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7 ways warehouse clubs get you hooked

If you keep these tricks in mind, you may get out of the store without deviating from your well-planned shopping list.

By Karen Datko Feb 16, 2011 5:04PM

This guest post comes from Aaron Crowe at dealnews.com.

 

Unless I leave my wallet at home, I can never leave Costco without spending $100. It's simply not possible. I may go there with a shopping list and be determined to stick to it, but every visit I leave with more than I expected to buy.

 

What pull does Costco have over my wallet? How do warehouse club retailers, or online bulk sellers like Amazon's Subscribe and Save, get shoppers to spend more than they planned? Here are a few factors that go into it. Make yourself aware of them, and maybe you'll avoid buying more than you need.

 

Post continues after video.

Low prices.

People shop in bulk to save money, but low prices offer another enticement to spend. Feeling that they're getting good deals as soon as they walk in the door encourages people to buy more than they need, says psychotherapist Judy Belmont.

 

"It’s unbelievable how low some of those prices are," Belmont says. "So people end up spending a lot more."

 

No music. This never occurred to me until behavioral and marketing psychologist Elliott Jaffa pointed it out: There's no music playing in the background. "They want you in that store forever," Jaffa says. There's no fast music to make you shop faster.

 

Large sizes that look like deals. If bigger is better, then buying more of something bigger is that much more of a savings, or at least a perception of savings. The sizes and quantities of products are not what people are used to, Jaffa says, so a four-pack of 32-ounce bottles of ketchup looks like a deal worth buying. Never mind that you may never use all of that ketchup before it goes bad. You have to look at the unit prices -- sometimes marked, sometimes not -- and compare them with other stores' unit prices to figure out if you are truly getting a good deal.

 

"I've got to believe they (Costco) have some of the best psychologists in the country who work for them," he says, "because they have the best suppliers and know how to price it."

 

Product placement. Whether it's a warehouse club or a grocery store, product placement is key to getting shoppers to buy, says Rob Jager, a business and management consultant who has worked for numerous big-box retailers. Cameras, computers and other tech equipment don't provide a large profit margin for such stores, which put those items at the front of the store so they get a lot of turnover.

The ends of aisles, or "end caps" as they're known, are prominent spots that suppliers often pay for. Signage may make you think the end cap products are great deals, but check twice before grabbing the product. "I think shoppers have been trained to believe that's where the deals are," he says. But it might just be that that's where the ad dollars are going.

 

A treasure hunt. Since stores like Costco change their merchandise often, you never know if what you see on sale today will be there the next day if you decide to go home and think the potential purchase over. Finding new things in a warehouse club is a treasure hunt and gives shoppers a sense of intrigue when they walk in.

Marketing expert Harry Beckwith, who has Costco as a client, says his best friend can't go to Costco without telling him about the three incredible deals he got there. This friend is wealthy but shops at Costco because it makes him feel clever and smart. It turns shopping -- something he normally dislikes -- into a game he loves.

 

Survival of the fittest. Face it: Walking through a huge store can be a hassle. The parking lot is usually crammed, the store is full of people pushing huge shopping carts that are difficult to maneuver, and checkout lines are long. It's not an easy trip, so once there, you might as well make the best of it and buy as much as you can so that you don't have to do another trip soon.

 

Customized deals. Sam's Club, for one, gets members to buy more by tracking prior purchasing patterns and then offering customized deals, says Bruce D. Sanders, a consumer psychologist and retailing consultant. The Sam's Club eValues program, which requires an extra annual fee, uses predictive analytics to determine which items would be attractive specifically to you, and then offers you discounts on those items. This includes items you've never tried before but the computer figures you'll probably get in the habit of buying, he said.

 

Sam's Club is creating what consumer psychologists call the "endowment effect" by encouraging shoppers to buy more because they've paid for the ability to get rewards and are motivated to use the privileges, Sanders said.

 

More from dealnews.com and MSN Money:

9Comments
Feb 22, 2011 10:08AM
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This article is filled with home loan ads, which I find as bad as the material included in the article
Feb 22, 2011 10:38AM
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I dumped my ****'s membership years ago.  My kids are grown, I only need 1 bottle of Ketchup not 4.  Plus I refuse to pay anyone to shop in their store.  If they want me to shop there then take away the fee.    But I guess I'm in the minority.  
Feb 22, 2011 2:51PM
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Seems to me that whoever wrote this article has a beef with Costco.  I used to belong to Sam's Club years ago, before they wronged me after which I refused to renew my membership.  While I was a member, I ALWAYS did the cost-per-unit math before putting an item in my cart.  Most of Sam's Club prices were the same as the local Walmart Supercenter prices, only multiplied by the number of items per package.  If I lived closer to a Costco, I would join today (not only for potential savings but for their employee-friendly policies also) but like any intelligent adult, I would continue to do "the math" before putting ANY item in my cart.  As with any store, be wise and dont buy if you dont need or use the item on a regular basis.
Feb 22, 2011 12:49PM
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We dumped our memberships too. After adding up the membership fees, "savings" and the distance we have to travel just to get there since we live in a remote, rural community. This was a waste of money for us. I get better produce at some of our other local grocers.
Feb 22, 2011 12:53PM
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I have been a member of Sam's Club since it was know as Pace years and years ago.  Back, then you really could get deals shopping at Pace.  I have noticed over the past few years that Sam's Club has seem to have gone to the model that every product must be at least $5-6 and up to make it worth their time.  In addition, many products are now more expensive then getting them in a grocery store (defies logic - pay a membership fee, buy in bulk and pay more)!

 

I tell my wife all the time that the day they put a Costco with 15-20 minutes of us (outside of Hartford CT) we are dropping our membership to Sam's and joining Costco, since they seem to have better prices. 

Feb 22, 2011 2:37PM
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Costco's research indicates that a member spends $100 for every ten minutes "spent" in the store.  That is why when you search for a specific item .... it has been moved.  Your effort trying to locate that item introduces you to many more items, much more time "spent" in the store, thus much more $$ spent trying to find that specific item.  How many times have you gone in for one item and come out with one item?  I mean the item you actually went in for, not the new item you left with.  Also, empty buggies are located strategically throughout the store which forces you to go a different direction, thus more $$.  It's not rocket science.  Their purpose is to sell as many big ticket items as possible.  That is where the money is.  Have you noticed the movies are now located more in the center of the section, rather than the end isle?  Everyone shops for movies on their way out - to exit this area you need to exit through the snack isles (Disney mentality - leave each ride through a gift shop; Costco snack, pizza, soda, ice cream, hot dogs).  Just make your list, go directly to the back of the store to get items on the list, move towards the check-out AND check-out immediately.  This, believe it or not, can be achieved in under ten minutes.  We wait for movies until their under $10 as a rule so there is no need to check their movie section.  We buy books directly through Scholastic or their affiliates, no need to check the books.  We do, however, purchase mens shirts at Costco ... but it must be on the list beforehand or it's a no go.  Our budget is $200 a month for gas/groceries.  We buy fresh produce and cook our meals from scratch; we fill the tank twice a month at Costco.  We use the reimbursement at the end of our annual membership to repurchase our membership and use the extra (in the form of cash) for our family birthday presents and stock (including Costco stock).  We use all the money saved from shopping sensibly at Costco towards vacations, skiing, replacement vehicles, etc.  Costco has been a lifesaver for our family not only with their excellent prices on food, but also their insurance offers through Ameriprise.

 

Win/Win situation.

Feb 25, 2011 8:15AM
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I b.elong to ****'s. I do realize savings however finding the same product at each visit is iffy THEY seem to purchase odd lots of merchandise, and sometimes buying a product on one visit you will not find it there on the next.
Feb 22, 2011 6:12PM
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I belong to both costco and sams. they vary on who has the lowest price for comparable items. the reasons i love my memberships (both clubs) also varies. While in my opinion, i feel i get better customer service in costco, their return policy is wonderful, and i enjoy my member 2% rebate each year, sam's offers me items not found in costco, like restaurant supplies and i have found sam's to actually be cheaper. both clubs have excellent meat, and i can no longer buy meat at any other place, as i am spoiled! i find myself with 2 different lists, and shop accordingly. I dont feel i could give my family the quality or quantity of food if i had to shop at a local super market. i recently shopped at one and i nearly fell over in shock at the horrible high prices! as for doing the math- ALWAYS!! which determines which 'list' the item goes on!! as for buying in guantity, i love it!! i dont like running out of stuff, so having a 'stock' at home is a must for me!! (I'm guilty, i have a 'costco room' !) :)  i find my memberships pay for themselves, if only for the savings and quality of the meat, bread, and frozen foods. i buy 2 - 2lb loaves of bread for the kids and pay only $ 3.62, which allows me to buy the required 4 loaves a week.   The stores don't get it. i have a budget, and thats it. if i have to pay $ 6 for bread, then i can only buy 1 loaf!!  the clubs let me buy 4 !!  the list goes on.......  HAPPY CLUB(s) MEMBER :)
Feb 22, 2011 3:23PM
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All moms do the math and I am one of them too. I have to keep my membership with the warehouse(s) for gas, yes our cars can take their gas not so picky probably, although sometimes when I go home my street corner gas station is some cents cheaper too and for prescription medicines not covered by insurance. Over the years I have learned how to walk out of the store with just the necessary things instead of the 5 year supply of salt and sugar.  And over the years that I have been a member and having sat there for long hours doing road shows for real estate before when they offer rebates, I also noticed the buying patterns of everyone but I believe it brings joy and pride to shoppers that they go out of the store with a truckload of groceries.  The only thing I hated is when our designated station was made to sit right next to the coffin on sale close to the exit.  Such a big joke by the one in charge.
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