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All Contents © 2017The Kiplinger Washington Editors
By Andrea Browne Taylor, Online Editor
| Updated 2017
Stu pendousmat via Wikimedia Commons
A Costco membership opens doors, quite literally, to a vast selection of bulk-size groceries and household goods selling at discounted prices. But buying potato chips and toilet paper by the case is just the start. The warehouse club also stocks everything from tires and furniture to electronics and jewelry. With so many items to choose from, Trae Bodge, a consumer expert who specializes in smart shopping strategies, says it's critical to shop Costco with a list to avoid overspending.
List or no list, shoppers seem to like the savings and selection. Costco boasts 84 million card-carrying members worldwide, and the worldwide membership renewal rate is 88% (91% in the U.S. and Canada). The chain ranks first in customer satisfaction among specialty retailers, according to the American Customer Satisfaction Index, comfortably ahead of rivals Sam's Club and BJ's Wholesale.
Thinking of taking the Costco plunge? Here's what you should know before investing $55 in an annual membership.
If you’re not ready to commit to a year-long membership, there are still ways to shop at Costco. Members are allowed to bring up to two guests. So if you want to check out the warehouse club to see the selection and compare prices, ask a friend or family member with a membership if you can tag along. Want to buy something? The Costco member will need to make the purchase for you -- cashiers check membership cards at checkout -- but afterward you can simply pay the person back.
If you want to shop on your own without a membership, give that same friend or family member the money to purchase a Costco Cash Card for you. These cards are treated like cash and can be bought for as little as $25 (and go up to $1,000 in value). Non-members can use a Costco Cash Card to enter, shop and pay at any Costco location.
And if you prefer online shopping, anyone can make a purchase at Costco.com. However, the product selection is limited for non-members, and non-members also may face an additional surcharge on orders.
You’ll soon be paying more to enjoy the perks of belonging to the warehouse club. Effective June 1, Costco is raising its annual membership fees between $5 and $10 in the United States and Canada. Fees for all Gold Star and Business memberships will increase by $5, bumping up to $60 from the current $55. A Gold Star card is available to anyone and can be used for personal purchases. The membership includes a free additional household card. The Business membership, available only to verified business owners, permits business purchases and bulk purchases for resale.
The annual membership fee for Executive-level members will see a $10 hike to $120 from $110. In addition to the basic privileges outlined above, Executive members can earn an annual 2% reward on most purchases (up to a maximum of $1,000 starting June 1) that can be applied toward future Costco purchases. Executive-level members also receive discounts on various Costco services including travel services.
Costco says the membership fee increase will affect about 35 million of its members with half of them being Executive-level members.
Caskets are often the single most expensive item purchased for a traditional funeral service, according to the Federal Trade Commission. The average cost of a casket bought through a funeral home is more than $2,000, but depending on the finish the price can climb as high as $10,000. Costco offers a cheaper alternative.
Costco members in the process of planning a funeral can purchase a casket online through the warehouse club's website. Provided by Universal Casket Company, caskets at Costco range in price from $950 to $1,900. Those interested in buying one must first call the casket provider at the number listed on Costco.com to confirm product, pricing and shipping/delivery details before the order will be processed.
Standard shipping is included in the cost of the casket, but expedited shipping is available for an additional fee. Both the shipping address and the billing address must be in one of the 36 states (plus the District of Columbia) approved for casket sales.
There isn't a time limit on returns or exchanges on most products sold at Costco. However, big-ticket items such as televisions, computers and smart phones must be returned within 90 days of purchase in order to receive a full refund.
That's still a much more lenient policy compared to other mass retailers that sell similar electronics. This includes Best Buy (most items must be returned within 15 days of purchase), Target (items must be returned within 30 days of purchase) and Walmart (most electronic items must be returned within 15 days of purchase). See our story about Retailers With the Most Flexible Return Policies for more.
Among the few exceptions are alcohol and tobacco, which can't be returned where prohibited by law. Diamonds over 1 carat must be authenticated before a refund is approved. As for the aforementioned caskets? All sales are final unless damage occurred during shipping.
