Sam's Club or Costco?
- Published on
- By Raechel Conover
Deciding whether to join Costco or Sam's Club is no small task. Both warehouse giants offer an array of discounted goods and services including grocery items, prescription medications, electronics, automotive supplies and services, and more. Both also promise exceptional deals compared with retail. Which, if either, is the better choice? We became members and shopped at each to find out.
Memberships at Costco are $10 more than Sam's Club's, but even the cheapest provides access to an abundance of low-priced services and savings, such as home and auto insurance and discounts on car purchases.
Sam's Club Review
Sam's Club offers low-priced memberships starting at $45, which includes perks such as in-store pickup for online purchases; 24/7 technical support on electronics; free flat tire repair; and multiple payment options.
Costco vs. Sam's Club: A Wholesale Club Showdown
A head-to-head comparison between Costco and Sam's Club reveals a host of similarities. When pressed to declare a victor, we settled on Costco -- by a hair. Sam's Club started with a price advantage: Annual memberships are $10 cheaper and a shopping cart of 30 items rang up 7 percent lower than the total at Costco ($321.42 vs. $345.81). However, Costco gained ground when we accounted for package size (for example, 200 trash bags in a box vs. 180 at Sam's) and limited-time offers. We also found a larger in-store selection (particularly for organic and health foods) and discounted prescriptions at the lowest membership level. For its part, Sam's Club excels in delivery and technical support and provides more payment options. (Note: We did not include BJ's Wholesale Club in this comparison, because it lacks a nationwide presence.)
If you join just one warehouse club, assess your needs against each retailer's strengths and inventory before making a choice. Both Costco and Sam's claim large followings, and consumers seem to have their loyalties. Costco boasts more than 76 million cardholders and Sam's Club has about 47 million members. We found few online reviews of the warehouse clubs overall; those we did find focus mostly on a particular product or service. We considered this user feedback in our evaluation of the two stores, informally polled consumers online, and noted the results of broader surveys. We also relied heavily on our own shopping experience in declaring a winner on a variety of fronts, from prices to pharmacy to return policy.
Locations.As of early 2015, Costco operated 671 outlets, including nearly 200 located abroad. Of the 474 stores in the U.S. and Puerto Rico, about a quarter are in California. Costco locations also tend to cluster in urban centers. Sam's stakes claim to 647 clubs throughout the U.S. and Puerto Rico. (BJ's counts just 226 locations concentrated in the eastern U.S.)
Membership Options.Both Costco and Sam's Club offer three membership levels. At Sam's Club, the cheapest option is Sam's Savings, which costs $45 a year and comes with one primary card and one for another household member, plus access to personal and business services, some of which are free. At Costco, the Gold Star level costs $55 a year and also comes with two cards and access to a raft of personal and business services, as well as savings on prescription drugs when insurance coverage is limited or absent.
Sam's Business ($45 a year) allows early-bird shopping and up to eight add-on memberships ($45 each). A Costco Business Membership ($55 a year) allows for six additional cardholders and lets shoppers resell merchandise.
Both stores offer cash back on purchases at the priciest membership level. For $100 a year, Sam's Plus returns $10 for every $500 spent on qualifying items (up to $500 a year); grants extra savings on select prescription drugs (five are free) in the absence of insurance coverage; and lets businesses add up to 16 members. Costco's Executive Membership, which costs $110 a year, provides extra savings on available services, plus 2 percent back on qualified purchases (up to $750 a year).
Bottom line: Sam's Club memberships are cheaper, but the higher fee at Costco is a good investment for shoppers who take advantage of the prescription program and wider selection of cut-rate services. The cash-back feature makes Costco's Executive Membership the cheapest deal of all for big-time warehouse shoppers. Both clubs give full refunds to customers unhappy with their shopping experience.
Grocery Shopping Cart Test.To compare Sam's Club and Costco prices (see chart), we shopped for a family of four, including an infant. Into our cart went 30 perishable and packaged grocery items, personal care products, and other household essentials. Item for item we tried to pick the same brand in the same quantity at each wholesale club. When possible, we selected in-house brands -- Member's Mark and Daily Chef (food) at Sam's Club and Kirkland Signature at Costco.
The total haul: $345.81 at Costco and $321.43 at Sam's Club. Although 21 of the 30 items on our list were cheaper at Sam's, the higher prices at Costco often reflected larger quantities. To account for these differences in package size, we calculated the price per unit (per ounce, per diaper, etc.). By that measure 16 items came out cheaper at Sam's Club; 14 were cheaper at Costco. Overall we saved an average of 8 percent on the products that were less costly at Sam's Club compared with Costco and about 11 percent on the products that were cheaper at Costco.
