You head to Costco to stock up on staples -- say, paper towels and cleaning supplies -- but you walk out with three salmon filets, a tub of cream puffs, and a ream of printer paper. Why?
Most of us are notoriously poor at assessing a true bargain, says C.W. Park, professor of marketing at the Marshall School of Business at the University of Southern California, and editor of The Journal of Consumer Psychology. Seduced by the prospect of saving money, we give in to impulse buys. Eventually, we regret the purchase or throw much of a past-its-prime product away. It's called the Costco Effect, and it's actually part of the store's incredibly successful retail strategy. But the effect on your wallet is that you spent more than you would have if you'd never seen that "bargain."
Here are four product categories where you're better off going somewhere other than Costco.
You might score the occasional pair of Lucky jeans or a Speedo swimsuit, but designer duds aren't exactly Job 1 at Costco. Even if you do see an item from a top-tier name brand, you can't assume it's the same quality as the similar-looking product at a department store. "Just because it's a national brand name, an item of clothing doesn't have to meet the standards you'll see in other stores," says Marshal Cohen, chief retail analyst at the NPD Group, a market research firm.
Kathryn Finney, founder of The Budget Fashionista, says it's no secret that most name designers make cheaper lines just for warehouse clubs or outlet stores. The tip-off, says Finney, will be in the packaging and/or label on the garment. Labels on the sub-brands are just glued on, and are usually stiff and crunchy, while labels on high-end goods are softer or silky, and stitched all around.
Most shrimp sold in the U.S. is imported from countries in Latin America and Southeast Asia, where environmental regulations are often lax or not enforced, according to the Environmental Defense Fund, (EDF), an education and advocacy non-profit. The EDF classifies shrimp imported from these regions as "eco-worst" for the environmentally destructive ways in which they are often farmed. Greenpeace took aim at Costco's seafood sustainability practices last June with an aggressive campaign called Oh No Costco. While Costco seafood buyer Bill Mardon says his company has entered into a partnership with the World Wildlife Fund to set global standards for shrimp farming, the specific objectives are still being discussed.
"Costco gets credit for starting down the road," says Tim Fitzgerald, senior policy analyst for oceans at of the EDF, "but they are still very early on." In the meantime, you're better off buying shrimp at Trader Joe's, which is much further along on the same path. After Greenpeace launched its Traitor Joe campaign in early 2009, Trader Joe's pledged to remove all non-sustainable seafood from its stores by the end of 2012, and it's already taken concrete steps in that direction.
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Sheets and Towels
"Target and Wal-Mart have this market cornered and they do a great job," says Budget Fashionista's Finney. Costco, by contrast, rarely stocks more than a handful of top-selling colors in sheets and towels. "If you want 20 colors, this isn't the place," admits Jim Klauer, Costco merchandise manager for bedding and the home.
12-Pound Crates of Navel Oranges
Sure, it only costs $11.99, but it's not such a good deal if you end up throwing away half the fruit. Same goes for the package of six hearts of romaine lettuce, and the 3-pack of whipped heavy cream (240 servings) unless you're, say, hosting a sleepover for your child's entire soccer team. And their opponents. Teri Gault, founder of TheGroceryGame.com, which helps shoppers save on food, says that when it comes to produce, it's often more cost-effective to shop at your local supermarket and combine coupons with seasonal specials. Also avoid Costco's candy aisle -- do you really need a 5-pound bucket of licorice twists?
This article is part of a package on shopping at Costco. Read the other article on 5 things to buy at Costco.