The Costco Delusion

“Look at how much I saved at Costco!”

Costco has some of the lowest markups in the retail industry. That, combined with the huge company’s buying power, allows the company to offer super-sized products at very competitive prices.  Those low prices are real.

My favorite Costco purchase happened when we were renovating our backyard.  To create a privacy barrier, the local nursery was asking $79.95 for 6-foot arborvitaes.  Instead, I bought 12 little 2-foot leyland cyprus for $12.99 each.  Three years later, they were well above 6 feet each.

When you’re shopping at Costco or other warehouse retailers, beware of two problems.

First, Costco packages are usually much larger than in other stores.  You might normally buy one loaf of bread but Costco forces you to buy two.  Fruits and vegetables, paper towels, office supplies, you name it, Costco sells these in huge packages.  There’s little point in buying a bushel of grapefruits if half of them are going to rot before you have a chance to eat them.  Don’t buy more than you need.

Second, Costco is full of stuff that you don’t need at all.  Mango salsa might taste great in the samples stand, and the designer clothes and small home appliances look very appealing in the store.  A day at Costco is full of temptations to add these items to your over-sized shopping card.  Enjoy the free samples, sure. But avoid the temptation.  Don’t buy things you don’t need.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

3 Responses to “The Costco Delusion”

  1. I have found that buying things on sale at local supermarkets is cheaper than most (not all) Costco purchases.

  2. Don’t ever go into Costco without a list and a full belly!

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