When you walk into any warehouse club, you are likely to notice a different shopping experience than what you would find at a typical discount store. People shop here for more than just the savings - wholesale clubs make an art of helping people feel smart about the deals they spot. Be careful, however, as with any retailer there are many small tricks at play to ultimately separate you from your wallet. Recall that these guys are in business to make money first, and somewhere further down the list is making your life easier.
Mind the following and you will get much better mileage out of your membership:
Limited Selection
Unlike grocery stores where every imaginable size and brand combination is available, in most cases warehouse clubs will limit selection to 2-3 options per product type. Most common are the house brand (such as Member's Mark or Kirkland) and a leading name brand, with the potential for a third if there is a competing brand that also captures a significant portion of marketshare or consumer interest.
Watch out! If it appears that options have been narrowed down to only the best quality available, think again. They have in fact made it easier for you to make a choice, but all options play directly into their hands. If you select the store brand, the retailer wins because the profit margin is higher. If you select the name brand, the retailer also wins because the brand rented the shelf space where the product is displayed.
As such, your preferences are no longer a priority to the retailer - size availability is limited to the most cost-effective and efficient packaging for the product. Further, if you don't like the small details both products have in common - like both options having high fructose corn syrup as the main ingredient - you might be out of luck.
Unit Pricing
Next, take care when trying to figure out which of the limited options is the better deal to you. Although unit price is clearly and visibly stated on each label, it isn't necessarily printed there for comparison shopping. Instead, it's intended to help you reach a quick (and potentially arbitrary) decision.
Here's how. Take a look at a few options from different product lines, each followed by the unit price featured on a prominent wholesale club label:
Apple Juice
Mott's 100% Apple Juice, 2-pack of 86 oz bottles --> 1.41 each
"Store Brand" 100% Apple Juice, 2-pack of 96 oz bottles --> 1.99 each
Dishwasher Detergent
"Store Brand" 2-pack, 100 oz boxes --> 59.8 cents per pound
Cascade 180 oz bottle --> 5.2 cents per fl. oz. Toilet Paper
Northern vs Charmin vs "Store Brand"
Rolls in two different sizes: double-size and standard, and sheets, respectivelyNotice something disturbing? In its ideal form, unit pricing is meant to enable direct comparison based on cost by using an appropriate unit of measure. In every example above, the chosen units bring new meaning to "apples versus oranges." If the weight units are the same, the container sizes are different. Then add in the fact that product offerings frequently differ in terms of consistency with no effort to translate. With all scenarios requiring multiple calculations and unit conversions, the whole purpose of unit pricing is defeated. And so could be your wallet unless you are willing to break out a calculator and follow a cheat sheet of unit conversions.
Treasure Hunting
Here is another reason to watch wholesale club tags closely: something you buy and end up wanting more of may not be available the next time you visit! Pay close attention to items marked "Special Buy" or "One Time Buy" on the label. Since warehouse clubs make lot-size purchases all at once, even if your product has staying power or high brand affinity, you may have to wait until the next alignment of production run and mega-purchase before it will appear again on the shelves.
A word of caution here. Be careful to have a "plan b" if your preferred item is out of stock - especially if it doesn't have a long shelf life. You don't want to fall prey to the standard defensive reaction of consumers and stock up just to have it spoil.
Your Membership Card
When you hand over - a year for membership watch to make sure you are actually gaining more than showing your ID card every time you walk in the sliding doors.
Be aware that higher prices lurk on everyday items like milk and eggs. Perishables can be 50%+ more than what you would pay on a trip to the local grocery store. "But wait a second," you might caution, "bananas and mushrooms are significantly cheaper per pound with membership!" True, but the right to buy at the cheaper price comes with the added cost of buying more than you might be able to use before the product expires.
Further, don't let your paid membership fool you into buying more just because you've paid for the ability to access great deals. This is a psychological tendency referred to as the "endowment effect" - something that retailers never complain about. Simply put, take care that you aren't simply paying for the privilege to be a motivated buyer.
End Caps
You might think you are getting a great deal when something is floated in the center aisle or on an end-cap. However, the truth is these spots are coveted real estate because of higher visibility, translating directly into more people considering the purchase. Ahem, more card-carrying members predisposed to justifying their memberships.
This turns into added revenue to the warehouse club by way of renting that space to suppliers and vendors. And prominent spots for product placement are typically rented at a premium. Unfortunately, the assumption that the extra cash is passed along to the consumer in the form of improved savings is often wrong. In fact, it often works in the opposite manner.
The price of "rent" actually gets passed on fractionally to consumers. It is ultimately rolled up in the price that the wholesale club pays to acquire the item and bring it to market. In other words members stand to take another hit on what appears as a great deal by paying extra for *permission to notice* the product. And you thought this was already covered in the membership price!
The Meat Department
If you're out to get a great deal on meat, be prepared to work for it. Wholesale clubs save you money on meat by buying tons and breaking it down as efficiently as possible. Unfortunately (or fortunately, depending on your point of view), your family doesn't eat entire pork loins or triple-packs of spare-ribs in one sitting.
Either way, cost savings come in the form of transitioning the labor of slicing things down into individual portions directly to you. This means two things. First, the "service button" to ring up a butcher for help is for basic questions only, and not your typical butcher-type requests. Yes, "USDA regulations" may prohibit slicing your massive pork loin into chops of reasonable widths, however the cost for the extra staff it would require to be "full service" weighs much more heavily.
Second, if you do find something individually-portioned be prepared to pay a premium for it. T-bone steaks are a great example of an item to consider purchasing elsewhere if you are truly looking to save money.
Checkout Lines
If you've ever stopped in mid-afternoon on a Saturday (or numerous other days and times throughout the week), you may be frustrated by an ever-present shortage of people running the checkout lanes. This can be by design.
First, it saves the club money. Employees are said to be the most valuable resource for a reason - they are the most expensive to the bottom line! Further, the longer you spend in line the more time you consider the high-margin convenience items piled high right in front of you as you near the checkstand.
And here's a kicker. A little frustration is known to go a long way in assisting customers to do their best to make every trip "worth while" by buying more. Always shop with a list (and stick to it).
Bonus: Membership Gas
Don't let your guard down when you leave the building! Here's a tip, only buy gas at a members-only pump *if* gas prices jumped significantly within the last day everywhere else.
Warehouse clubs centralize control of their pump operations right down to when they turn on and off, including the sale price. Likewise, gas is contracted to deliver only at certain times and well in advance - when the prices were lower.
If you don't watch the timing and fill up on a transition, you may be getting a worse deal than anywhere else. This is in part due to state-by-state "mom and pop" laws, which require consumables like gas to be sold at a minimum markup. Take Minnesota's, for example, which is 7% above cost.
The minimum price line makes it more difficult for nationwide chains to bring about the demise of local business by using taxable commodities as loss leaders. If the line is crossed, fines and penalties await the retailer. Just the same there are loopholes, and it is worth pointing out that the major warehouse club chains don't issue gas coupons on their receipts.
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