This weekend while we were shopping at Costco, my roommate and myself were musing how Costco manages such great deals on name brand items. Part of it is the lack of selection. You get X or Y or sometimes just X. They bring in one item in bulk and that’s it. And it’s a gigantic size so you are pay substantially less per unit than a regular supermarket. Interesting Costco is also getting into higher end “organic” foods, cleaning supplies, etc. Thus they are cutting into the “rich” whole foods market.
But in the middle of our discussions my DH says “Costco isn’t for poor people, it’s for the middle class. Wal-mart is for the poor.” That gave us both a pause. His reasoning?
At Wal-mart you can buy generic items for less than at Costco. Costco generic Kirkland brand is still a pretty high quality, for example the coffee beans are from Starbucks. The Wal-mart generic truly is generic.
But a more important point is that Costco sell things in one size bulk. At Wal-mart people have the opportunity to buy the products in different sizes. Why is this important? Poor people don’t have the income to spend and inventory products. Rather the poor buy what they need when the need it. People who shop at Costco can afford to spend money to stockpile goods rather than worrying about their cashflow. Thus my DH feels Costco/Sam’s Club/BJ’s are for the middle class, not the poor.
What do you think?
24 responses so far ↓
1 444 // Jul 14, 2009 at 9:34 am
Someone pointed out to me once that people of limited means can’t shop at the warehouse stores as easily because there is a membership fee to pay. Also, they balk at having to stock up on large quantities when their money is budgeted so tightly that getting three months’ worth of coffee or paper towels is a waste of resources; they need the cash to buy other things on a week-by-week basis and can’t have a valuable stockpile of things sitting around the house when that could have freed up some cash flow.
It appears that people of more expansive means shop at our local Sam’s Club; many appear to be doctors (just my guess from appearance and demeanor; and in fact, I’ve run into the surgeon who operated on my daughter’s eyes there. Had I not known she is a top-class surgeon, chief of her department and responsible for the training and supervision of many interns, I would have thought she was the average ninny-witted housewife looking for a good deal on gardening gloves. (I’m just saying her appearance did not tip off her occupation but I happened to be privy to it.)
2 FB @ FabulouslyBroke.com // Jul 14, 2009 at 10:01 am
I could see that. That, and it costs to pay for a membership to shop there.. and they tend to buy on the fly rather than stockpile, unless there is a sale.
The quality really is better at Cost-co, but also more expensive.
3 Little Miss Moneybags // Jul 14, 2009 at 10:23 am
I completely agree. I’ve always been able to see the value in buying in bulk, but there were times when I simply wasn’t able to afford it. Yes, buying toilet paper for ~$1/roll at the grocery store was silly when I could get it from Costco for $50/100 rolls–but I didn’t HAVE $50 to spend on toilet paper (much less $50 for the membership fee). I had $4, so I bought a 4-pack from the grocery store.
It feels like a real luxury now to have a Costco membership and be able to shop there regularly and have a fully stocked pantry, fridge and freezer.
4 Ginger // Jul 14, 2009 at 10:28 am
I agree, I have always viewed it that way, too.
To shop at Costco you have to have large amount of cash upfront, and also be able to pay your membership fee. If you don’t shop there often you won’t make back your fee in savings.
There’s also the issue of transportation and storage. Costco’s are usually located out in the burbs or in the middle of nowhere and are difficult to get to if you don’t have a car. The same problem with bulk items applies: if you have to take the bus, can you carry all those giant packages you need to buy to get cost savings?
In addition, those that have less income may potentially live in smaller apartments where space is at a premium. They may not have anywhere to store all the bulk items. All of these barriers sort of defeat the purpose of the poor shopping at Costco.
You really DO need to be middle class or higher to shop there, it seems!
5 JoeP // Jul 14, 2009 at 10:32 am
444 nailed it. In most cases, we find that stockpiling is wasteful. You spend about 3x more during that shopping session, so you have less cash available that week. Of course, it is nice to have on hand some of the critical items like toilet paper, tissues, napkins, soap, paper towels, foil. So for these, we like to keep 2+ weeks worth on hand.
As far as “class” I don’t think too many lower class folks think in terms of bulk non-generics at stores that have a membership fee. They are probably more concerned about spending LESS, which is hard to do at a warehouse club, where you pay more and get more. It’s not always about the lowest unit price.
6 R. May // Jul 14, 2009 at 11:04 am
I could go with Costco being a middle-upper class store for the reasons enumerated.
But I have to say that Wal-Mart has transcended the lower class – middle and upper shop there too.
