I live in a fairly rural area of the country. I remember when we got a Wal-Mart; it was very exciting. But when Sam’s Club opened a store in our area, you’d have thought we’d died and gone to heaven. When it first opened, the wait to get to the membership desk could take an hour. I’d not seen people wait so long to pay good money, in order to be permitted to spend more money, since my last trip to Disneyland.
The concept of the wholesale shopping club has become a huge hit in this country. Sam’s Club, Costco, and B.J.’s are the three biggest and I read recently that combined, they have over 155 million members. Think about that for a moment. 155 million people are paying at least $50 per year for the privilege of buying things, ostensibly, at a savings. Over $70 Billion (with a ‘B’), just to be able to buy things. But are we really saving money?
The reason for this post coming today is that I was having a conversation with a friend of mine earlier and she said, “I went to Sam’s to buy some ground beef, and it cost me $155”. How many of us have had that experience? We go into our club to get some chicken and come out with chicken, a pie, three loaves of bread, two giant bags of potato chips, and 5 pounds of M&Ms. What should have been a $10 purchase is now $100 because we could not resist “saving money”.
I remember about 10 years ago or so a friend of mine , Mike, told me that he and his wife had given up their Sam’s Club membership. He had done the math, tracked their spending, and found that when they went to the normal “overpriced” grocery store (a Kroger’s) rather than Sam’s Club, they spent between 25% and 30% less per month on grocery and household items. He told me that when he did it, he thought they would save money, but had no idea it would be that much.
Flash forward to today. We have many options for purchasing grocery or household items within easy reach of where we live. That is probably true for most folks in “First World” countries. Still, about 75% of my family’s food/household expenditures in a given month are made at Sam’s Club. Are we saving money? Probably not.
When it comes to perishable food (fruits, vegetables, meat, bread, etc.) we throw away about 20% to 25% of what we buy simply because we cannot eat it before it goes bad. Now when you look at the price of the food we’ve bought on a per serving basis, it is less than if we bought at Kroger or Food Lion (the other main grocery chain in our area), but we have to buy more servings in order to realize the per serving savings. If we end up only consuming 75%-80% of the food we buy, it is actually more expensive per consumed serving than had we only bought what we were going to eat.
Do we save on non-perishables then? In a very unscientific survey I priced Bounty Paper Towels (our family’s choice) and found that the per roll price at Sam’s Club is $2.00, at Kroger it is $0.99 on sale ($1.56 regularly priced), and as low as $1.50/per roll at Amazon Prime (in typical Amazon fashion, they’ve got 18 different ways you can buy the same thing). Now granted, I looked at one item we use a lot, and selected it arbitrarily (could have been toilet paper or dishwasher soap, or laundry detergent), but the concept still applies. We just cannot assume that we are getting the best price when we are buying in bulk from wholesale shopping clubs.
My suspicion is that the 25%-30% my friend Mike and his wife saved by shopping at the “overpriced” store, was as much because he was not tempted to “save” more by buying his peanut butter in a 3 pound tub, one pound of which he had to throw away because it went rancid before he could eat it. My guess is that if you shop at wholesale shopping clubs, your experience is similar.
