SEATTLE – Sue Snodgrass is in Costco, in a quandary. She’s got six gallons of milk in her shopping cart -- her three kids go through a gallon a day—and mondo boxes of Cheerios and Life cereal.
And then there’s this inflatable ski tube she spotted. Perfect for summer, but that’s still months away.
“Do I buy it now,” she wondered, “or do I wait?”
The West Seattle woman is feeling the Costco effect; the thrill and ambivalence of finding something “you want but maybe you weren’t going to buy right now.”
And if you don’t buy it now, you might not see it again, she said.
Triggering impulse purchases is Costco’s calling card, said Detra Montoya, professor of consumer behavior at the University of Washington’s Foster School of Business.
By selling only the hottest products in every category, offering free samples of chicken burritos and crackers smeared with goat cheese and operating a food court with cheap treats like hot dogs, frozen yogurt, and pizza, Costco makes customers feel they’re having fun and saving money.
“Everything’s new and exciting,” Montoya said. “It’s like a Disneyland.”
For those trying to curb their spending, it’s also like an obstacle course.
Research on consumer behavior shows Snodgrass, who said she is “trying to be more responsible” with money, must push her cart past impulse purchases, put the brakes on “shopping momentum” and overcome the assumption that membership necessarily means lower prices.
Once she gets home, she’ll have to keep her kids from gobbling up the bulk boxes of cereal faster than they otherwise would.
Think you’ll save money at a membership store? Join the club. Consumers tend to equate fees with greater savings and spend more money at discount clubs than at stores that don’t charge a fee, researchers Michael I. Norton of Harvard Business School and Leonard Lee of Columbia Business found.
To test shoppers’ perception of prices and figure out why consumers intending only to pick a few items to end up leaving with “enough pasta to outlast a nuclear winter,” Norton and Lee created experimental discount clubs.
Their study revealed customers “overgeneralize” the savings at membership stores, believing, often wrongly, that they will save money on all items in the store.
Not foiled by $12 aluminum
Debbie Wyman is already hip to this. Her kids gave her the membership for Christmas, but she’s not much of a shopper, she said.
Perhaps that’s why Wyman, who came to Costco for the turkey bacon (they didn’t have it) decided against a giant roll of Reynolds Wrap, even though she had a coupon for $4 off.
“I’m not going to spend $12.99 on foil,” she said.
Wyman's restraint is unusual. Norton and Lee found that when people pay a fee to join a club store, they are more likely to shop at the club, regardless of whether they can get items cheaper elsewhere.
They concluded that a perception of low prices and “shopping momentum”— where each purchase further diminishes resistance-- could create “a kind of perfect storm of consumer irrationality – and perhaps account for some portion of the fifty pounds of pasta people end up lugging into their pantry.”
Pallets of peril
Different product sizes and varying inventory make it harder for shoppers to compare prices among club and non-club stores.
The math may not even matter. Customers perceive they’re getting a better deal when they’re buying larger quantities, Montoya said.
They also tend to consume bulk quantities faster and more often. In a now-famous experiment, Brian Wansink created “bottomless” soup bowls secretly refilled themselves as people ate. Of the 62 people who ate a free soup lunch, those with the “bottomless” bowls at 73 percent more soup but did not feel any fuller. Only two people realized the bowls were refilling automatically.
Wansink, author of “Mindless Eating: Why We Eat More Than We Think,” concluded that environmental cues and other factors have a huge influence on how much we consume. For example, those who eat straight from a package eat 32 percent more than those who dish it up first.
Anyone who has ever stood at the freezer eating ice cream from straight from the carton can attest to this.
Manufacturers have tried to address the portion-control problem with “snack packs” of foods. Although consumers typically pay more per unit for these items, buying them in bulk at Costco would seem to offset the added cost of convenience.
But a study published last year in the Journal of Consumer Research found attempts to regulate consumption by buying portion-sized packs can actually backfire. The researchers found that when tempting products come in large packages, like a big bag of Doritos, consumers put more forethought into what they were eating and ended up eating less.
Small snack packs seem insignificant, and because they are “under the radar” consumers are likely to eat them more often, the study found.
All these factors may not matter to many die-hard Costco shoppers. Remember what Montoya said about Costco? The main thing is it's fun.
Stephanie Green was beaming as she headed out to the Costco parking lot.
“I probably don’t need these,” she said, sheepishly holding up a plastic container of Jelly Belly jelly beans.
She keeps the container in the basement, as a treat for whoever does the laundry, she said.
Green, who works down the street, finds a reason to come to the South Seattle store about once a week.
“The gas is cheap. And I come here more often than I should," she said, "for the pizza.”