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Shopping smart at Costco


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POSTED: Monday, October 05, 2009

Let's face it. We all head to Costco, and sometimes end up picking up a few more items—a DVD, iPod or a Prada handbag that was on sale—than we were planning to on the way in.

Costco Wholesale Corp. has a knack of tantalizing customers with an array of impulse items before you reach the produce at the back of the store. You actually might spend more money even though you're supposed to be saving by shopping in bulk at a membership warehouse for $50 a year.

Still, everyone from the mom feeding a family of eight to the chief executive officer of your bank is shopping at Costco in Hawaii.

Here's the deal: If you shop smartly, and go for Costco's Kirkland Signature house brand, you can save money.

Costco wants to let consumers know how much they could save by buying its private, in-house Kirkland Signature brand. Some stores recently had a display—two shopping carts filled with items side by side—one with national brands amounting to $437.85 and the other one with the Kirkland brand amounting to $229.35. The resulting difference is $208.50, or 47.6 percent in savings.

But what's behind the Kirkland Signature brand?

The Kirkland brand was established 15 years ago, according to Costco, and named after the city in Washington state where the company once had its home base (today's headquarters are in Issaquah).

Kirkland currently makes up about 10 percent of the products you see in a Costco warehouse, and is still growing. You can find Kirkland products in nearly every department—from olive oil to coffee, macaroni and cheese, pumpkin pie, vanilla ice cream, dog food, vitamins, laundry detergent, cookware, toilet paper, towels, beer and bedsheets.

Costco's goals in developing the brand, said CEO Jim Sinegal, were to develop popular items where the company could control the packaging, and drive down national brand prices. In instances where the right product wasn't available at the right price, Costco decided to create its own.

Kirkland Signature cashews, for instance, in round instead of square jars, meant 432 instead of 288 could fit on a shipping pallet, saving 600 truckloads per year. Those savings are passed on to the consumer.

A number of over-the-counter Kirkland prescription drugs are also available for 30 percent to 90 percent less than national brands.

Kirkland's daily multivitamins (500 count), for instance, cost an average of $14.99 compared with Centrum (365 count) for an average of $18.59.

National brands usually are launched with expensive ad campaigns with the goal of becoming a household name that consumers automatically seek.

House brands, which used to be perceived as a lower-quality version of the national brand, are making a comeback in this economy and gaining a better reputation.

Costco insists that its Kirkland products are either better than or equal to the national brands. The simple test is whether customers buy them.

Consumer Reports, in its October issue, compared several store brands with national brands for individual products using a team of trained tasters in blind tests.

Between boxed chocolates, the Swiss Lindt brand and Kirkland Belgium chocolates tied and were both considered very good. Same with the McCormick Pure Vanilla extract pitted against Kirkland's Pure Madagascar Bourbon Vanilla.

Kirkland's organic salsa was rated as tastier than Old El Paso by Consumer Reports at just 10 cents per serving (compared with El Paso's 17 cents per serving).

The Kirkland Signature toilet paper was listed among store-brand standouts.

Here are some tips for shopping smart at Costco:

» Try the Kirkland brand: From olive oil to prescription drugs, this could result in significant savings. If you've always bought the national brand, give the Kirkland brand a try.

» Go straight to the back: Don't get sidetracked, and don't be tempted to buy an item you don't need just because there's a deal. Go straight to the back with the list of items you need, and then head to checkout.

» Research online: Do your homework for big-ticket items online first, whether it's the flat-screen TV or diamond ring. Compare with other stores, and find out whether there are manufacturers' rebates. You can find a list of these online—hsblinks.com/tp—before heading into the warehouse.

» Bring coupons. Costco cashiers in Hawaii used to keep the monthly coupon booklet (mailed to members' homes) at the checkout register and scan it for you if you were buying an item in it. In recent months I've learned that you must now bring it in yourself (and have them clipped out).

» Don't overbuy. If you've gone for the crate of apples or giant tub of hummus but ended up throwing most of it out, learn your lesson the first time. You aren't saving money if you are throwing items out. Know what you can freeze, or get a Costco buddy to split your purchases with.

» Calculate miles. Consolidate your trips. Know the difference in Costco gas prices before bothering to drive 20 miles out to sit in line with an idling engine. Sometimes it's worth it (when prices are high), and sometimes it's only a few bucks' difference from your local gas station.