Warning to Costco Shoppers: Costco Is Trying to Get You to Spend More Money

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Costco is a great place to save money. But read on to see why you might end up accidentally spending more than intended. 

A big reason so many people join Costco is to save money on household essentials, whether it’s food, cleaning supplies, or paper products. And while you’ll pay a fee for the privilege of being able to enter a Costco store — $60 a year for a basic membership or $120 a year for an Executive one — you might more than make up for that fee by paying less for groceries and other necessities regularly.

Now, one thing you should know about Costco is that it prides itself on offering members great value. So the fees you pay for a membership are used to offset the retailer’s costs, resulting in lower prices for you.

But while Costco’s goal may be to offer the best prices in town, let’s be clear — it, like other retailers, wants you to spend as much money as possible. And the company recently implemented a strategy that could result in a significant uptick in your personal spending.

Costco is trying to tempt you

During Costco’s most recent earnings call, CFO Richard Galanti was asked to discuss consumer spending at the company’s stores. Galanti said that he’s seen an uptick in big-ticket item purchases. But he also said, “We’ve consciously added 40 or 50 what I’ll call smaller-ticket indulgent items, whether it’s snack items and the like…just impulse items. And so, that’s what we do as merchants.”

Of course, Costco isn’t the only retailer to try to tempt consumers with impulse purchases. If you go to Target or even a regular supermarket, you’re apt to see displays of new and/or seasonal products that can trigger the impulse to pick one up before it’s too late. So it’s not at all shocking to see Costco employ a similar tactic.

But still, too many impulse buys at Costco could wreak havoc on your personal finances. It’s one thing to buy a $3 box of cookies on a whim at Target. But since Costco’s selection of snack items is super-sized, an impulse buy there might have you spending $15 on a bulk box of something similar. A few purchases like that every month could result in a credit card balance you can’t pay off in full.

How to avoid impulse buys at Costco

Costco’s new additions to its lineup are intentional — the warehouse club giant wants you to open your wallet even more and scoop up its new or seasonal offerings. But if money is tight or you’re trying hard to save for a specific goal, then it’s important to do your best to avoid impulse buys — at Costco and elsewhere.

One strategy that generally works is making a list before you shop and sticking to it. Along these lines, don’t go into aisles that don’t contain something from your list. You’ll be less likely to spot new products if you don’t go looking for them.

Another strategy you can employ that’s unique to Costco is avoiding the free samples when a given item tempts you. If you don’t take a bite, you won’t know what you’re missing. But if you sample a tasty snack that wasn’t on your list, you might feel compelled to buy it once you realize just how yummy it is.

Retailers like Costco thrive on consumer impulse spending. But now that you know that, you can take steps to avoid that trap.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Costco Wholesale, Gala, and Target. The Motley Fool has a disclosure policy.

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