As the media cries about economic woes of consumers, wholesale clubs are reporting strong numbers. Stores like Costco say that consumers are stocking up due to the cost savings offered by buying in bulk. While other retailers are struggling, those selling bulk items seem to be doing well. Discount retailer Wal-Mart is looking as strong as it has in the past, but its Sam's Club business unit is doing well with this current consumer preference toward bulk products.
But buyer beware: Bulk pricing isn't always best. It's important to look at your unit cost (by ounces or other measure) to see if you're really getting a good deal. Shoppers automatically assume that products bought in bulk save them money. And while that's often the case, it's not always the case so you have to be educated about what you're buying.
You should also resist the temptation to overbuy. If you aren't able to use all of a bulk food product before it spoils, you're no further ahead. And buying three year's worth of toilet paper doesn't seem to make sense. If you're buying something you don't need simply because the price seems right, you may want to think twice. Smart shoppers buy in bulk only when it makes good economic sense.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Buying in bulk to save a buck