The super-size packages of many items at wholesale clubs may deter some consumers, especially those with few family members or who lack lots of storage space. At both stores, for example, apples come in bags of 40 -- can you eat or cook that many before they go bad? Such large amounts are no doubt useful for parties, daycare centers, group picnics, and big families. Our hypothetical family of four would find a Sam's Club or Costco membership most valuable for stocking up on cleaning supplies, paper goods, condiments, baby supplies, and grocery items that won't spoil anytime soon. For consumers worried that bulk buys will go to waste, it's worth noting that in the cases where package sizes differed, Sam's Club almost invariably sold a smaller quantity.
Extra Savings.Both clubs play the discount game. Special offers are automatically taken at checkout. The difference between the two seems to be the number of deals (at least on the day we shopped) and how they are communicated to members. Costco mails out coupon packets monthly and clearly marks sale items in store -- and there are many. Mailings from Sam's Club are more sporadic and we struggled to find any discounted items while ambling down the aisles; either they weren't clearly marked or very few were available. Members of both retailers can keep track of the latest deals via mobile apps. Although we didn't include these savings in our shopping cart comparison, because shoppers can't count on the discounts to be available when they visit the store, it's worth noting that temporary price cuts even the score to 15 items cheaper at Costco and 15 cheaper at Sam's Club. Costco had dropped the price of Crest Pro Health toothpaste to $8.49 from $11.99, compared with $9.78 at Sam's Club. With that discount, Costco undercut Sam's by 33 percent (based on unit price).
Sam's and Costco Shopping Experience
The customer feedback we gathered indicates that Costco has engendered slightly more satisfaction than Sam's Club. When we looked at surveys conducted by other organizations, Costco bested Sam's Club more often than not. In 2014, Temkin Group, a research and consulting firm, asked 10,000 U.S. consumers to rate their customer service interactions with the two warehouse clubs and more than 200 other companies, from airlines to wireless carriers. Costco landed in the No. 10 spot overall. A survey of 26,000 Consumer Reports readers in 2012 found Costco to be the top-ranked store out of 10 major chains, including Sam's Club.
Both wholesale clubs claim fans and detractors. In Cheapism's online poll, responders posted numerous gripes about service at Sam's Club. For example, Jeff Rigg of Columbus, Ohio, wrote: "Costco employees actually seem interested in helping you and trying to get you checked out quickly. Sam's Club is more like going to the DMV." Although experiences like this may vary from location to location, Sam's Club is dogged by concerns about the employment practices of its parent company, Wal-Mart Stores. Lauren Wilson, also from Columbus, railed against Wal-Mart and Sam's Club, pointing to news reports about low wages -- still lower than the average at Costco despite a recently announced increase - limited benefits, and hiring preferences.
Product selection, availability, and quality also affect the customer experience. Costco fans enthuse about the quality of the in-house Kirkland Signature brand. Nora Wilkes Klee, of Milwaukee, Wisconsin, wrote that she typically prefers this label over others. A respondent with memberships at both warehouse clubs said the produce she buys at Costco always lasts longer than what she gets at Sam's Club. Others asserted that Costco seems to carry more upmarket inventory and a larger selection of healthy and organic products. One Sam's Club advocate stood firm against the tide in appreciating the steadiness of the store's offerings compared with a seemingly ever-changing assortment at Costco (a deliberate effort by the company to encourage impulse buys and frequent visits). Several other shoppers value the low-price policy and bulk deals at Sam's Club.
Broadly speaking, the range of departments at both stores is very similar, as is the assortment of inventory. In addition to groceries and household essentials, each superstore sells electronics and computers, apparel, home goods, pharmaceuticals, health and beauty products, toys and video games, sports and fitness equipment, automotive supplies, and photo printing. Some Sam's Club and Costco locations also operate gas stations, where prices generally undercut the local competition. Differences between the two are more apparent in the array of available services across departments.
Automotive.In the auto departments at Sam's Club and Costco, a similar selection of tires and accessories carry largely equivalent prices, but the available services vary somewhat. Both stores offer free rotation, balancing, and flat repair for the life of the tires they sell; Sam's also repairs tires purchased elsewhere at no charge and provides free battery testing and wiper blade installation. Costco sells auto insurance and offers discounts on cars, automotive service, and parts purchased through preferred dealerships and service centers. Some members take solace in the Costco Auto Program's haggle-free vehicle pricing; others use it to negotiate an even better deal directly.
Electronics.Both clubs offer a large variety of electronics at very similar prices. The cost of a 70-inch Vizio TV, for example, was $1,499.99 online at Costco (including a manufacturer's discount) and $1,498 for the same model at Sam's Club. That's a mere $2 difference on a $1,500 TV.
