How Costco is Cheaper Than a Regular Supermarket: Price Comparison of Basic Items

How much more profitable is it to make large purchases at Costco than at a regular grocery store? You can save up to $1000 on bulk purchases of items with a long shelf life. CNET.

Photo: IStock

Most of us understand the principle of bulk shopping, but when it comes to our normal grocery shopping habits, how many of us actually enjoy the bulk economy?

Stores like Costco, Sam's Club, and BJ's Wholesale sell mostly wholesale groceries, and department stores like Target and Walmart usually offer a few wholesale options, but even mainstream grocery stores often sell basic items in bulk or larger. Storage can of course be a problem when buying in bulk, and not all products are suitable for bulk buying if they have a short shelf life.

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But the question arises: how much money can you save by buying products in bulk? By conservative estimates, you'll save over $1000 when you buy from a wholesaler.

Stop & Shop vs. Costco

Using grocery list templates available online, we have compiled a list of 25 typical staple foods that are suitable for long-term storage in the pantry, refrigerator or freezer. This excluded most fresh produce, with a few exceptions, although if you're hosting a large meeting, buying groceries in bulk might also make sense. Buying in bulk doesn't mean buying all the products a year in advance, but the list doesn't include anything that doesn't last at least a month, given that you can buy products in bulk less frequently. Buying in bulk also has a high upfront cost, which is why Costco's total per item is significantly higher than Stop & Shop's.

Screenshot: CNET

Screenshot: CNET

Screenshot: CNET

Assuming a two-week or monthly consumption of these staple foods for a family of one or two, experts have come up with an approximate annual intake for each. They chose Stop & Shop to represent the general grocery retailer, as it is generally considered a quality store with average prices, and Costco to represent bulk shopping.

Unless another national brand name is indicated, the Stop & Shop SB brand name or the least expensive branded product for this item was used to compare it to Costco's Kirkland Signature brand. For Stop & Shop items, determining the annual price for each item was simply multiplying by 26 for two-week consumption or 12 for monthly consumption. For Costco items, prices have been scaled accordingly based on which pack size Costco offers to indicate the annual cost of the same quantity of a given item.

Since the experts were primarily interested in savings on food, they didn't factor in cleaning products, paper products, or other items, but you can safely assume that this also offers a lot of savings potential throughout the year when buying in bulk. Also, since the calculations were based on a small household, the larger your household, the greater the savings.

Costco membership fee

Costco requires membershipso you can take advantage of your wholesale savings and low cost branded brands. Basic membership costs $60 per year and is valid in all locations.

Why wholesale is cheaper

The economics of bulk shopping is simple: the more you buy something at once, the less it costs per unit of weight. So manufacturers, distributors, and retailers can offer lower prices, not only because bulk items often require less packaging, but also because it's a guaranteed sale for them, not a potential sale—they'd rather have your money now, even at a discount than for a certain period of time.

Verdict: Savings on wholesale are huge

Considering this particular list of products, buying in bulk will save you over $1000 over the course of a year, which is a 33% savings over regular products. It's worth noting that in today's economic climate, you're also saving money on gas by reducing the number of trips to the store. In some cases, Stop & Shop has proven to be the cheaper option: organic milk, carrots, potatoes, and frozen salmon fillets, for example. In all these cases, there was not much difference in size between regular and wholesale items. Milk is a particularly good example, as it is still offered in large quantities at Costco, but you can buy it in limited quantities without risking it, so wholesale offers are relatively modest. Costco also does not offer Kirkland-branded organic milk, while Stop & Shop does.

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Generally speaking, the larger the scale of wholesale products, the greater the savings. For example, if you buy 40 ounces of Cheerios instead of the 12 ounces you get in a regular box, it will cost you 75% less. Buying 25 pounds of white rice at once instead of 2 pounds will save you 60%.

The verdict is clear: Grocery shopping in bulk is worth the effort, even if you have to shell out for new storage shelves.

Non-perishable items bring the most savings

Some of the biggest percentage savings come from shelf-stable foods, including chips, crackers, canned sauce, rice, and whole-bean coffee. These items are generally easier to store and less likely to degrade. Buying in bulk from a discount grocer like Costco is a clear and risk-free strategy for saving money on your grocery expenses throughout the year.

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