Thursday, December 31, 2020

Is the Wholesale Club Worth It?

Wholesale clubs can have good bargains. They can also be a trap.  Cristalino sells for $9.99 at the local liquor store.  I bought two cases.

A reader writes:

I just got a coupon for a one-year membership at BJ's Wholesale Club for $25. One of the stores is a 15 minute drive from me. I'm thinking of joining it, but want to be sure I turn a profit off of it by saving money on goods I would have otherwise bought from non-membership retailers I regularly visit, like Lidl and Wal-Mart. Is there a way I could achieve this goal, or is the BJ's membership not worth it?

I'm a single guy and don't buy anything but essential goods. I have some storage space and could do something like buy five years' worth of toilet paper from BJ's and slowly use it up. My only other real expense is due to my landlord business (building materials, new fixtures and appliances, etc.)

I have written about wholesale clubs before.  A few times, in fact.  One of my earliest postings was about them.  Long story short, they have some good prices on some things, but they hope you "impulse buy" other things without checking prices.  They are also an invitation to over-consume - you buy a ton of something, you tend to view it as less scarce, and thus consume more of it.  With BJ's in particular, the pricing is very confusing, as they rely on catalogs of coupons, in-store coupons, and virtual coupons, to make price-shopping confusing.

The history of BJ's is interesting - one of the first, if not the first, wholesale clubs.  It was born out of Zayre's if you can believe that!

A pandemic note:  In the past, wholesale clubs had mountains of toilet paper and paper towels and other paper products.  It seems that lately, BJ's has only one or two brands, and limit "one giant package per customer" - no coupons, and few discounts.  In the past, they had a plethora of confusing brands and package sizes and coupon discounts - although the "Berkley & Jensen" house brand usually beat the "national name brands" with the coupon discount.

I was told or read somewhere that one of the main sources of income for wholesale clubs was, in fact, the annual membership fees.  It may not seem like a lot - $55 for BJ's for a "basic" membership - but I guess it adds up.   Sometimes they offer "free" daily passes, but if you use one, you can't use another withing so many months.  I stood in line behind a guy once who argued with customer service for two hours over this issue.  The customer service rep didn't budge on the issue - the computer wouldn't let them.

There are other levels of membership you can buy.  We tried the "upgraded" membership once, which promised as "cash back" reward on things we bought.  After a year, the cash-back reward was almost exactly equal to the additional amount we spent on the upgraded membership.  So, unless you buy a lot of stuff for a family of 12, I doubt the upgraded memberships are worth it.

To answer the reader's question up front, I would say to try it - but to make sure the membership is NOT set to "auto-renew" or your credit card will be charged for $55 next year.  I suspect they get a lot of income from people who join and never shop - and never cancel.   It is not a hassle to manually renew.  If your membership is about to expire or has expired, the checkout kiosk will remind you and ask you to renew.  Again, you have to UNCHECK the "auto-renew" box at checkout.

For $25 and living 15 minutes away, it is worth exploring.  You may find nothing that interests you, or you may become a regular shopper.  There seem to be two types of shoppers there, by the way.  There are the people who live nearby who come in and buy a quart of milk, as though it were a grocery store or even a 7-11.  Then there are people like us, who have to drive an hour to get there, and "stock up" and wedge the car full of crap until it is riding on the bump-stops.

By the way, for all you cashiers out there, the next time someone says, "having a party?" when I buy more than two bottles of wine, expect a punch in the face.  It is about as annoying as when a customer says to you, "he he, must be free!" when a product refuses to scan.  Let's both be original as a New Years' resolution - how about that?

Are there bargains at the wholesale club?  Yea, but you have to know pricing and be astute.  As illustrated above, the Juame Serra Cristalino is regularly $7.99 which is two dollars cheaper than what the local liquor store charges.  On sale?  $5.99 - a savings of four dollars a bottle.  Of course, since we live an hour away, I bought a couple of cases ("having a party?" PUNCH!) which "saved" $96 over buying at the local liquor store.  Of course, you cannot "shop your way to wealth" and I would have bought those two cases anyway (maybe not all at once).  If you are buying something only because it looks like a bargain, and it is not something you would buy normally, well you are not saving money.  Impulse-purchases are the deadly trap of the wholesale club.

Why do I have a photo of that price sheet on my phone?  Simply stated, when we went to ring up the purchase, the discount did not automatically apply.  You have to be like a hawk during checkout and not be afraid to ask the head cashier to manually adjust prices, as sometimes coupons do not scan, or in-store discounts are not applied (how convenient for them!) or the app coupons don't apply automatically.  So I had to run back, take a photo of the price sheet, and then show it to the cashier.  For $96, I will do that.

And in spite of the name "Wholesale Club" the people shopping there are not retailers or store owners, for the most part.  Oh, sure, I've seen wholesale club products for sale in small Bodegas and corner stores.  You can tell by the brand-name (Berkeley & Jensen) or by the packaging ("Not For Retail Sale!").  But for the most part, retailers are buying directly from distributors.  The "wholesale club" is for schmucks like you and me.