Shopping at a warehouse club isn't for everyone. If, after joining Costco, you decide you aren’t getting the best value on the products you buy or you simply don't shop enough to justify paying the annual fee, you can cancel your membership anytime and get your money back.
All you have to do is visit your local Costco, go to the membership desk and request to close your account. As part of Costco's "Risk-Free 100% Satisfaction Guarantee," your membership will be cancelled and you’ll receive a full (not prorated) refund of the annual fee on the spot -- no questions asked and no cancellation fee.
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About 20% of the items found at Costco are from its Kirkland Signature private-label brand. The product line includes everything from home goods and apparel to food and liquor. You can even buy a 72-pound wheel of Kirkland Signature cheese. Costco strives to make its branded items as good as or better than national brands, going as far as manufacturing its products in the same factories used by national brands. According to Bodge, the shopping expert, you can often save a few bucks by opting for the Costco brand over a national brand. However, compare quality as well as price. In quality testing, Consumer Reports gave low marks to Kirkland Signature toilet paper and facial tissue.
We put prices on a few Kirkland Signature items found at a Washington, D.C., area Costco to the test against similar name-brand products. Here’s what we found: A 30-roll pack of Kirkland Signature 2-Ply Toilet Tissue (425 sheets) cost $15.99, while a 30-roll pack of Charmin Ultra Soft 2-Ply Toilet Tissue (231 sheets) was $21.99. A 48-ounce container of Kirkland Signature Arabica coffee cost $9.49, while the same size can of Folger's Classic Roast Coffee rang up for $9.99. A 12-roll pack of Kirkland Signature Premium Paper Towels (160 sheets per roll) was $15.69, while the same size package of Brawny Paper Towels (156 sheets per roll) priced at $15.99.
Many store-branded products appeal to shoppers because they are cheaper than national brands. But cheaper isn’t always better. In an effort to identify some of the best Kirkland Signature products to buy at Costco, we homed in on items that are not only less expensive than national brands but also on par in terms of taste and quality. Here are a few of our favorite Kirkland products.
Kirkland Signature bacon, for example, bested top national brands including Oscar Mayer in testing by Consumer Reports. In a quality study of olive oils conducted by the University of California, Davis, Kirkland olive oil was one of only a few imported oils that met international and U.S. standards. Kirkland batteries might not last as long as name brands, but they’re a better value once you factor in quality and price, according to Consumer Reports.
Costco may not be top of mind for many shoppers when it comes to buying organic foods, but it might be soon. The warehouse club surpassed Whole Foods as the top seller of organic food. Costco sold $4 billion in organic foods last year compared to $3.6 billion at Whole Foods.
We spot-checked Costco's prices on organic items such as milk, brown eggs and salad mix and compared them with prices at traditional supermarkets. Here's what we found: A 16-ounce container of Earthbound Farm organic spring salad mix cost $4.39 (unit price: 27 cents per ounce) at Costco, while a four-ounce bag of Whole Foods' 365 brand spring salad mix was $1.99 (unit price: 50 cents per ounce). That's practically double the price at Whole Foods.
A two-dozen carton of Costco's Kirkland Signature Grade A large organic brown eggs was $6.99 (unit price: $3.49 per dozen), while an 18-count carton of Safeway's O Organics Grade A large organic brown eggs totaled $7.69 (unit price: $5.13 per dozen).
If you're buying staples such as organic milk on a weekly basis, it may make sense to buy it in bulk since organic milk lasts longer than regular milk. Costco had a three-pack of 64-ounce cartons of Kirkland Signature Organic Whole Milk for $11.49 ($3.83 per carton), while at Whole Foods a single 64-ounce carton of Whole Foods' 365 brand organic whole milk went for $3.99.
Costco members on the market for a new ride can take advantage of the warehouse club's auto program, which includes an online car-buying service. Members purchased 465,000 vehicles through the auto program in 2015.
Here's how it works: You search Costcoauto.com for a new or certified pre-owned vehicle. Once you know the manufacturer's suggested retail price (MSRP) for your desired vehicle, you can then locate nearby dealers who sell it. You'll be prompted to input your membership information and then be connected with a participating dealer. The dealer will contact you directly to schedule an in-person meeting where they'll provide the Costco member price -- no haggling required. Costco estimates that their member price is typically $1,000 below the average transaction price and varies based on location, desired vehicle make/model, options and accessories selected.
