Business

Big Box Stores vs. Small Retailers

August 30, 2023

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The mom-and-pop shop is working hard for your dollars

Carol M. Kopp edits features on a wide range of subjects for Investopedia, including investing, personal finance, retirement planning, taxes, business management, and career development.

Big-box retailers like BJ’s, Costco, and Sam’s Club lure customers with the promise of saving money by buying in bulk. But do they really pay off for the average consumer, or can you get better deals by shopping at smaller retail stores and local shops? In other words, is shopping big worth it for you? Here are five pros and cons to consider.

Price

Price is often the biggest factor when choosing where to shop. Big-box stores offer their most attractive discounts on big-ticket items, undercutting specialty stores and smaller retailers on price. So yes, you can often save hundreds of dollars on electronics, appliances, and other major purchases if you shop at a big-box retailer.

KEY TAKEAWAYS

Many customers shop at big-box retailers to save money on big-ticket items and by purchasing items in bulk.
Buying large quantities of perishable items might work well for large families, but not necessarily for singles or for people with small families.
Warehouse retailers charge a membership fee that will not be recouped if the shopper doesn’t visit the store frequently enough.
In contrast to local and mom-and-pop shops, customer service is not a priority for many big-box retailers.
Wise shoppers will consider the benefits and disadvantages of each type of retailer when searching for bargains.

But not everything sold at the big-box retailer carries a deep discount. Once they have you in the store, they’re counting on you to purchase other items that aren’t deeply discounted and that you might not even need.

When you’re in a big-box store, your best bet is to buy what you came for and avoid browsing around. Check out the weekly specials in your neighborhood market or discount store and collect their coupons. You may find you’ll get a better deal on some items.

Quantity

Big-box stores typically carry items in large sizes or quantities. Real bargains can be had by purchasing bulk non-perishable items like paper goods. Food items with a long shelf life such as soda, canned goods, or jumbo bags of frozen chicken wings are usually well priced.

That works for large families but it might not be worth it for singles or small families. And it doesn’t work well for people who live in small spaces with limited storage. Be practical. Purchase what you can easily store and avoid buying large volumes of perishables that may go bad before you get a chance to use them.

Membership Fees

Warehouse clubs like Costco charge membership fees, usually $60 to $120 a year. That fee gets you in the door. If you have a large family and shop frequently, the money you save over the course of a year should easily cover the cost of the membership fee. If you don’t visit the store enough, you won’t recoup the fee, and you’re better off shopping at smaller retailers and local markets.

Consider your shopping habits before you fork over $60 or more for the mere privilege of walking through the door.

The Shopping Experience

Big-box stores attract large crowds during peak shopping hours, which can mean long checkout lines and mobbed parking lots. Sometimes fighting crowds is worth it. If it weren’t, retailers wouldn’t be able to count on Black Friday sales to get them through the fourth quarter. But sometimes the struggle isn’t worth it, not to mention the time and stress. When you count up your savings, offset the benefits of saving money by considering what your time is worth.

At the very least, try to shop at off-peak times when the crowds are likely to be smaller. And think longer term, buying enough to last weeks instead of just a few days.

Customer Service

When it comes to customer interaction, big-box stores can be very different from your typical local shop or retailer. Some big-box stores don’t emphasize customer service, as the few employees on the floor are kept busy stocking shelves. For that matter, big-box customers typically aren’t interested in chatting with sales associates, but more focused on finding good deals and making their purchases.

Some shoppers prefer the personal attention and expert assistance that mom-and-pop stores or specialty shops can offer. Ask yourself which you prefer, anonymity or up-close and personal attention. If you know what you want to buy and do not need a lot of help from customer service, the big-box store is probably the place for you to shop for some of your purchases.

The Bottom Line

Big-box stores definitely have their place in the American consumer landscape, as do small retailers and local shops. The wise shopper considers the advantages of each and takes a hard look at where the real bargains are.