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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{ 9 comments… read them below or add one }

T. Mac 2011/04/18 at 11:45 am

Nice article.

I’m new to the site; only been reading a few days, I’ve enjoyed what I’ve read, and I wanted to toss out a couple of comments here.

Freshness is one thing my wife and I pay close attention to, particularly when it comes to fruits, veggies, milk, and eggs. Your grocery stores are going to have a much higher turnover of product, typically, than your bulk/wholesale clubs. This means more new product, more often. I’ve never seen a bulk/wholesale store that has been able to compete in this aspect. My family will continue to buy our toilet paper and paper towels at the wholesale club, but we’ll stick to the grocery stores for our fruits and veggies.

Specialty items are another area which bulk/wholesale stores usually cannot compete with grocery stores or your local co-op/farmer’s market. If you’re into organic foods, stick with small stores who specialize in this sort of product. The percentage of customers who buy this type of food at large chain or bulk stores is so small, that the mark-up has to be huge for the store to make it worth their time to carry the product. At a place like a farmer’s market, there are a dozen or more mom & pop stores all competing with one another, this keeps the prices lower than you would find at a grocery or bulk store.

Keep up the good work with the site. I’ve enjoyed reading your articles during my morning “news and coffee” time.

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Kevin 2011/04/18 at 12:13 pm

T. Mac – Thanks for weighing in with your thoughts. I happen to agree with you on fruits and vegetables at warehouse stores. I buy potatoes, onions, and sometimes canteloupe at warehouses, the rest come from the grocery store.

I think you’re right, that the produce in warehouses isn’t as fresh. But I’m not sure it’s due to lack of turnover, or the fact that warehouses buy and stock the lower grades–which is probably why they’re cheaper. I’ve found that produce in warehouses isn’t as fresh, sweet, tasty or long lasting as what you can get at a grocery store.

It all makes me think that we’re doomed to grocery shopping at mutliple stores. That isn’t as efficient, and probably erodes some cost benefit, but for now it seems to be the way to go. The ultimate solution is to have some land for growing your own, but that takes time and a different kind of effort…

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Leigh Holcombe 2011/04/18 at 3:11 pm

One thing to keep in mind at the grocery store is that coupons and sales and club savings can lead you to the same poor shopping habits that can make bulk outlets less economic. Make a plan before you enter the store, and stick with it. Don’t buy something you normally wouldn’t buy, or in larger quantities than normal, just because it’s on sale.

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Kevin 2011/04/18 at 5:04 pm

Leigh, Very true, there are certain rules of shopping that you have to apply no matter where you shop. Advance planning can be more important than which store you shop in.

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Grace 2011/04/19 at 7:52 am

Thanks for sharing your experience. We like our one current warehouse membership, Amazon Prime. :D But seriously, we recently moved near my in-laws who have a Costco membership, & they offered to meet us there if we wanted to get anything. So if you expect to only get a few items occasionally (or just want to try it out) & have willing friends/relatives, you can try an arrangement like that. You can offer to contribute toward their membership fee.

Our main deterrent for buying in bulk is lack of storage space. The freezer that comes with the fridge that came with our apartment is pathetic. It is already full with a couple of small frozen fruit bags and a few lbs. of meat. We’d love to get one of those large standalone freezers but there is nowhere to put it.

This time of year, we get most of our food from weekend farmers markets and a flexible CSA which lets you customize your box. Most of the vendors sell herbs & organic/grassfed animal products that are fresher, cheaper, & much higher quality than the grocery store. You can buy bunches of fresh herbs that tend to be extremely marked up in stores & dry them in a food dehydrator (proving to be more than an impulse purchase by my husband!). If you live near a dirt-cheap year-round farmers market like my sister-in-law does, I envy you!

We also shop at the multiple grocery stores in our neighborhood due to the price variations. Funny how some specialty item can be cheaper at Trader Joe’s/Whole Foods than Kroger. Unfortunately, all the coupons I’ve gotten from them have been for boxed food that we don’t buy because my husband is severely allergic to stuff in them.

We have bought a couple of bulk items from Amazon. They have good prices on usually expensive things like raw nuts & coconut oil. Our purchases from them have been great quality.

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Kevin 2011/04/19 at 1:30 pm

Grace – I didn’t want to go to deep into the “how to” of food warehouses (it’s very important!) because it’s a topic unto itself. But you’ve brought up an excellent point about storage space.

Because you’re buying in bulk, a dedicated refridgerator/freezer or a standalone freezer, plus ample room for dry storage are “musts”. If you don’t have these available, shopping at a warehouse will be a problem.

Interesting about finding items cheaper at Trader Joe’s or WholeFoods. I haven’t spent much at Trader Joe’s, but I’ve never found too many bargains at WholeFoods. We have one close by, but never shop there. I guess it depends on what it is you’re buying?

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Grace 2011/04/19 at 2:37 pm

Re: TJ/WF prices – yeah, I notice it for specific things like canned food that my hubby can eat. I don’t want to get much into it but because of his allergies I often can’t just get the cheapest thing on the shelf that has an additive or 2. Now in our regular local stores there’s at most one additive-free choice which is usually some expensive organic brand. WF/TJ have their store brands which are usually quite cheaper.

Maggie@SquarePennies 2011/11/12 at 11:57 pm

You have to know what things cost at other stores to know if the warehouse club price is good or not. Not every price at a warehouse club is a good deal. And you have to know how likely you are to use it all before it goes bad. If you’re not sure, you’ll find out!

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Shaun @ Smart Family Finance 2011/11/30 at 8:59 pm

My biggest problem is the membership fee. Do I get enough savings to justify the yearly fee? If forces you to shop there more often to get a benefit and as you pointed out, the price club is not always the best choice from week to week.

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