April 23, 2008

"The more you buy, the more you save!" I hate this kind of marketing spin. It draws us in because, after all, who doesn't like to save money? But it conveniently focuses on only one part of the picture. A sale might entice you to buy three shirts for $30 rather than at $12 each. Obviously, a $10 shirt is cheaper than a $12 shirt. But they've gotten $18 more of your dollars. Did you really go out intending to buy three shirts? The commercial should say, "The more you buy, the more you spend."

The idea of saving money by buying in greater quantities is also the appeal made by warehouse clubs. These huge member-only warehouses claim to offer great savings, partly due to the fact that you're buying in bulk (and partly due to the no-frills environment). But are the savings more than offset by the fact that I may buy more than needed? And is buying in bulk really a money-saving strategy? I went on a mission to find out!

I started my quest at Sam's, the dominant warehouse club locally. I thoroughly enjoy walking down aisle upon giant aisle of everything from tube socks to hot sauce. I mean really, who couldn't use a 48-bottle case of Tabasco? With apparent bargains all around, it's hard not to love the clubs.

I decided to primarily focus my research on goods one would buy regularly from the grocery store. Though it wasn't mandatory for the items to be food, the food items I did pick were in a quantity that would not quickly perish. So with my clipboard in hand, I wrote down the prices of 175 items at Sam's, and then went to two of our leading grocery chains, Kroger and Meijer, and wrote down the prices for those same 175 items.

Most of the time, I was able to compare items of the same container size. In other words, if a package of four 32-ounce bottles of Mott's Apple Juice could be purchased at Sam's, I priced the same Mott's Apple Juice, but in a single 32-ounce bottle from the two grocery stores. When this was not possible, I wrote down the price of a comparable size. After crunching the numbers, I found that a great majority of the items were indeed cheaper at Sam's. On average, the savings amounted to 31%, more than enough to easily offset the $35-45 annual membership fee.

To see if there were patterns to where the savings would be found, I broke down the data into categories: baby, can goods, cereal/bread, cooking/baking, dairy, frozen, health/hygiene, household (cleansers, paper and plastic products, etc.), snacks, soup/sauce, and other (peanut butter, stuffing, salad dressing, etc.). The big winners: cereal/bread, cooking/baking, snacks, and other averaged nearly 40% savings. Still not impressed? Buy some raisins, syrup, bottled water, and sandwich bags and you can save an average of 66%.

And it doesn't stop there. You can rack up even more savings by buying generics in bulk, where I found savings of up to 83% on items like aspirin and hand sanitizer.