Avoid the 50-Packs Of Cereal, and Other Tips for Bulk Buyers

Tuesday, July 7, 2009

In your effort to save, you may have signed up for a membership at a warehouse store such as Costco or Sam's Club. True, such stores do have great bargains, but have you ever found yourself at the checkout line with one too many boxes of pasta or a book you didn't really need?

You're not alone. Researchers have found that discounts often drive people to buy more.

Michael Norton, an assistant professor of business administration at Harvard Business School, and Leonard Lee, an assistant professor at Columbia Business School, co-authored a study on warehouse stores and consumer behavior.

What they found was that the membership fees made the consumers think the club offered better deals, and so they bought more than planned. Shoppers preferred warehouse stores over regular stores even when they offered the same goods for the same prices.

Norton said stores with membership fees often give better deals. (A "Gold Star" membership at Costco is $50; an "Advantage" membership at Sam's is $40). "The stores signal something to you when they make you join and charge you a fee," Norton said. "You make this inference that is not necessarily incorrect, but it can lead you to do things that you wouldn't have done, once you're inside. . . . That 50-pack of Cocoa Pebbles looks fantastic, but I don't need 50 boxes of Cocoa Pebbles."

So how can you avoid walking out with too many loaves of bread?

Make a shopping list. It's as simple as that, Norton said. Know exactly what you need and buy only that. Avoid the book aisle. "This is the absolute key," Norton said.

-- Nancy Trejos


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