Spending

Costco brings back purchase limits on toilet paper, bottled water, other essentials  

"We're looking well into next year before we get things back into balance."

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Costco will once again enforce purchase limits on essentials including toilet paper, paper towels, bottled water, and high-demand cleaning products. This move is an attempt to slow down buying as the truck driver shortage and shipping delays have made it harder to keep shelves stocked. The limit amount was not yet specified.

Purchase limits were originally instituted in spring 2020 when uncertainty about the pandemic fueled panic shopping. Retailers couldn't keep cleaning products, or even food staples like pasta and milk, adequately stocked. As Covid-19 wore on, however, this increased demand for essentials died down.

Now, however, Costco is bringing the policy back, but for different reasons.

Shipping delays and driver shortages

Unlike earlier in the pandemic when purchase limits were implemented due to a shortage of products caused by increased demand, these limits are due to a breakdown in the supply chain

"A year ago there was a shortage of merchandise," Costco Chief Financial Officer Richard Galanti said on an earnings call Thursday. "Now they've got plenty of merchandise but there's two or three week delays on getting it delivered."

Lots of products are manufactured overseas and then sent to the U.S. in shipping containers. Right now there is a backlog of shipping containers floating off the West Coast, says Scott Grawe, chair of the department of supply chain management at Iowa State University. Even if the shipping container makes it to a port, there is a scarcity of drivers who can take it to retailers.

Costco, and other big box stores, are being affected by these delays. "We're looking well into next year before we get things back into balance," Grawe says.

Now they've got plenty of merchandise but there's two or three week delays on getting it delivered.
Richard Galanti
Costco chief financial officer

How to shop responsibly

With purchase limits looming, you might want to employ some smart shopping strategies the next time you need to stock up. Here are four that can help you spend responsibly.

  • Call ahead: Contact your local store to see what products are being limited.
  • Make a list: Before you head over, take inventory of what you already have in your pantry or your cabinets. Then, make a list of what you actually need. This can help you avoid panic shopping.
  • Keep your eyes on your own cart: Purchase limits can create the "scarcity effect," or the cognitive bias that makes people place higher value on products they believe are sought after and running out. Just because you see someone else stocking up on hand soap doesn't mean you need to. Stick to your list.
  • Make a backup grocery list: Because stores are having trouble keeping shelves stocked, you might not find exactly what you're looking for. That's why it's smart to make a list of potential swaps for some of the items you know are in high demand. For example, instead of buying paper towels, you can pick up a couple of absorbent dish rags and reuse them. 

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