A 32-inch Samsung smart LED HDTV was listed at a regular price of $349 online at Sam's Club and $339.99 at Costco. For this and many other models, though, a message on the Sam's Club website advises potential buyers of a sale price "too low to show." Clicking through the checkout process reveals a selling price of $328, which undercuts Costco but makes comparison shopping onerous.
Among other electronics, Sam's Club had a considerable pricing edge on a Nikon D5300 bundle (including two lenses, a case, and a 32GB SD card) that was the same at both stores. The cost: $1,149 vs. $1,299.99 at Costco. At any given time, however, a discount may tip the scale. Sam's was offering a $200 tech discount, for a sale price of $949, and Costco advertised a $300 manufacturer discount, which brought the final price down to $999.99 -- still $50 more than Sam's.
Sam's Club offers members free 24/7 tech support by phone to help with troubleshooting and setup for select electronics. Free tech support from Costco is available 5 a.m. to 10 p.m., excluding holidays. Costco also extends the manufacturer's warranty to two years for computers, TVs, and projectors. Both stores limit the return window to 90 days for most electronics. Cell phones, tablets, e-readers, and GPS navigation devices must be returned within 30 days for a refund from Sam's Club.
Financial and Business Services.Most large retailers these days have their own credit cards, but these two superstores feature an array of other financial services, as well. Costco offers check printing and credit monitoring; home mortgages and refinancing; discounted insurance; and credit card processing, payroll services, and phone services for businesses. Sam's Club processes credit cards for businesses and arranges check printing and small business loans through partner banks. Sam's recently started offering small group health insurance, payroll, and legal services for business members. The average shopper probably won't join Sam's or Costco to take advantage of these services, but they're worth checking out.
Health Services and Pharmacy.Costco shoppers at any membership level can get between 2 percent and 40 percent off medications when not using insurance coverage for prescription drugs. Sam's Club members must upgrade to Sam's Plus ($100 a year) to save 8 percent on select name-brand medications and 40 percent on generic medications. Both pharmacies provide flu shots for $14.99. (Costco extends this offer to non-members, too, while Sam's charges non-members $20 for the vaccine.)
Further research reinforces Costco's advantage. In 2013 Consumer Reports had "secret shoppers" call 200 pharmacies and price out five commonly prescribed generic medications. Costco came out the cheapest overall; Sam's Club's total was more than $200 higher. (The survey reflected the total retail prices of the drugs without insurance and without member discounts.)
Both retailers provide optical services at many of their stores. Sam's Club offers a relatively broad set of free health screenings (e.g., cholesterol, glucose, blood pressure) and hearing tests at select locations on a monthly basis while Costco focuses on periodic osteoporosis, heart, and lung screenings and free hearing tests at select stores. Costco goes a step further with its free hearing-aid testing, which includes a free cleaning and battery change.
Travel.Many consumers look to Costco for travel planning and discounted booking of vacation packages online and over the phone. One shopper told Cheapism, "We've always been Sam's Club members, but then we discovered the car rental discount through Costco. The Costco membership is so much more valuable to us now because it makes renting a car so much cheaper on our yearly vacation." Although Sam's Club stopped providing travel services for a few years, the company launched Sam's Club Travel in 2014. A website, call center, weekly email, and mobile app now offer members discounts on hotels, car rental, flights, and cruises.
Payment Methods.Paying for a full shopping cart can be tricky at a wholesale club. Cash, checks, and debit cards are often the only options in store. Sam's Club and Costco both issue their own credit cards, but the former stands out because it also accepts MasterCard and Discover credit cards. Costco takes only American Express, although the warehouse club announced that Visa will replace Amex on April 1, 2016. Both clubs allow members to bring in guest shoppers. At Sam's Club guests can pay for their purchases with any of the accepted methods; at Costco, the member must pay the non-member's tab. The relative flexibility of payment types at Sam's was the deciding factor for at least one respondent to our poll who chose Sam's Club over Costco.
Return Policies.Neither store sets a deadline for returns of most merchandise (with the exception of electronics). At Costco a receipt is preferred but not required for returns. Shoppers must produce a receipt to return electronics to Sam's. Purchases of other items returned without a receipt are refunded in the form of a shopping card for the last selling price. Sam's Club features a 200 percent satisfaction guarantee for fresh produce, meat, and baked goods, promising double the purchase price back or a refund plus a replacement.
Both retailers accept returns of online purchases in-store. Refunds for online orders from Costco include shipping and handling fees. Sam's Club refunds the shipping cost only if the return is the result of an error.