I don’t find costco cost effective for me at all. There’s two of us. I can do better at the local grocery store with sales and coupons, not to mention the gas it would take to drive to my costco.
7 sarah // Jul 14, 2009 at 12:16 pm
I am surprised that so many people still think the warehouse clubs are a good deal. While they may beat the grocery store’s non-sale price, they usually cant beat sales combined with a coupon. I took my MIL out shopping last weekend, and she was surprised that we could beat the per-unit price of Costco on just about everything except milk. Our Aldi carries milk for $2.30/gallon, Kirkland brand is $1.99/gallon. So I guess based on that they are saving about $125/yr on their milk (since they buy 8 gallons a week!!), but if that is the only thing that is cheaper I wouldn’t bother driving all that way.
8 Meg from FruWiki // Jul 14, 2009 at 12:42 pm
I agree — Costco, et. al. are definitely for the middle class or higher.
You have to be able to pay the membership fee, pay higher prices up front for bulk food, pay higher prices in some cases because the brands are more expensive and there aren’t as many coupon opportunities, and you have to pay to drive back and forth because you’re not going to get very far walking or even taking the bus with all those huge containers of stuff. Heck, you almost need an SUV to buy some of those things!
My husband and I have been thinking about renewing our Sam’s membership which expired in April. We’ve joked that we would when the toilet paper ran out. Would be nice to get some cheaper bags of lemons the way we’ve been going through homemade lemonade. But I’m not sure lemonade and toilet paper would be reason enough to pay $40 or more for a year’s membership. And anyhow, we hope to tag along with a friend sometime since he has a membership.
9 444 // Jul 14, 2009 at 1:02 pm
Where we live, there is a marked apparent social class divide between the customers at Sam’s Club (analogous to Costco) and the employees. With a few exceptions, they are polar opposites in economic class and also race/color. Sorry to anyone offended – it’s an observation that is striking.
Some of the employees may drive but most of them appear to ride public transportation and the walk they have to take from the closest station is really not fair. The train even goes right by the Sam’s Club but there is a sign making sure everyone knows that while the train stops there only to change drivers and so that the drivers can use the convenience store restroom, it is NOT a stop. Workers must hike the better part of a mile through non-pedestrian areas (or hike even longer on sidewalks beside busy thoroughfares) just to get to their low-paying job. This is true for the nearby Wal-Mart, too.
I sound like I am writing a sociology book. I’ve read plenty of them, but I don’t have to read about the glaring socioeconomic divide I see every day in my wealthy suburb which is run by a working class commuting up from a high-crime economically-depressed inner city. Oops,did I expand the topic too much?
10 Meg // Jul 14, 2009 at 3:11 pm
I agree about Costco not being for the poor, but Wal mart is cutting into the middle class/upper middle class market as well. They change their inventory based on where the store is located – for example those in Hawaii have higher end alcohol and beachchairs and more brands of sunscreen, etc.
In my Uptown neighborhood the Wal Mart carries nicer groceries such as hummus and more fresh produce as well as organic options. the Wal Mart near my parents in rural-ish Alabama is very different though…
11 LAL // Jul 14, 2009 at 3:17 pm
JoeP, I also like to buy food I’ll eat that week. I usually buy one package of meat for the week and use it different methods.
R.May, how do you beat costco using coupons on meat and veggies? Do you have coupons for those? I don’t.
I can beat costco for paper towels, body wash, toilet paper if I wait for CVS deals. I can’t beat it for meats, veggies really.
Fresh foods in my area don’t have coupons and even with loss leaders the quality is usually poor.
Walmart in rural hawaii is likely like rural Alabama Meg!
12 R. May // Jul 14, 2009 at 3:49 pm
I only by meat when it is bogo or clearance (and ocassionally they have 20% off which is in addition too) and veggies that are on sale pretty cheap. Plus I grow my own veggies which gets me through a good chunk of the year because I freeze. Those I have to buy, I tend to buy frozen anyway because they’re cheaper.
The closest Costco is 30 minutes away. Between gas and membership costs it’s not worth it. For fresh veggies I would have to go a week or so to save a few pennies. And I don’t drink milk so not worth it there either.
13 amy // Jul 14, 2009 at 4:20 pm
We have the world’s second smallest Costco in my town. No, really, it is. DH and I shop there almost exclusively; we only shop other stores if Costco doesn’t have what we need. It has the best prices in town for just about everything, and some for some items it is the only place they’re sold. It’s about a 15 minute drive from our condo and we go every week or so and stock up on meat, produce, milk, cereal, cheese, kitty litter, eggs, and other basics.