As I noted in an earlier posting, BJ's now has an "app" which allows you to electronically add coupons. It sort of is stupid, as what we end up doing is putting something in the cart, and then looking up the item to see if there is a coupon.  If there is, we click on "add coupon" and it generally appears at checkout (again, you have to watch this like a hawk, and that gets tiresome).  So instead of inducing us to buy, it ends up being a windfall discount - something that goes against the theory of couponing.  We also compare the coupon price with the generic brand, and half the time, the generic brand is still cheaper.

But speaking of cheaper, online pricing still beats warehouse pricing most of the time. I used to buy things like vitamins and supplements at the wholesale club, but lately have found that is a lot easier and cheaper.  Again, wholesale clubs can be a bargain, or they can be a trap.   You still have to know competing prices and do comparisons.  For everyday things that you are price-aware of, it is not hard to spot bargains versus the rip-offs.

But getting back to the nature of these places, each end-cap has an impulse-purchase display, sometimes of an "as seen on TV!" kind of item.  You know, like the guy who sells My Nazi Pillows.  I hear he is still looking for his red stapler.  They also have a huge selection of televisions, and a smaller selection of laptops and pad devices.  We've bought a couple of televisions (to watch Netflix) and they seem to last about five years before they go pffft!   Of course, the price of these things keeps dropping over time, so it isn't worth fixing them, particularly when for the same price, you can buy one much larger with more features.

BJ's also sells gasoline at some locations and the price is pretty attractive.  Again, they play games with pricing, and if you buy certain brand name items, they can knock even more off the price per gallon. But in a way, it is like the deal with Winn-Dixie and Shell:  You buy $500 worth of groceries and you get 50 cents off on ten gallons of gasoline - or something like that.  No one is giving away free gasoline or free money samples this week.   But the regular price on gas is good - as evidenced by the long lines at the pumps.  By the way, they are Nazi about which direction you drive into the pumps.  Follow those arrows!

Their price on propane is pretty decent, too, and we've filled up there for cheap.  Some locations also sell tires and batteries, and back in the day, I remember the store in Virginia, as I recall, having rows and rows of tires to look at - the smell of new rubber!  Today, they keep most of the tires in the tire shop, as I guess they realized the real estate taken up by the mounds of tires could be better used selling other merchandise.  I think I may have bought tires there once - decades ago.  But the last set I bought, for the Nissan, I ordered from and had them mounted at Walmart.  Actually, all three companies had the same price on those BF Goodrich tires. I went with Tire Rack based on service (Walmart misplaced the last tire I had "shipped to store") and used Walmart to mount based on convenience - it wasn't an hours' drive away.  I suspect BJ's may be morphing away from auto service - I don't see a lot of cars being worked on at the wholesale club - the shop is pretty quiet.

They also sell eyeglasses, and my experience has gone from "Wow!" to "Meh!" and today I use online.  Do you see a pattern here?  I've gotten some pairs for cheap at the wholesale club, but lately the prices are increasing - to a few hundred dollars a pair.  You can go online and buy the style you want (as opposed to what the have in stock) for less than a hundred bucks - sometimes far less.

Note also that some stores have a deli, and the price-per-pound on deli meats can be far less than most grocery stores.  Cheese?  You can buy pre-sliced cheese in a nice plastic package in the refrigeration case for less-per-pound than at the deli. And Kentucky Legend pretty much beats deli prices even at the wholesale club.  Plus, no waiting in line for a half-hour with surly deli employees who act like you ruined their day!

Some locations also have a separate liquor store, and in Florida at least, you don't have to be a member to shop there.  The prices are about 10-20% less than "discount" liquor stores, but the selection is a lot thinner, of course.

Appliances? Yes, they do sell them online, but I've never looked. I found our local independent appliance dealer to have better deals even than the "big box" stores. There usually are displays at checkout (and sometimes desperate salesmen) selling replacement windows, or vacations, or even cars.  I've never investigated these, so I don't know how they work.

Some stores used to have a small pizza and hot dog snack shop, but many were closed during Covid, and some never reopened.  At one store, they tore out the pizza ovens and soda dispensers and replaced it with a stack of mattresses.  I guess the pizza wasn't a big seller.

That's about it, I guess.  There are bargains on some things, other prices are just "OK" and some things are actually higher than in other stores. And it goes without saying, if you impulse-buy a giant swing set or a set of patio furniture, you aren't saving money, you are just shopping.

I guess the main thing to keep in mind is that like any other major chain of stores, they have an army of marketers, computer experts, and psychologists who are analyzing your every move and watching what you do.  They know more about what is going on in your mind than you do. If you shop there at all, you will get coupons in the mail for what you shopped for previously, which often isn't helpful, as if you just bought five pounds of cheese, odds are, you won't need five more pounds in the coming week.

I digress, but these fears of "AI" are pretty stupid.  Online retailers, Amazon, Google et al., use "AI" to figure out what you want to buy.  You buy a microwave oven, and are instantly tagged as "Mr. Microwave Oven" and they assume that is all you want to buy for the rest of your life.  You get flooded with ads for Microwave Ovens - or knitting supplies (I still do!).  Somehow, this doesn't impress me much.   If this is the technology that will "take over the world" I am not losing too much sleep over it!