BULK APPEAL HIGHER-INCOME CONSUMERS NO LONGER ASHAMED OF SHOPPING AT NO-FRILLS STORES.

Byline: Evan Pondel Staff Writer

Janet Alexander's car is loaded down with three pounds of salmon, six pounds of beef, 70 bottles of water, 10 boxes of tissues and 10 pounds of carrots.

She's not preparing for a trek through the Alaskan wilderness. Alexander, 52, and her friend Judy Legendre, 58, just finished up their biweekly shopping excursion to Costco in Canoga Park.

The two plan on splitting up the items to save money. And while they realize that shopping at a warehouse store isn't all that necessary to feed their relatively small families, the potential for a bargain is irresistible.

``Isn't that ridiculous?'' said Alexander, who also noted that the 10 pounds of carrots are for her horse.

Actually, shopping for bargains at warehouse retailers isn't ridiculous at all. It has become a norm for Southern California families who buy in bulk to save money. Even traditional supermarkets are carrying more bulk items to support those shopping for one, two or 20 people.

``We really like big things in this country,'' said Elissa Altman, author of ``Big Food: Amazing Ways to Cook, Store, Freeze and Serve Everything You Buy in Bulk.''

``But there is both a practical and psychological approach to buying in bulk. And in the end, if you are going to buy big, you gotta use everything you buy.''

With consumer confidence dwindling, that's sound advice as shoppers search for more cost-effective ways to buy groceries. And now that the economic effects of Hurricanes Katrina and Rita are in full swing, a higher proportion of affluent households, compared with poor households, are shopping at warehouse club stores, according to a survey last month from ACNielsen U.S., a provider of consumer and marketplace information.

For Costco and other warehouse retailers like Sam's Club and Smart & Final, that could mean a windfall of new business during the next year. Costco alone experienced a 10 percent increase in net sales for its most recent fiscal year, registering a total of $51.87 billion in revenue. Shares of Costco have also been on an upward trajectory, nearly doubling in the last three years.

Another reason why more affluent families are shopping at warehouse retailers is the simple fact that they're not ashamed anymore. Decades ago, warehouse shopping was associated with lesser-quality goods.

``But today, I know plenty of upper-income Costco shoppers who are pretty proud that they shop there,'' said Dan Geiman, analyst with McAdams Wright Ragen in Seattle. ``It's the whole treasure-hunt mentality. People find the value amazing.''

That doesn't mean the average bulk buyer saves more money in the long run. It all depends on how efficient the shopper is when he visits a warehouse retailer. Some consumers walk into a store with a list of items they plan to purchase, while others are more impulsive and tend to pick up extraneous goods.

Smart & Final Inc. is consumer-oriented, but the Commerce-based company often walks a fine line between catering to the lay shopper versus the commercial shopper.

``Part of our core business is serving the restaurant people, but we are also trying to build the household business as well,'' said Randall Oliver, spokesman for the company. To address the needs of both types of customers, the company operates two separate warehouse formats.

Wal-Mart-owned Sam's club essentially operates in the same way. Except Wal-Mart stores cater to more varied needs, while Sam's Club caters to a ``higher-end customer. We carry the electronics and the jewelry. And I think there will always be a differentiation between our parent company and our division,'' said Olan James, spokesman for the Bentonville, Ark.-based company.

Costco doesn't delineate between the two. The retailer's doors are open to anyone in search of a good deal. At least, that's the sentiment echoed by Richard Galanti, Costco's executive vice president and chief financial officer. ``I think people who shop with us like quality, like to save money and like to brag about how much money they saved,'' said Galanti, who admits that even if a Costco item is slightly less expensive than the same product at another store, the consumer ultimately feels like he's receiving a significantly better deal.

The Issaquah, Wash.-based company is attempting to capitalize on this theory by selling everything from air hockey tables to eyewear. A recent study by J.D. Power & Associates found that Costco ranks highest in terms of satisfying customers' eyewear needs. The retailer also sells pharmaceuticals and gasoline at discount prices.

``Even if we can get you to save a few cents buying gas with us, it's worth it. And that's when the loyalty comes in,'' Galanti said.

But not everyone is inclined to shop at Costco to save a few dollars. Virginia Seitz, a professor of marketing at California State University, San Bernardino, doesn't believe it's always cost-effective for herself and other individuals to shop at warehouse retailers.

``People like you and me will go there and overspend because we are not a planned shopper,'' said Seitz, who occasionally takes advantage of her boyfriend's membership at Costco.

The issue is that warehouse retailers have the power to induce a treasure-hunt mentality that can be quite costly. In one aisle, a consumer will find cereal, cookies and cake mix. And then a few feet away, there's a 40-piece sushi platter for $12. And don't forget that flat-screen monitor or the mini digital video recorder on the way out.

``The whole concept of whether people are really saving money by buying in bulk is in the eye of the beholder,'' said Charles Harrington, assistant professor of marketing at Pasadena City College. ``Naturally, those stores don't carry everything, so you'll eventually have to go to the supermarket.''

Or shop for bulk wisely. The first rule of thumb is to buy what can be reused. ``In the restaurant industry, this is what we call repurposing,'' Altman said.

Olive oil, vinegar and other nonperishable goods are reusable. Shoppers can also rely on freezing items to avoid excessive waste. Conversely, buying pastries or cookies in bulk is not as practical because they usually cannot be repurposed.

Shirley Marks, 80, is a master of repurposing items she's purchased in bulk. The chicken she purchases at Costco can easily be repurposed. And the five pounds of peanuts Marks buys can be repurposed for her own enjoyment and the squirrels she feeds every morning.

``I like Costco's rotisserie chicken because I'll eat a little and then save the rest for later,'' said Marks, who lives on her own in Woodland Hills.

But buying in bulk doesn't always entail shopping at warehouse retailers. Jack Glaser makes a living by buying electronics, paint and oil in bulk. He then sells the goods to companies like a mini Costco. And as the cost to move goods increases due to rising oil prices, he's beginning to feel the squeeze on his business.

``The business goes up and down,'' said Glaser, owner of Long Beach- based DSAA. ``And rising oil prices don't help.''

Costco is also feeling the pressure. But Galanti is confident that rising energy prices won't spoil the prices at Costco.

``Ultimately, those costs will have to be passed along,'' Galanti said. ``But our philosophy is that we want to be the last to go up.''

Evan Pondel, [phone]

evan.pondel(at)dailynews.com

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2 photos

Photo:

(1 -- color) Ana Castillo of Bellflower pushes her flatbed cart down the warehouse-style aisles as she shops for her family of six.

(2) Stores like this Sam's Club in Long Beach, as well as Costco, that offer customers savings by selling bulk have been gaining in popularity.

Steven Georges/Staff Photographer