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Plan Well, Retire Well

Saving and investing your money
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Shopping Clubs-Buyer Beware!


My husband and I were shopping at a local shopping club the other day. I'll admit it- I LOVE shopping there since I really don't like shopping all that much. The idea that I can buy in bulk and make fewer trips and less time shopping overall appeals to me, after all I am getting a bargain .... Right??

Whoa! Not so fast. In order to save money at membership clubs like Sam's, BJ's and Costco, you need to be an alert and aware consumer. First of all there is the annual membership fee. You need to subtract that cost from what you are saving. How long does it take for you to recoup that fee? Much like a rewards credit card, if the annual fee is greater than the rewards you earn and use in a year then you aren't saving money.

In addition to the cost of membership, there is the size of the products to consider. When both my kids were still at home, a large bottle of spaghetti sauce was a good deal because we used it all quickly. Now that it is just my husband and I, if I don't use it or freeze it, it will go bad. Money thrown away is not money saved. I do buy the case pack of canned vegetables because we use an entire can at once, they have a long shelf life, and we can buy the name brand at a savings. Money saved.

Here is the biggest secret of all. Not everything at these clubs is cheaper than buying comparable items at grocery or discount stores. You have to know and use the unit price of the item you are buying. Here is an example.

My husband and I enjoy a certain brand name carbonated beverage with zero calories. We go through a good amount of it and generally buy it at the shopping club because on average it is less expensive than buying it at the grocery store. Here is how it breaks down. When the grocery store sells 12 pack 12 ounce cans at 4.99, the cost is 41 ½ cents per can. The shopping club has a 32 can pack for $9.98 which averages just over 31 cents per can. Advantage shopping club. When the grocery store puts the beverage on sale, three 12 packs for $11, the cost per can is just over 30 cents. Advantage grocery store. At the shopping club this week we traveled a different path to the carbonated beverage section and passed a traditional case of our drink (24 cans to a case). The price was $6.48 (27 cents per can). The 32 pack was still $9.98.

As my husband walked to get the 32 pack ("it's a bigger pack, so it will be cheaper") I asked him to check out the unit price that was displayed on the sign. He shook his head as he came back and said "the smaller pack is cheaper- a lot cheaper".

It isn't just this one item. There are many items that at any given time are cheaper elsewhere than at the shopping club. We have shopped, and purchased elsewhere, everything from DVD's, computers, and other grocery items simply because the cost was less expensive somewhere else.

On the flip side, there are many things we buy at the shopping club because they are cheaper-even if we don't use it all and throw some away due to spoilage. The shopping club sometimes has items we want that we can't find anywhere else. Further, we save the cost of our membership fee in gasoline savings, usually in the first quarter of the year. I learned our shopping club changes gas prices only once a day so if I miss cheap gas because of a mid-day price increase, I head for the shopping club to get it at the lower price.

The moral of the story is to keep on shopping at the shopping clubs, but only if you are saving money –at least enough to cover the membership cost. Know your prices at all your favorite stores. Don't assume that one store always has the best prices. A little knowledge can save you big bucks!

Written by Pam Atkinson, Consumer Economics Educator, University of Illinois Extension



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