Costco's auto program also allows members to save 15% on automotive parts and services on any of their household vehicles at participating service centers.
Mike Mozart via Flickr
With gasoline prices on the rise, a Costco membership can help you score lower prices at the pump. Select Costco locations have on-site gas stations for members that carry store-branded regular unleaded (87 octane) and premium unleaded (91 octane) gas.
During a visit to a Washington, D.C., area Costco location equipped with a gas station, the price of regular unleaded was $1.97 per gallon. Premium unleaded totaled $2.45 per gallon. The cost of regular unleaded gas at a nearby Exxon station was $2.29 (an extra 32 cents), while premium unleaded cost $2.89 at Exxon (an extra 44 cents).
Costco's gas stations are self-service, and there's only one way in and out to speed up transactions. Members can pay using a debit card or Costco credit card. Anyone including non-members can fill up and pay with a Costco Cash Card. Cash and checks are not accepted.
Coupons offer shoppers a great way to save. Combining coupons from manufacturers with supermarket sales is a particularly effective strategy to lower your grocery bill. It's also a strategy that won't work at Costco. The warehouse club doesn't accept manufacturer's coupons or discount coupons from outside retailers.
There is some consolation for Costco members: The company issues its own coupons, which can be found in a monthly printed booklet sent in the mail or on Costco.com. Costco's coupons also can be viewed and redeemed either in-store or online via the warehouse club's smartphone app. Recent Costco coupons offered discounts on products ranging from toothpaste to televisions.
For years, American Express was the only major credit card accepted by Costco. AmEx even backed a variety of co-branded rewards credit cards for warehouse club shoppers including the American Express Costco TrueEarnings Card and the American Express Costco Platinum Cash Rebate card. That exclusive arrangement is no more. Effective June 20, 2016, Costco switched to Visa as its only accepted major credit card.
Costco members who previously used the co-branded American Express card have been automatically transferred over to Citibank’s new Costco Anywhere Visa card. However, it’s up to individual members to decide whether to activate their new cards. Costco will now accept any Visa card, not just the co-branded card from Citi. In addition to Visa credit cards, club members can still use cash, debit or Costco Cash cards to make purchases.
You can order some groceries online at Costco.com, of course, but you might need to wait up to five days for delivery. Faster express delivery in a day or two is available on certain items for an extra charge. But if even a day or two is too long to wait, then consider using an online grocery delivery service that will send a personal shopper to Costco to fill your order and rush it to your front door.
Just keep in mind that the speed and convenience don’t come cheap. A service called Instacart, which operates in 19 states and the District of Columbia, promises to deliver your Costco grocery order in as little as one hour. You don’t even need to be a Costco member. Instacart charges a delivery fee -– the amount varies depending on your order –- plus the prices you pay for your groceries might be higher than what Costco members would pay in-store.
Another service, called Shipt, offers unlimited home delivery of groceries from multiple retailers including Costco for $99 a year. The app-based service aims to be in 50 U.S. markets with more than 30 million households by the end of 2017. In March, Shipt started testing Costco grocery delivery in the Tampa Bay, Fla., area, before expanding the offering to other cities.
Bob With via Wikimedia Commons
Buying household essentials in bulk seems like a no-brainer. Not only can you save money but you can also save time by avoiding frequent trips to the market. But unless you're shopping for a large family or group, paying to join a warehouse club solely to gain access to bulk-packaged products might backfire, says Jeanette Pavini, a savings expert for Coupons.com. If the items you purchase in bulk expire or spoil before you finish using them, that's money poorly spent.
In fact, in our story 12 Things You Should Never Buy in Bulk we highlight several staples to steer clear of at warehouse clubs. The two main reasons: Either they have a short shelf life or you can typically find better prices on them elsewhere. Examples of risky bulk purchases include liquid bleach (its effectiveness diminishes after six months), cereal (sale prices at traditional supermarkets are usually less per ounce) and skincare products (they lose effectiveness over time, plus the risk of contamination rises the longer a container has been open).
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