Frequent warehouse club shoppers can spot the newbies in an instant. With expressions of glee on their faces, they stop at every aisle. Cereal, pasta, bathing suits and batteries all go willy-nilly in the cart. Shopping lists are soon abandoned as gallon-sized containers of gourmet jelly beans along with a new iPod or DVD player find their way into the cart.
Veterans shudder, thinking of the shock and horror those first-timers will no doubt feel when they confront a $300-or-worse bill at check-out.
Clearly, warehouse club shoppers are getting wise to the best way to shop these bargain meccas. Learn some of their secrets: See, The Top Five Worst Warehouse Club Buys.
Ironically, you can often tell the most experienced warehouse club shoppers by the dearth of items in their carts. Less experienced warehouse shoppers like myself (not a newbie, but not hardcore), often steal glances into these carts to see what choice items lurk there. Surely these represent the best buys in the place.
This dynamic -- the more frequent the customer, the fewer items purchased -- presents a problem for the companies that operate these stores, as well as investors in the stocks of Wholesale Corp. (NASDAQ:COST) and Wal-Mart Stores, Inc. (NYSE:WMT), which operates Sam's Club.
How are these companies going to keep their sales up in the long run? Shoppers will keep coming back -- and many of them will buy their big ticket items through warehouse chains (cars, flat-screen TVs, mattresses, jewelry). But does that spending equal the regular week-to-week splurges that new customers bring?
Right now Wall Street is decided bearish on Costco, fearing its quarterly sales won't keep pace with earlier growth. Analysts were more optimistic about Wal-Mart -- that is, until it turned in a disappointing sales performance during the key post-Thanksgiving shopping weekend.
I predict both warehouse outlets ultimately will do fine this quarter as customers flock to Costco and Sam's Club for all their holiday entertaining needs and find plenty of luxury-oriented gift ideas along the way.
But next year, if consumer spending fades and the economy weakens further, it seems likely that the free-spending newbies will convert even faster the the smart-shopping veterans. For warehouse club stocks, which are valued on sales growth, that could mean trouble ahead.
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Reader Comments (Page 2 of 2)
12-04-2006 @ 7:43AM
Dina said...
I have comparisoned shopped for years. I do not consider myself a "newbey". I have converted my daughero-in-law to shop Sam's. She can buy in bulk things that the children eat up like locucts. Shopping once a month also cuts down on impulse shopping. Save on that,time and gas and you are saving big bucks. I survived 2 teenage sons that way. Sure sales are good but when both parents are working you don't always have the time. Also the sale items are only to get you into the store and then you almost always buy other items that are more expensive or even in some cases raised for the sale on other close by items. Amy you havn't checked prices week by week and seen where grocery stores raise prices near sale items a few pennies add up to big profits on these items. So BEWARE of sales. Watch out for the by one get one half price sales or get one free. In meat section I have often seen prices almost double the price of a week or 2 ago. Walmart sells 100% juice items in bulk and that for the price of half the quanity in the retail stores. Know the deals and shop WISELY. Dina
12-04-2006 @ 10:48AM
lynn hall said...
Our local Wallmart has fazed out it's lay-away service here in Albany,New York.I'm wondering if it's a chainwide thing.That alone would explain their poor sales over the Thanksgiving weekend.Many,many women,myself included,liked to go to Walmart during those Holiday sales and take advantage of the sales prices.We would do all of,if not,most of our Christmas shopping there and then put it all on lay-away.It was nice to just stop by and make a paymentrather than to be running all over town looking for the best prices on all those gifts. And I don't know about most people,but I can't afford to pay for it all at once. And I as well as most other people with lay-aways-would often pick up a fewother items when coming in to make a payment.This season Walmart didn't get nearly as much money out of me as they did last year.And I haven't changed my Holiday shopping needs at all this year.I still buy popular toys for the kids and useful things for the adults. And Walmart is also going to see a big drop in big ticket items because of this.
12-04-2006 @ 2:33PM
jay shultz said...
i think your opinion is just that and does not hold water to what is in reality. i have shoped at costco for the last 14 years or so and fien that my cart is full most of the time so i guess i am still a newbi as you have stated. reading the other comments i guess we are all newbi's geez they are a great store a greaat organization and they ahve the greatest return policy of any one. there food is the best and the prices are one of the best as well. i priced noni juice of whice i take all the time at whole foods was 36 dollars a bottle and at costco i a afraid was a bit less 11.00 for the same name and the same size and the same organic noni i could ahve got at whole foods. just one example. and yes i do ahve the room to store the food and the added stuff i buy there so hold your water some where else you really dont know much about fiances
12-05-2006 @ 6:48PM
Herb Kaufman said...
This is the only mass merchandiser I have ever known and patronised that has (paywise) treated their employees fairly.
12-04-2006 @ 8:33PM
barbara said...
I let my Costco card lapse several years ago. I was spending way too much money. Since I live alone, 100 of something will never get used. I now understand that I am a "newbie." Gonna renew the card and make better decisions......... Thanks to all of you for your comments.............
12-04-2006 @ 6:56PM
porsche said...
Boy, what a gyp. This article doesn't actually say anything. "What Warehouse Veterans Know...See what warehouse veterans have learned...", well??? I'm waiting!!! What have veterans learned???? What are the secret facts that I can learn from these veterans to make my shopping better? Your article doesn't have ANY advice from veteran shoppers. All your article says is "buy less". Geez, THAT'S ADVICE???? DUH, the best way to save money is not to spend it at all. Thanks a bunch. Did someone actually pay you to write this article??
12-06-2006 @ 8:04AM
David Kriedler said...
Well Amey, looks like you got stoned on warehouse
club shopping... especially at Costco! The Ronster
at #7 must be your significant other if he knows "you're hot" ! Haven't seen a picture...
but I'll bet your face is red after this article.
12-06-2006 @ 9:44PM
Maxine said...
Why are you all so happy that you blow so much money at warehouse stores. You all seem proud. They have built a sams club across the street from a costco and have three more of these same big box stores in development with in a 8 mile radius where I live. I receive coupons and guest passes atleast once a month trying to court me to sign up. I refuse. I spend maybe three hundred dollars a month at a regular grocery store for a family of four. If I did sign up, I'd surely be a slave to purchasing items that I priorly had no intention of needing. I bought a deep freezer to stack up on sale items which saves me more money. And I shop early sunday morning when they discount items from the prior weeks sales. Wise up and save your money. I'd rather blow my money on a charity or my IRA.
12-12-2006 @ 8:21PM
scott said...
Amey are you a nut? Where did you do your research for this article? I was a member of costco until they opened a sams club closer to my home,now I have a B.J's 2 miles away so I switched to B.J's. Bottom line is my wife and I have been members of wholesale clubs for over 20 years! We have 3 kids and spend around $300+ every 3 or 4 weeks just for staples! (not the little metal ones)Amey, you missed this one by a mile!
1-16-2007 @ 7:03PM
BOB said...
Who cares ? How about you shop where you want and I'll shop where I want ?
Truth be told...I have never found any deal at any of the warehouse clubs on a specific item that I couldn't beat the price somewhere else. In addition, I/we don't need 25 sponges, a gallon of ketchup, or 100 trash bags..we are happy going to the local grocery,buying what we need,and price shopping the larger purchases when we are ready to buy those.
If Costco has a great deal on an item I'm ready to buy...I'll join again if my membership has expired, as long as the savings covers the dues...then I'll stop by every once in awhile to see all these "great deals" everyone is always talking about...it's just that we never seem to find those deals so we tend to let our memberships lapse...