In this report

Club stores sell luxury for less

Last reviewed: October 2009
Tumi carry-on luggage
Our reporter found this Tumi suitcase at Costco for $150 less than what competitors were selling it for.

Sam's Club, Costco, and BJ's Wholesale might be better known for discounts on giant jars of mayonnaise and crates of diapers, but they also slash prices on fancy jewelry, crystal, and handbags that are rarely discounted elsewhere.

In visits to warehouse clubs near our Yonkers, N.Y., headquarters and to the chains' Web sites, our reporter uncovered discounts of as much as 61 percent on many brands also sold at pricier stores and Web sites. Here's what he concluded:

The deals are impressive

At Costco, our reporter found an Omega watch for $400 below the going rate at Tourneau. At BJ's, he found Escada sunglasses for $90 (next-best price, $230), and at Sam's Club, a Giorgio Armani eau de toilette cost $59, vs. $70 at cosmetics giant Sephora.

Still, you'd better shop around. At Sam's, our reporter saw a Calvin Klein satchel for $166, far less than the $298 list price, but Macy's had a clearance price of $149 online.

Clubs lack variety

They usually sell a few models from a handful of brands. Costco, for instance, sold a single Omega watch, Tumi carry-on, and Herman Miller office chair. The mix, which is always in flux, might include discontinued or closeout models, colors, and styles, as well as products made solely for sale in clubs. Comparison-shopping for leather goods proved particularly tough.

Clubs sell some "gray market" goods

These items are made to be sold abroad at a lower price. It's legal to sell them, and if bought directly from an authorized source, gray-market goods are not fakes or knockoffs. But Costco's chief financial officer, Richard Galanti, acknowledged that no company can be 100 percent sure that a product is "the real deal if it isn't bought from the manufacturer, distributor, or importer. (He said that Costco had gotten stuck with fakes only once or twice in his many years with the company.)

Gray-market goods lack a manufacturer's warranty, but warehouse stores let you return any item for a refund or exchange, for any reason. The return policy for luxury goods is open-ended at Costco and Sam's. BJ's allows returns within 30 days.

Bottom line

Choices are limited, but you can save a lot by buying fancy products at a warehouse club. Since the stores guarantee satisfaction (keep receipts and original packaging), you and your wallet should end up happy.

How they do it

Clubs make most of their money from membership fees and undersell competitors by slashing expenses and buying in huge quantities. Why do bargain stores even sell fancy merchandise? It generates buzz. "When you see a Tag Heuer watch at 30 to 40 percent lower than anywhere else, members will brag to their friends about it," says Richard Galanti, Costco's CFO.

What you save

Club stores chart