Are wholesale clubs worth the membership price?

Marketplace Contributor Apr 25, 2012

Jeremy Hobson: Well whether or not you are saddled with student loan debt, chances are you’re either a member of, or you’ve given some thought to becoming a member of, one of those big discount clubs like Sam’s or Costco to save money on groceries.

L.A. Times consumer columnist David Lazarus has been looking into the pros and cons of these clubs and he joins us now to discuss. Good morning, David.

David Lazarus: Good morning.

Hobson: What are the numbers when it comes to these clubs, and how many people are joining them?

Lazarus: Well a whole bunch. In fact, the latest numbers from the big dogs out there — and that would Sam’s Club, Costco, BJ’s — more than 120 million people are members.

Hobson: Wow.

Lazarus: Yeah, it’s a lot of people. And you can understand the attraction, because in tough economic times like these, anybody who offers you any kind of savings is going to be very attractive.

Hobson: Is it really worth it, though, for people to go to these places where they can buy 500 hot dogs instead of five hot dogs, or whatever — buy in bulk in times like this?

Lazarus: You say it like it’s a bad thing, Jeremy. I guess there’s two sides to this. First of all, there’s the cost to join, which can be anywhere from $40 to $55. And that’s going to obviously put you behind the 8-ball right out the gate. On the other hand, the savings are substantial. According to one recent study, it’s about 30 percent less than your typical big supermarket, and that is the good-sized saving. According to that same survey, any family that spends about $150 a week at a typical supermarket could save more than $2,000 a year shopping at these big clubs.

Hobson: But don’t you still have to go to the supermarket for some things?

Lazarus: That’s exactly right. And the problem here is there’s not a lot of choice when it comes to these clubs. And also, there are factors of convenience — they’re not very close to your home as say, the supermarket. But they have very, very limited choice. So if you’re very monogamous with a certain brand, if you’re very finnicky about the various products you can choose, this isn’t going to be for you.

Hobson: But do people feel like after they’ve spent that initial membership fee that they’ve got to go shopping a lot more in order to make it up? That it actually makes them spend more money at the supermarket?

Lazarus: And that’s not a coincidence, Jeremy, because these clubs know that and they know it’s going to bring you out shopping. At the same time, it’s a good thing because that’s where the big savings are going to come in. So yes, you’re going to pay that $50 or so to get it going, but if you can save $2,000 or more a year because of the roughly 30 percent discount on all these products, you’re going to come out way ahead.

Hobson: L.A. Times consumer columnist David Lazarus, thanks a lot.

Lazarus: Thank you.

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