Price Clubs and Warehouse Clubs
- the key to bulk-buy savings

Price Clubs are retail stores that offer everyday items at discounted prices compared to regular stores. The key to their business model is bulk procurement and sales.

Price clubs don't focus on fancy shelf displays or a luxury shopping experience. Goods are in fact just stacked up in a large warehouse-like enclosure (hence the alternative name, 'warehouse clubs'). Most items are sold in larger package sizes. Since consumers end up buying "more" of a product, the club is able to offer a volume discount, thereby bringing down the price per unit. In a sense, a price club lies midway between a retail outlet and a wholesale seller.

Some of the most well-known price clubs with nationwide reach include:

  • Costco. This is the largest warehouse club in the US in terms of total sales.

  • Sam's Club. This is a division of Walmart, and has the most number of stores in the country.

  • BJs Wholescale Club. This club is mainly concentrated in the north-east.

Here are some tips to keep in mind, while shopping at warehouse clubs:

  • All clubs charge an annual membership fees. This fees usually ranges from $40 to $50 per year. You therefore need to shop often enough at a price club to make up for the fee. If, for instance, club prices are 5% lower on average compared to regular store prices in your locality, shopping for least $1000 worth of goods in a year will be required to 'break even'.

  • Make sure you have adequate storage space at home, when you go warehouse club shopping. As aforementioned, package sizes are bulkier than normal.

  • Warehouse club shopping is most useful for items that get consumed in bulk and quickly. For instance, toilet paper. Or diapers. Or milk. Slow consumption items will end up sitting in storage for long periods of time (since you would have bought in bulk).

  • Warehouse club shopping can be useful when purchasing big ticket items, because the discount can be more meaningful. For instance, savings on a branded LCD TV bought from a club versus a speciality electronics store might be substantive.

  • Although most people don't realize this, price clubs offer not just products but services at a discounted rate too. Things like vacations, auto and home insurance, printing services and even stock brokerage are generally offered at great prices. Once you join a price club, you must explore and exploit all its offerings, services included.

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