Saving Advice - I really have nothing against Costco (NASDAQ:COST). I think that they are a quality company and they treat their employees well, especially when compared to other retailers. I used to be a huge advocate of shopping at Costco and the great deals that one could get when buying in bulk to reduce costs. I know a lot of people still feel that way.
While I was a true fan in the past, I no longer subscribe to this line of thought. In fact, I realized that shopping at Costco actually costs me far more money than it saves. I realize that each of the reasons I no longer shop at Costco may not apply to everyone, but I have a feeling that more than a few are doing the same things I did for years and may not have even noticed. Here are 7 reasons that I no longer shop at Costco and why you may not want to shop at Costco either.
You may be buying more than you need
When I used to shop at Costco, I would come back with huge containers and boxes instead of the smaller sized products found at regular grocery stores. If you have ever been in a Costco store, you know what I mean. There are peanut butter jars and then there are giant industrial sized tubs of peanut butter sold at Costco.
When you shop at Costco, it’s extremely difficult not to buy more than you really need. Everything comes jumbo sizes, and even though the jumbo size may be inexpensive when one considers the price per unit cost, is it really a good deal if you purchase more than you need? More often than not, I’d end up throwing out a portion of what I purchased because I just wasn’t able to consume it all before it went bad. I finally figured out that I wasn’t saving money when I ended up throwing out a good portion of what I was buying.
You consume more than you need
I tried to rectify the first issue by making a conscientious effort to make sure I consumed everything I bought at Costco. The problem was that I simply started to eat more than I would have regularly eat which had two detrimental effects — I spent more money and I started gaining weight.
I soon realised that just because I was eating all the food and wasn’t wasting it anymore, that didn’t necessarily mean that i was saving money. If I went to the grocery store, I would buy a couple of Cliff Bars which would last me to the next week’s shopping trip. When I purchased the box of 24 at Costco, it would last me a month and the bars were less expensive on an individual basis, but I was eating 6 a week instead of 2 which actually made them more expensive overall.
You are getting a good price, not a great price
The great thing about shopping at Costco is the prices. If you are looking for a good price without doing any additional work, Costco is a good place to buy stuff you need. You know when you buy something at Costco, you likely got yourself a decent deal.
This all came crashing down when, back in 2010 I realized it was possible to eat on $1 a day and create a Thanksgiving meal for six for $1. Even without going to the extremes I did in those challenges, and even without ever clipping a coupon, if you are willing to look at grocery store weekly deals, it’s much less expensive to buy food at the grocery store than it is at Costco. If you add coupons into the equation, the comparisons are not even close.
There is increased impulse buying
I have more things lying around my house than I can count on both hands which were purchased from Costco that I had absolutely no idea I needed until I saw them there. Whenever I was walking around Costco, I would see all these amazing things that I never knew that I needed, but all of a sudden I felt that I could not live without them, especially at that price. By the time I made it to the cash register, my shopping cart was filled with more things that I never planned on purchasing than the ones on my shopping list. While I have always been pretty good at resisting impulse buying at regular stores, I don’t think I ever walked out of Costco without at least one item that I had not planned to purchase.
Travel costs more than you think
This one depends a lot where the nearest Costco is relative to where you live, but mine happened to be a fair distance away. Driving 20 miles to the nearest Costco may not seem like much when you think of all the deals at Costco, but those 20 miles ends up costing over $20 round trip if you consider the IRS business allowable mileage deductible figure. Compared to a $1 round trip cost to the local grocery store a mile away using the same figures and the travel costs end up negating some of those perceived savings.
Shopping at Costco takes a lot of time
Being inside a Costco on a weekend is not an activity for the faint of heart. It might be different if you are able to go during off hours when there are less crowds, but that wasn’t the case for me. Fighting the crowds and the check out lines meant devoting a few hours for a shopping trip. Add in the extra time that always seemed to be spent wandering around the store looking for all those things that I didn’t realize that I really needed, and the time it took to shop at Costco meant that I was missing out doing a lot of other things on the weekends.
You have to pay a yearly membership fee
In order to shop at Costco you need to pay $50 yearly membership fee. Most people are able to justify this cost because of all the savings they get from shopping at Costco. That is why I never had a problem paying for it. It becomes difficult, however, to justify paying $50 a year when you realize that the membership is causing you to spend more than you would have without it.
As with most personal finance questions, what works and doesn’t work depends a lot on your individual habits. The key is that you have to be willing to sometimes look beyond the conventional wisdom to truly see what is happening. I shopped for years at Costco assuming that I was saving money because it has good deals, but when I really started to look at what was going on, it became apparent that shopping at Costco wasn’t really in my best financial interest.
Finally, if you are looking for good alternative, consider looking into getting an Amazon (NASDAQ:AMZN) prime membership. Amazon’s prices are competitive and they’ve developed their retail system to the point that their prices are competitive compared to major retailers like Costco or Wal-Mart (NYSE:WMT). They are also offering a standing 30 day free trial, so check it out if you are looking for a good Costco alternative.