Bulking Up on Savings

— -- This report originally aired on Nov. 18, 2005.

More people are buying in bulk at places called warehouse clubs. You have to pay to join. Is it worth it?

Chains like Costco, the leader in sales, and Sam's Club, which has the most stores, are enormously popular. These stores are huge bare-bones warehouses -- packed floor to ceiling with practically everything: meat, produce, clothes, DVDs, cameras, even luxury items like Cartier watches and Waterford crystal. They tempt customers with things like food tastings.

"It's all about the free samples. These sampling stations at the end of the aisle are there to not only entertain -- and that's what we hear from lots of shoppers -- but also to sell product. There is nothing more effective," said Phil Lempert, editor of Supermarketguru.com.

The sheer volume of goods for sale, says Lempert, drives sales. "Because you look at the pallets and you go, wow, it must be cheap. I want to buy it."

That's certainly true. At Costco, the vast aisles of merchandise made me feel compelled to shove things into my cart every time the crew wasn't taping me. One woman we spoke with said she had come to buy one thing -- Hot Wings -- but her car was already overflowing with snacks, salad dressing, a cooked chicken and a ham when we spoke to her.

It's a reason warehouse club sales are up, even though, according to Lempert, supermarket and mass merchandiser sales are down.

Price Club was the first major warehouse club, selling office supplies at a discount to small businesses back in the 1970s. It merged with Costco, and today, 70 million people are members of Costco, Sam's Club, BJ's and other clubs.

One reason these places are so popular is that they have so many different kinds of products. And good prices -- you can save 20 percent to 30 percent compared to supermarkets or department stores.

But there's a catch -- you have to become a member, and that will cost about $40 a year -- or $100 if you get a club's "premium card," which gives you 2 percent cash back on your purchases.

You have to buy a lot to justify paying a $100 membership.

Teresa Arca makes it work by partnering with her friends. It's called the "buddy system." They buy in bulk using Arca's membership card, and then later divide up the items; all of them share in the savings. Arca says using the buddy system has saved her "anywhere from $2,000 to $4,000 a year."

It works for Arca and her friends, but some say warehouse clubs make people spend more money than they normally would.

One woman we spoke with at Costco said she often spends more than what she planned to spend. "You can come in here and think you're going to spend $25 to $50 and you go out spending $200, easy. You know what they should call it? 'Costco Surprise,' because when you get to the register, everybody's face is like, "What?!"

And when she got to the register, she was surprised. Her total was $134.06. She had to return a ham she bought because she'd gone over her budget.

Researchers who study warehouse clubs also told us having all that food around the house makes people overeat.

Cornell University marketing professor Brian Wansink tracked the eating habits of 240 club shoppers for two weeks. He found most ate more, because they had more food in the house.

"Buy something, you take it home. Of course you're going to open it. …Some people even open the stuff on the way home," Wansink said.

Club shoppers said they were buying food for a month, but Wansink said within 10 days of buying it, people ate half the food that they had bought.

"I guess you eat more of it because you know it's there," the Costco shopper told us.

Another problem, say the experts, is that club members often waste food bought in bulk, because it spoils or sits in the cabinet uneaten.

So here's the advice from the experts: