Wednesday, November 28, 2012

Costco is not necessarily as cheap as Wal-Mart

People are talking a lot about how Costco treats workers better than Wal-Mart and does well and that it offers a better "big box store model".

I don't know how widespread Costcos are or how many people actually shop there, but I think it's important to recognize that these are not exactly the same shopping experiences. You have to pay a big up-front fee with Costco that you don't with Wal-Mart. And it's different products. Costco let's you buy a lot in bulk. Wal-Mart has some bulk purchase aspects to it, but mostly it just has a whole bunch of cheap stuff.

We were Costco members for two years, but if you're just buying for two it's not the most cost effiective way of shopping. Ten years from now I could see us joining again.

It just makes me wonder: is Costco able to be better to its employees because its actually not as low-cost of a store, it just seems that way because it has a warehouse/wholesale-type feel to it? Everybody's been making a big deal about the differences on the side of labor costs, but there are big differences on the other side of the ledger as well.

Costco is great for salmon, sun-dried tomatoes, and beer. We got our flat-screen there too.


  1. In the NYT article the other day, they specifically mentioned a middle-class clientele, with average family income included and everything. The family size is another important point to bring up, although if you're buying an expensive item like a tv every year, that goes some way in paying back the membership price. Gas, too... I'm not sure how widespread it is, but our local Costco has a gas station that's usually at least $.25 cheaper/gal. than any place near by... if we plan ahead and pretty much just fill up there, it pays for membership pretty well, too.

    I think the NYT article, at least, was clear that the comparison was Costco and Sam's Club, which is a bit more comparable than speaking of Walmart more generally.

  2. If you buy enough, and you have a second person on your account, and you buy the "Executive" membership, you oftentimes can get enough back to pay for most of the card. I don't have an "Executive" membership, because I don't buy enough from Costco, but that's how my dad does it. I split the costs of the cheaper membership with my girlfriend, which makes the upfront cost easier to deal with ($25 a piece). I don't buy a lot of different things from Costco, but there are some things that make it worthwhile to shop there: the price of meat is usually much lower than in other stores (they were selling chicken thighs for something like $1.50 a lb. the other day), for example.

    But, yea, I agree that WalMart and Costco are two different types of stores. I shop at both. Oftentimes, I have to go to a third store to find what I'm looking for (like Whole Foods, which is the only place you'll find more "exotic" items here in San Diego, like calamari, et cetera; unless you go to a specialty store).

  3. Costco = Munger on BOD

    need one say more about the importance of integrity and leadership


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