Hi, my name is Nelson, and I have a problem. I am addicted to going to Costco.
My Costco addiction is a relatively new thing. I spent almost a year between mid-2014 and mid-2015 living in South Korea, one of Costco’s newest expansion locations. Costco was the only place to find reasonably priced American products, so once per month or so the wife and I would take the bus out to our city’s only location, load up a cart, and then try (badly) to tell various Korean taxi drivers how to get us and our haul of groceries home.
The best part of Korean Costco? They had the exact same hot dogs as Costcos in North America. You don’t know how good a hot dog tastes when you’ve been eating nothing buy kimchi and weird flavored meat.
Now that we’re back in Canada, we’ve continued our Costco obsession. We continue to shop there because we like the prices, the service, the free samples, and the relatively easy access to our nearest location.
But are we really saving money by shopping there? I’m not sure. Here’s why I have my doubts.
The membership fee
From a business standpoint, charging people to get into your store is a terrific idea. Kudos to Costco for figuring out a way to make this happen. When you get $55 worth of pure profit before somebody even comes in the store, you’re definitely doing something right.
Charging for membership also all but ensures the company has created loyal shoppers. When you pay to join a store, you’re going to make sure you go often to justify the cost of membership. Costco does other things to make sure customers show up regularly too like the cheap snack bar, in-store unadvertised specials, and gasoline for approximately $0.10 per liter cheaper than competitors.
People who buy all of their groceries at Costco can easily justify paying a membership fee. People who only shop there occasionally are likely paying more for their groceries once we factor in the cost of the membership.
Like most of you, I enjoy bacon. But I’m lazy, so I don’t want to make it whenever I want to add it to my baked potato, pasta, or sandwich. This is why bacon bits are quite possibly mankind’s greatest innovation.
My local Costco sells a big bag of 100% real bacon bits for $12.99 (if my memory serves me right). This bag has 567 grams of some of the most delicious bacon bits I have ever tasted. It gets opened approximately three hours after I get home from the store and gets used at least once a week thereafter.
I’ve bought three bags of these, and the same thing happens. I get about three quarters through and then the bacon bits at the bottom of the bag start growing mold. I don’t want to risk getting sick, so I throw the rest of the bag out.
It’s not just bacon bits. We intentionally don’t buy much produce at Costco because we know that even though we might be getting a good price on five pounds of lettuce, there’s no way just the two of us will eat all of it before it goes bad.
We tend to focus on buying things like toilet paper, dish soap, and other non-perishables at Costco. That way, we don’t have to worry about stuff going rotten before we can use it all up. You’re not saving money if you’re throwing stuff out.
Watch the sales
After carefully comparing prices at Costco versus more traditional competition, here’s what I’ve noticed. Costco definitely has better regular prices on just about everything in the store when compared to Wal-Mart, Loblaws, or other value-based grocery chains. You do tend to get a good deal if you shop in bulk.
But if you shop sale items at other stores you can do just as good — if not a little better — going around to other stores and buying up their loss leaders, the ultra-cheap stuff on the front cover of the flyer.
And remember, you won’t have to pay a $55 membership fee to do that. You will need to do a little extra driving, so factor that into your decision.
Costco is a great place to shop; I’m not about to stop going there anytime soon. I like the selection, the prices, the new items every time I go, and those delicious hot dogs. But I need to remember that I’m not necessarily saving money by shopping there.