Here, it is not always middle and upper class that shop at Costco—it is mostly, but not exclusively. The prices are just so much lower than anywhere else and our city is so small (and a very HCOLA!). People taking cabs to and from Costco here is not terribly unusual, and there is a shuttle service to Costco, Walmart and Fred Meyers in the summer.
We have a walmart here too, but no Sam’s Club. I have never been to our walmart—Ican afford not to shop there. I am under the impression Sam’s Club pays a much lower wage than Costco does. Costco employees here start at about $15 an hour and get a full benefits package.
14 444 // Jul 14, 2009 at 5:24 pm
After my example about thinking my daughter’s eye surgeon looked like June Cleaver’s modern-day half-sister, I’m curious about:
“Here, it is not always middle and upper class that shop at Costco—it is mostly, but not exclusively. ”
How do people discern with any accuracy what proportions of which socioeconomic classes are represented? It seems like people have confident estimates and I’m wondering what they’re based on. I believe some multi-millionaires look like Joe the Plumber and many “middle-class-appearing” people could span the spectrum.
15 amy // Jul 14, 2009 at 6:52 pm
444, let me expand on that—Here, there is a steady flow of Costco shoppers on weekends who arrive in a cab, shop, and take a cab home with their purchases. They save money even factoring in the cost of cab fare. Here, only the very poor do not own or have access to cars.
16 444 // Jul 14, 2009 at 7:27 pm
Gotcha… I see the cab riders here, too, but at the rundown grocery store instead. I really love warehouse shopping because even though I sometimes have to stock up more than I would like to, in some cases the savings is half off what we would pay at the supermarket. Typically more like 10% to 30% but that’s something, since we have a big family and thus, big food costs.
17 fengshui // Jul 14, 2009 at 9:38 pm
thumbs up 444
18 LAL // Jul 14, 2009 at 10:19 pm
R.May, I’ve never seen meat on sale BOGO. Granted it’s a HCOLA is part of the reason. I know I pay a lot because I use HCW for shopping and the prices people quote for meats I’ve NEVER seen. I watch loss leaders and it just doesn’t happen.
I’m trying a garden this year but it’s not very big and the season here is horrible for growing. We’ll see how it goes. It’s been a terribly cold summer here.
Interesting that a lot of people see costco as a middle/upper middle class shopping place.
19 amy // Jul 15, 2009 at 1:22 am
Well, LAL, mostly I think it actually IS a middle/upper class shopping place. Just in my city, that is not exclusively true, but still, it’s mostly true.
This is a pretty interesting article about Costco.
http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html?_r=1&scp=2&sq=costco&st=cse
20 Neil // Jul 15, 2009 at 8:40 am
During the recession here in the UK many more people are shopping at the equivalent of Wal-mart (ASDA).
I agree that for the many reasons above warehouse clubs are not usually used by the poor (if they are at all it is by the educated poor – if that makes any sense!)
21 R. May // Jul 15, 2009 at 9:14 am
I find bogo meat at the small regional type grocery stores – not the national or larger regional chains and not the independent ones. The one good thing about this area is there is a ridiculous number of types of grocery stores – the competition doesn’t hurt either.
One thing super easy to grow no matter the time of year is actually lettuce which is always pricey. You can plant it in clamshell containers and grow them inside.
Here’s a pretty good tutorial if you’re interested:
http://www.ebfarm.com/AboutUs/GrowSomethingGreen/HowToGrowYourOwnSalad.aspx
22 LAL // Jul 15, 2009 at 9:32 am
Amy in our city it is closer than any walmart, walmart was banned in the city limits! So even the “poor” could if they wanted but I think the spending of $50 or $100/week is too much.
R May, wish I had more competition. Even the chain grocery stores here are more expensive than other areas in the Northeast.
Hmmm…I buy salad at costco for $4.99 a box. Used to be $3.99/box for 2 lbs of lettuce. Not a terrible deal.
23 pamela // Jul 17, 2009 at 2:09 pm
I think Costco or warehouse store in general are for people who can afford it , have use for bulk items and can store them. I am not even middle class and I have a membership to BJ’s through my job. A few times a year I take advantage and stock up. I never try to judge the customers there. Upper lower middle.. to me they are all there just trying to save a buck
24 LAL // Jul 23, 2009 at 10:29 pm
Pamela, but if you have less money to stockpile it’s probably harder than if you can and can store the items to boot!
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