Posted by: Michelle Mitton | October 20, 2008

Costco: A Relationship on the Rocks

Saving Money with CostcoWhen Costco came to Anchorage in the 1980s it was received like manna from heaven. My parents had a foreign exchange student from the Soviet Union staying with them and they told me how, when they took Zanna to Costco, she walked between the aisles staring in stupor at the mountains of goods that stood as a tribute to American consumerism.

What’s not to love about the place? You can get killer deals on cheese and meat, buy diapers and formula at a great discount and come Christmas time you can get half of the stuff on your shopping list from the toys they carry. Everyone I know has a membership and if you go to the warehouse at any point on a Saturday you’re pretty much taking your life into your own hands because unless you’re packing water and supplies you won’t make it through the checkout lines before starvation and dehydration hit you–it’s that long of a wait. Though now that I think about it, it’s probably all part of their plan, to have you wait so long in the lines that you’ll buy their pizza and hot dogs, no questions asked (oh how I love their pizza).

So why am I writing about Costco? Because I have this love-hate relationship. I love it for the reasons I’ve just described above, somehow their marketing department has managed to convince me that if I don’t have a membership I’m really missing out on something good. Deals on DVDs (though I don’t buy them–ever), deals on socks (have I ever bought Costco socks?) and eggs and orange juice, deals on just stuff. You know . . . stuff.

However, I’ve come to the conclusion that unless you’re a small business owner–say a restaurateur or espresso-shack operator, maybe an office manager–that Costco is pretty much the biggest scam ever put over on the American public.

I feel nervous about putting that in print, it’s kind of like saying “Children shouldn’t be taught to read” or “I hate puppies” and is sure to bring me gobs of fan mail but maybe after I give you my three big reasons you’ll think twice about that shrine you’ve held in your heart for America’s favorite warehouse. Not that I’m trying to get you to drop your membership–I still have one myself–but maybe it’ll give you a different view of what’s happening on your weekly pilgrimage to the Mecca of Bulk Buying.

Membership Ain’t Cheap
I don’t know if this is standard across the country but here a basic, cheap-o membership is $50. If you upgrade to the Executive Membership it’s $100–but with the lure of potentially getting 2% of your money spent back at the end of the year–but this is a completely bogus fee set down to cover, what? The costs of supplying oxygen to the building? It’s a trick set out to cover their prices–they can make them slightly lower to lure you in then charge you a whopping fee for the privilege of strolling through their store and you still think you’re getting a deal.

But let’s just examine this a little closer. Most staples such as bread and milk are at Costco about the same price as you find in other places–last week milk at Fred Meyer was $3.50 a gallon, bread $2.50. At Costco you’ll pay $6.84 for two gallons which works out to be $3.42 per gallon and bread comes in at $4.85 for two loaves, making it $2.42 per loaf. For our family that means if I buy my weekly six gallons of milk and four loaves of bread at Costco instead of Fred Meyer I save a total of $.80. Wow.

Even if I bought my milk and bread there every week for a year I only save $41 which might not sound too shabby but after you figure in the gas it takes for 52 extra trips to get over there–that’s like, what? $5000 in gas alone?–and the time spent in lines the savings is diminished significantly.

You might argue there are lots of other things that save you more money–say baby formula and diapers, prescription drugs or automotive items, things I rarely buy–but in general, for my every day, weekly shopping list items the prices I’m seeing on things like cold cereal, apples, rotisserie chickens, butter or pasta sauce really aren’t great. This is mostly because Costco tends to offer higher-end brands over generic. Sure, you’ll get the Kirkland Signature brand on some things but take, for example, the issue of canned tomatoes.

I can buy a 28-ounce can of tomatoes at Fred Meyer for $1.39 because I can get the Fred Meyer generic brand but at Costco the only brand they carry is S&W which is always more expensive–even at Costco. I’m paying more for tomatoes but my mind gets twisted into thinking that I’m saving money because I’m buying a brand name product for less than I’d buy a brand name product at other places. Problem is, the brand name products are rarely better, they’re just brand name. I don’t need Gucci tomatoes folks.

