re single, you live in a smaller household without a self-proclaimed chef in the kitchen or you simply have limited storage space, then buying grocery and household items in bulk could be a waste of money, says True Trae’s Bodge. Only make purchases in large quantities if the items have a very long shelf life or if you can finish them before they expire (and, yes, olive oil can go bad). That means thinking twice before loading up your shopping cart with big bags of fruits and vegetables, as well as large containers of milk and other dairy products. Planning to freeze the extras? Make sure you have enough room in your freezer, and remember that the quality of frozen foods including meat and fish can degrade over time.
Jekoln via Wikimedia Commons
Costco’s food court is legendary for its low prices. Need to fuel up before a shopping spree? An all-beef hot dog (Kirkland Signature brand, naturally) and soda combo runs $1.50. A slice of pizza costs just $2; a whole pie, $10. And for dessert? A twisted churro for only a buck. Rather get your meal to go? A rotisserie chicken is priced at a mere $5. The cooked whole birds are so popular, in fact, that Costco sells 60 million of them annually.
The warehouse club can afford to serve up such inexpensive grub because it figures it’ll make the money back (and more) when you shop for other stuff. Think of Costco’s dirt-cheap meals as a loss-leader -- something a retailer offers to customers at a super-low price to draw them into stores. That’s all well and good as long as you stick to your shopping budget when you hit the store aisles with a full stomach. Otherwise, the $1.50 lunch combo that lured you into Costco in the first place will start to look awfully expensive.