Tuesday, December 7, 2010

Things you should and shouldn't buy at COSTCO

If you're like me, you head to Costco to stock up on staples - say, paper towels and cleaning supplies - but you walk out with three halibut filets, 208 diapers, a mondo pack of fruit snacks, a 18 pack of gum and a ream of printer paper. Why? Because it's Costco. There's no way to describe what takes over you once you walk in the store.

Reality is 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."

According to CBS Money Watch, here are four products where you're better off going somewhere other than Costco. (Keep reading for another four where Costco has some surprisingly good deals.)

Things you SHOULD NOT BUY:

1. Designer Clothes: You might score the occasional pair of Seven jeans or Hurley board shorts, 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. I don't know how many times I've tried something on at Costco and I swear it's mis-marked or just fits funky. "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.

2. Imported Shrimp: 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). 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's 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. 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.

3. 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 a wide array of colors and a selection of styles, Costco is not the place for the home.

4. 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? Definitely NOT with the New Year soon approaching.

Alright moving on to what you should fill that cart with. Now that frugal is fashionable, Costco seems like the perfect store for the times. The blogosphere, no surprise, offers up sites for Costco fanatics and Costco cooks. And even A-listers are getting in on the action: Jessica Alba, Megan Fox, and Zac Efron have been spotted loading up their cars with paper towels and flat-screen TVs. So should you follow the crowd? Yes, but only for certain items. If you've got the storage space, it's tough to beat Costco for staples such as paper towels, diapers, and shaving cream. But as good as the price-per-ounce may be, you just don't need that much mayonnaise. Below, we've listed four surprising items that you should pick up at the warehouse.

Things you SHOULD buy:

1. Chocolate Truffles: They're real and they're spectacular (so I've heard.) Costco sells authentic Dilettante's premier chocolate truffles - in stores now. They cost $49.99 for four boxes of varietal bliss. That's 60 mouthwatering truffles, but who's counting? Put them out at your dinner party or give them to colleagues at the office as a holiday gift.

2. Eyeglasses: Costco Optical - the only place. For $49, a licensed optician will perform a vision and eye health exam in an in-store exam room. A week later, you can pick up your specs. In a survey released by Consumer Reports, 30,000 lens-wearers chose Costco as their favorite optical retailer over vision store chains, independent optical shops, and private doctors' offices. Costco Optical earned the highest scores for overall satisfaction as well as for price, with its $157 median price for glasses. Compare that price with an average of $211 at independent optical shops, $212 at private eye doctors' offices, and $228 at Pearle Vision. Costco also stood out for lack of problems, such as loose lenses, distorted vision, or damaged frames in the first weeks after purchase.

3. Laptops: Costco's prices on notebook PCs are already a good deal, but there's a further benefit to buying one at Costco - A two year warranty policy (most manufacturers provide just one year), a 90-day return policy, and Costco Concierge Services, which is free to members and gives buyers access to technicians for set-up questions, product use, and trouble-shooting. Model numbers and configurations are often unique to Costco, but a perusal of specs will let you compare it to similar models sold elsewhere. Among current laptops on sale at Costco, PC Magazine Online gives high marks to the 14-inch HP Pavilion dm4-1173cl ($800 list price at Costco vs. $849 elsewhere for a comparable model).

4. Extra Virgin Olive Oil: Costco's Kirkland Signature Organic Extra Virgin Olive Oil may be the best-kept secret in the store. At $9.99 for 1.5 liters, it is roughly half the cost of the well-known Bertolli brand, and yet, according to at least one independent study, it's much better. In a recent comparison of 19 olive oils on the market, The Olive Center, a research group at the University of California-Davis, found that Kirkland Organic was one of only five in the study not mixed with cheaper refined olive oil that can spoil the taste. The other four at the top of the list were all high-end brands that cost as much as five times Costco's. Make sure you buy the Costco version that's labeled organic, though, as opposed to the one that's simply called "extra virgin olive oil." It'll cost a little bit more, but it's worth it.

Another that didn't make the list that I personally think should have - meat. We aren't big meat eaters in our house but I have friends that have done their research and exclusively shop at Costco for meat. They have some of the highest quality 'choice' beef rather than 'select' beef which is a step up in quality at very reasonable prices. Take home the 5lb hamburger and put it into 1lb freezer bags, same for pork chops, steak (prime available @ $11 pound!) fish, baby back ribs and chicken.

And another - Kirkland Signature Baby Wipes. You can't deny that 900 wipes (9 packs) for $26.99 is an amazing deal. Might sound like a lot but 1) they don't go bad and 2) who wants to buy just one pack of wipes when it's guaranteed that you're gonna run out right when you've got a major blow out to clean up. Best to have wipes on hand everywhere you turn. In your car. Purse. If you're a mom, you get it. Kirkland Signature wipes are alcohol-free, hypoallergenic and have natural softness from Tencel. Tencel is made from the Cellulose inside trees which is naturally absorbent and renewable.

Ahhhh I just love Costco. The list could go on. There are several other products that didn't make the CBS Money Watch list that in my mind are SHOULD buy items; toilet paper, paper towels, tunafish, window cleaner. Bottom line - Costco rocks.

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