Is Buying Groceries in Bulk at Wholesale Clubs Always Cheaper?

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My wife and I split many household chores and one of them is grocery shopping. I handle the food warehouse and she tackles the traditional chain grocery store runs. We’ve found we need both, since neither has the best deals all the time.

I realize that conventional shopping wisdom holds that food warehouses—Sam’s, Costco, BJ’s, among others—are generally cheaper than grocery stores. But in our experience that isn’t always true. In fact on certain items, it’s categorically untrue.

As much as we prefer to avoid shopping at two (or more) stores for our groceries, experience has taught us that the warehouses aren’t always cheaper. The problem is that the comparison isn’t always obvious. Many times higher prices are buried in the apparent economy of buying in larger quantities.

How can food warehouses be more expensive than traditional grocery stores?

Buying in bulk can go to waste

This is the primary angle of food warehouses. You pay less per unit by buying more—simple and effective. But more isn’t always better.

If you buy ten pounds of potatoes but only use five, the rest go to waste and you’ve probably paid more than you would have had you simply bought a five pound bag at your local grocery store.

Similarly, let’s say you take a chance on a different laundry detergent and buy yourself a big 18 pound box of Brand X. After a few loads you find that your spouse is allergic to something in the detergent and you can’t use it any more. But the box has enough to do 160 loads and you’ve only used three of them—how much money have you saved?

No coupons

My feeling is that across the board and on an everyday basis, food warehouses ARE cheaper than grocery stores. But coupons are a major variable. Grocery stores have them, food warehouses usually don’t.

What compounds the issue is that grocery stores not only accept manufacturers coupons but they also have their own. My wife is an expert on collecting coupons on a large percentage of the items she buys at the grocery store, and that has a way of cutting the bill way down.

Coupons offering 50 cents or a dollar off an item can make it cheaper than what you can buy it for in a food warehouse. If you can use enough of them, the price advantage of the food warehouse can quickly evaporate.

No sales

Our food warehouse has never run a sale that I’m aware of, and it’s one of the big ones. The grocery store my wife shops at runs them all the time. Buy one-get one free, buy one-get another half off, and the like can really turn the price tide in favor of the grocery stores.

Grocery stores have to be more competitive. Not only do they have to compete with food warehouses, but they also have to find a way to get noticed among the much larger number of grocery stores. They will often run loss-leader type sales on staples like milk, eggs and bread in order to ramp up traffic into their stores. Those are the exact items we buy in bulk at food warehouses.

Quantity doesn’t always equal quality

Not everything you buy in a food warehouse is at the top of the quality food chain. We’ve found that certain items—produce, chopped meat, peanuts, baked goods and a few others—are below grocery store quality. Perhaps it’s that emphasis on bulk and something has to give in order to make it cheaper.

Yes, they’re cheaper, but if an item doesn’t taste good or keep well, cheaper goes right out the window.

Lack of variety forces you to go elsewhere

What food warehouses seem to do best is selling large quantities of inexpensive staples. There’s obvious value in that approach, but it also tends to limit the variety.

In grocery stores, you not only have several competing national brands in every category, but there’s usually a store brand as well. In food warehouses, there may be only a single brand of a given product. Even more limiting is that they may also omit entire categories. I find that sometimes they’re also out of items they normally do carry.

Because of this, even though you buy the bulk of your food at a warehouse, you’re still tethered to grocery stores for what the warehouse doesn’t provide. That means you’re making more shopping trips to more stores—and that can cost more.

Fewer outlets means more travel

Grocery stores tend to cluster in communities; where there’s one there are usually others not too far away. Getting to one is seldom an issue. Food warehouses, on the other hand, tend to be regional. There may be only one or two in a heavily populated suburban county. It could be miles from your house to the nearest warehouse, and that means travel.

We often don’t think of travel expenses when we’re going someplace to save money, but it becomes more important with a commodity such as food that you buy again and again. Often the warehouses are located in regional shopping centers, which can mean heavy traffic (on top of distance) on weekends or holiday seasons. Travel is a soft cost that reduces the price advantage of warehouses.

What do you think?

Obviously, we continue to shop at a food warehouse because there is a price advantage. But what we’ve learned is that it can end up costing you more if you blindly assume that everything is cheaper by virtue of the fact that it’s in a food warehouse.

Do you shop at a food warehouse? Have you found any of what I’m reporting to be your experience as well? Are we doing something wrong here?

Kevin At Out of Your RutThis post is from FiscalGeek staff writer: Kevin Mercadante. I’m very excited to have him contributing to the site. You can find out more about him at his own blog OutOfYourRut.com.

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