Make no mistake, I love Costco Wholesale and shop there regularly. I have also spent a lot of time watching many other people shop there. Here is my conclusion: The vast majority of Costco shoppers are dumb and blindly buying incredible amounts of goods there, usually walking out with a hundred or more dollars worth of things.
I say this because I am an obsessive comparison shopper, always looking for spending the least amount of money on products. As much as I love Costco, I know that the vast majority of items there can be bought at lower prices if consumers shop wisely at supermarkets and other stores like Target, or on Amazon. But most loyal Costco shoppers who spend a significant amount of money for annual membership seem to be in some type of buzzed, euphoric and almost hypnotic state of mind. This explains why Costco is the second biggest retailer in the US with nearly 70 million members.
They lose all mindful control and go nuts when at Costco, almost as if all the stuff was free. Those extra large Costco carts quickly get filled up, often to overflowing conditions. Some use those large flat bed carts to load up even more. And of course people are buying some huge sizes of products, raising issues as whether they will ever consume all of the contents. When you are spending $55 a year membership fee you are certainly motivated to shop there. But overpaying on a lot of what you buy remains unwise.
"Right after you join a warehouse club, the first thing you think is 'how am I going to earn back that entry fee I just paid?'" said Brian Wansink, a professor of consumer behavior at Cornell University. "It creates a spending, but also a justification mentality."
Many business articles about Costco have pointed out that nearly all of its considerable profits come from the membership fees it charges. This might suggest that shoppers are getting terrific deals on everything they buy. That is just plain wrong. While generally speaking Costco does work to offer relatively low prices, the truth is that many other retail outlets, especially Amazon, are able to offer lower prices, if not all the time, then definitely when items are on sale.
Anyone who looks critically at Costco and many other retailers should note that there really are a lot of workers in Costco, far more than at supermarkets. Moreover, it has been widely publicized that Costco pays rather high salaries with good fringe benefits. This helps explain why so many of its prices are really not the lowest available to shoppers. Add to this that one of Costco's attractions are the food samples handed out to shoppers. This means still more workers and corporate costs. But stuffing yourself on free food samples adds considerably to the Costco shopping experience and surely is part of the genius of the Costco business model.
Here is another interesting feature of Costco. It changes many of its prices very frequently, perhaps reflecting changes in consumer demand. But I have also noticed significant price increases on weekends. Also, Costco holds its own sales, offering considerable price reductions lasting several weeks; this means that shoppers have to pay attention to in-store signs and the booklets that are sent monthly to members. These reductions are typically several dollars per item and suggest the wisdom of not stocking up too much on items, because they may go on sale.
When it comes to food items, there are some that, over time, I have learned are definitely terrific deals at Costco. It is the main store I use for buying humus, herring, quinoa, salsa, Greek yogurt, some vitamins and supplements, and often fresh fish. But I rarely buy any other food items, because I know I can get them cheaper or in more reasonable sizes or quantities elsewhere. For other kinds of products, such as clothing, I definitely get convinced sometimes that Costco offers a good price. In past months, for example, I have purchased four automobile tires, jeans (at an incredible price of $12), a suitcase, some prescription drugs, an ornamental garden item, and a neat assembly for drying clothes outside. Today I bought a pair of Adidas running shoes for $35; the exact item on Amazon was $75.
In sum, I enjoy shopping at Costco, getting free lunches, and, most importantly, saving a lot more money than my annual membership fee. And when I check out I continually notice that nearly everyone else at Costco is spending many hundreds of dollars, while my bill is usually way under $50. Self-control is the key. Never think that you can or should avoid also shopping for sale items at local supermarkets and other retailers, or even on Amazon. Enjoy Costco, but do not let yourself get addicted.
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