The membership fee keeps the “people of Walmart” away from Sam’s Club. That’s huge unless you’re one of the people of Walmart.
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If you’d seen my tires, you would know that I needed them. 
Buy your tires from the junkyard. So what if they’re used? You’re not spending more overall!
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100% true for Costco, but not at Sam’s.
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I don’t want to spend too much time on the values of Sam’s Club, but one of the interesting things I like is often Sam still gives you a choice between the private label and a leading brand (either out of necessity or to cater to its audience). At Costco, in many categories like rice and spices, you can no longer get a brand choice. I feel Costco hasn’t done this right especially as Amazon accelerates their food business. This is perhaps a bit of ego on Costco’s part (or frankly to improve margins like any other grocery chain), but if you offer a private label, you better price it much lower than the brand. Kroger has figured this out, but Costco sometimes charges the same price or more than it used to charge with the brand version. I don’t think this is the right approach.
I also think Sam’s click and pick service and self-checkout options are all good innovations. As mentioned, I don’t think Sam really needs to require a membership and has done a lot to give out really discounted memberships, but I look forward to the day when Walmart’s website has better access to the Sam’s Club pricing.
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Obviously, this begs the question - had Costco continued to offer the brand version, would it still be at the same price they used to charge? Or are they only offering the private label due to a spike in the brand name’s price?
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I will go ahead and give one example. I picked this item because I know the product distributor is not giving any slotting money or other marketing spend breaks to the retailer (unlike everything in the coupon catalog).
Royal Basmati 20lb rice
Costco - no longer found in West Coast stores - Kirkland version was 20.98
Sam’s Club - 16.98 (warehouse pickup only)
Amazon - 16.98 (prime shipping eligible - obviously goes in and out of stock a lot)
walmart.com/Jet.com - 19.97
grocery.walmart.com 21.48
This may seem trivial (23% more expensive at Costco), but I have no idea how Sam’s or Amazon are selling the branded item at the low price. I think Amazon is matching Sam’s long historic price, but probably losing some money. I can see why Costco would stop selling the brand in the warehouses. It is not their style to lose money on any items (except the rotisserie chicken).
I see something brewing here in this battle which I think is going to spread to a lot more categories.
Remember Amazon is being very aggressive to hide their pricing from search bots (Google shopping doesn’t show them usually and they stopped putting prices and item details ordered in their confirmation emails too), so I believe other retailers have to use humans to trawl Amazon to compete.
I further think many analysts who cover Costco are not doing their job. Costco claims their margin dropped because they are selling more fuel which they margin less than in-warehouse items. But they are forgetting to indicate that perhaps people are having an issue with their warehouse items. I don’t think the Costco model is sustainable in this new retail world - at least not for saving money on core merchandise. Perhaps for big ticket items and long gas lines they can keep the value. But how many laptops or Nests can you really buy at a Costco deal? Maybe this is why they promote smartphone and tire deals so much - their future depends on selling these type of items, not on more core/basic needs.
This doesn’t mean doom to Costco, but when you look at whether a Costco membership is worth it - if you are really trying to save money and time versus buying the same items elsewhere (which should be the only real measurement of having the membership)… if you have clear grocery needs and don’t buy higher cost items on a frequent basis, I feel Costco is not offering you a deal. Even though you might buy items there anyway just because you assume they offer a better deal (similar to the Southwest Airlines thinking).
But doesn’t Costco make almost pure profit on the membership fees? It’s not like Prime where there are substantial costs associated with providing the services.
I also believe that many who shop at Costco do it because it’s a fun day out exploring and old-fashioned shopping. If they do it six or so times a year, it’s cheap entertainment. Maybe they fall for a $500 Vitamix on demo with some gewgaw or cookbook only available at Costco (I can always return it, right?); a $5000 HVAC system “on sale” for $10,000 (with a cash card kickback though); or a case of always-crummy Feit light bulbs.
Value (other than the rotisserie chicken and maybe the snack stand food) isn’t really the main reason.
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Amazon can’t hide their prices from the camel. The camel sees all. Well, actually, the camel sees maybe 90% of the time.
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Disagree – I’ve been pleasantly surprised by Feit LEDs. The pack I got was better (lighter, cheaper, runs cooler) than the CREE TW-series LEDs I got from Home Depot. And none of them managed to fail yet (two CREEs failed < 1 year).
Southwest Airlines is a good analogy. You get a better value at Costco because of their return policy, no-BS high quality selection of products, customer service, etc. You can always find something cheaper but for a no hassle experience (other than the exit checker queue) Costco is good.
Parking is a hassle. Putting up with the traffic getting in and out is a hassle. Getting around crowds especially near the sample booths is a hassle. Trying to find an item without clearly marked aisles is a hassle.
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Go on weekday evenings or on weekends right when it opens or closes. The sample booths are not present then and checkout is a breeze. Every Costco has different density around it but my local one has enough parking and not that big an issue pulling in and out. The aisles are an issue but with so few SKUs and most things grouped together it is not that big a deal.
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Still isn’t worth it. Once, I spent 20 minutes looking for bottled water at Costco because they didn’t put it in the usual place. It was crowded that day and there weren’t any employees available to ask. Also, different Costcos put the same things in different places. I think the people who love Costco are so used to putting up with the hassles of shopping at Costco that they don’t even realize it.
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This really depends on the location. In NYC (actually queens/bkln) the whole process is an extremely painful experience. In LA it’s fine, depending on when you go. In some other smaller cities it’s amazing. There’s usually only one person in front of you at checkout, there’s no waiting in line for the receipt checker, aisles are clear, employees all friendly and fun, etc. I actually find it to be a much better shopping experience than places like whole foods, that are often more crowded in those smaller cities.
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It’s fine in New Orleans. Of course, I never go on the weekend. I suspect one’s satisfaction with the place will vary depending on how crowded it is. If I only went on Saturday or weekdays after 5, I’d hate it.
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Holy cow. I was in our local Costco today and there was a line of about 20 shopping carts waiting to get out the door. That is definitely not for me. (I am not a member at Costco, but heavily utilize their pharmacy - their prices for almost all the Rx I need are so low that it isn’t worth futzing with insurance).
That said, I respect that your mileage may vary and if calwatch finds a value proposition there, then that is great. We cannot say as a blanket statement that Costco is worth it or not.
If you buy tires at junkyard, make sure they are not really old, or at least not dry rotting. I think the general rule is not to buy tires that are 10 years old. You can look up on the internet on how to read the date code from tires.
FYI, just saw free BJ’s posted on the DOC page.
BJ’s Wholesale Club Open To Everybody Without A Membership Until November 4th (No Fee/Commitment)
You had me at free BJs.
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