Fewer generic brands and fewer choices. If I want to buy pasta I have two, maybe three choices at Costco and all of them are fancier than the generics. If I want a fancy brand then buying it at Costco saves me money but if I’m trying to feed my family as cheaply as possible (and trust me, I’ve got a 12 year-old son who has never been heard to utter the phrase “I’m full.” I am trying to go as cheaply as possible) then Costco doesn’t necessarily make it work for me–especially with that large yearly membership fee hanging over my head every February.

The only time I’ve heard anyone making the cost of membership work for them is with my sister and sister-in-law who go halves on an Executive Membership. They each pay $50, get their joint cards and then with two families buying groceries on the account the 2% they get back isn’t too shabby–it more than pays for the costs of membership plus some. But unfortunately I have a finite number of siblings and they’ve already got their operation running, without a partner like that the savings, for me, is minimal.

Buying Bulk Means More Waste
Then, add to the questionable savings the fact that at Costco I tend to buy more than we can use. We really only use about 5 1/2 gallons of milk a week but I can’t buy half gallons at Costco so that extra half gallon tends to go to waste. The expiration dates on Costco’s milk are pretty pathetic and I’m lucky if I can get them to last the week as it is so leftovers often get tossed.

And in case you think I’ve got a thing against milk it happens with other stuff as well. Those huge #10 cans of pineapple or sliced peaches? Even with six hungry mouths at our table it’s hard not to have food going to waste when it’s bought in such enormous amounts without eating so many peaches we start to turn slightly orange. Sure, I can buy a gallon-sized jar of artichoke hearts and save a fair amount but there’s pretty much no way on earth this crew would tolerate that many artichokes being served. It would be mutiny.

Costco Invented the Impulse Buy
Which brings me to the last gripe which is really the heart of the matter–at Costco I buy too darn much. I started my membership with the idea that I’d buy in bulk, stocking up on items like juice boxes and lunch treats, 5-pound blocks of mozzarella and mangoes and that by alternating which items I buy in bulk each week I could stretch my food budget overall.

Oh how wrong I was. I have a pretty strict list of rules when I go shopping: don’t go hungry, go with a list, stick to the plan but it doesn’t matter–every time I go to Costco I end up buying something that I wouldn’t have normally bought. Maybe it’s a bag of limes (because I need 10 pounds of limes in my life) maybe it’s a box of sausage breakfast biscuits (because trans fats are fun) or a jar of kalamata olives (they sounded good at the time) or whatever but they don’t set those sample ladies out for no reason folks, they’re there to get you to buy and they’re earning their pay I’d say.

I’ve never been to Costco where, when the cashier announced my total, I was pleasantly surprised. It is always more than I meant to buy–sometimes by only $5 or $10 but there have been times I get to the grand finale and I nearly faint. “Did I really buy that much?”

I start thinking, wondering if somehow the computer didn’t add the items incorrectly. How can I have spent $150? But sure enough, all it takes is 15 or so things in my cart and suddenly I’ve spent nearly all of my grocery bill without making that much progress in my list of things we need for the week. Fifteen things–that’s like the number of items you can take through the express lane. Fifteen items goes by pretty fast and suddenly 15 has turned into 150.

So this past month I came to a bit of a decision: I think I’m going to drop my Costco membership. With economic times such as they are I’m looking for ways to cut costs and the hard numbers don’t lie–if I buy all of my groceries at Fred Meyer, I can keep a firm control on what the costs are going to be but as soon as I give in to the dream of “buying in bulk” I’m consistently over budget.

I saw a news report on the subject several years ago where a reporter went through the check-out lines at Costco asking people if they’d bought more than they had planned on buying and every one of them said yes. Of course they said it with a gleam in their eye because they were convinced they were saving money but after watching our budget I’m just not sure that there is any savings.

At any rate, it’s worth a bit of a test. I’ll let you know how it goes–though I might go into withdrawal when I can’t get my Costco pizza fix. That’s going to be the hardest part.

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