Is Costco Really A Deal?

Filed in archive Buying Stuff on September 13, 2006

In today's edition of the New York Times, David Leonhardt's article "Distractions and Bargains Bought in Bulk" questions whether consumers get fooled into thinking they're getting a deal when in reality they can buy things cheaper elsewhere. He starts off at Costco, where, in an experience many warehouse shoppers can appreciate, he knows some things are good deals, but has no clue about the merits of other prices--after all, your local supermarket may not carry a two-gallon tub of mayonnaise that allows for top-of-the-head comparisons.

The point is that once convinced a certain location is a good place for deals, we'll buy there even when a little price comparing would show us the error of our ways. For example, people will bid items up on eBay to prices beyond what they could simply buy an item for if they went to the store or, in a true apples-to-apples comparison, if they bought the item at a different Web site.

It's an interesting discussion. For me as a Costco shopper, though, I was interested in Leonhardt's conclusions about that particular retailer. In general, he seemed to think that Costco delivers pretty well on its promise, but...

1) The $50 annual membership fee negates much of your savings unless you are a power shopper, and

2) When you buy things in massive bulk sizes, you're more likely to use those things liberally, whether it's gorging on pretzel rods because you bought 500 at once or taking an extra swipe with the toilet paper because you have so many rolls (btw, that last gross example is mine, not his; once it popped into my head, I couldn't resist).

I've got one other potential downside to Costco--they put a lot of stuff in front of your face that you absolutely do not need but it seems like such a great deal, it's hard to resist buying it. The clothes often get us--good brands at good prices, but do I really need another pair of jeans? It might be good value, but that doesn't mean it's good sense.

Are you a warehouse club shopper? How do you think these clubs stack up overall? Do you buy too much, use too much, or buy stuff you don't need because of the prices, or are you all about the savings on things you'd absolutely buy anyway?