How Costco Became the Anti-Wal-Mart

[davidinalameda]

http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html?ex=1122609600&en=dea0e4ba4338d34b&ei=5070&incamp=article_popular

JIM SINEGAL, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, had all the enthusiasm of an 8-year-old in a candy store as he tore open the container of one of his favorite new products: granola snack mix. "You got to try this; it's delicious," he said. "And just $9.99 for 38 ounces."

But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco's customers but to its workers as well.

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."


so happy and productive workers are worse for the bottom line than unhappy and unproductive workers, not to mention workers that only stay for a short period of time and the business is constantly retraining people

I'd think that the Costco retail model would be very profitable for all involved

[TimeChaser]

1. I love Costco

We got one in our area about a year and a half ago.

[ProfessorPlum]

2. We've been members since 1992

we love it too. And knowing that they treat their employees well only makes me love it more.

[Lefty48197]

3. Everybody should shop at Costco

They treat their employees well, they don't send job to China...
Is there any reason NOT to shop there?
I'm sick of hearing about the "shareholders". They're the same sipsh*ts who get richer everytime corporations lay people off. Screw the shareholders!

"Mr. Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers' expense. "This is not altruistic," he said. "This is good business."

He also dismisses calls to increase Costco's product markups. Mr. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.


...one of Mr. Sinegal's cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more. "

[SoCalDem]

7. Mr Sinigal is right.. Service sector jobs "used to" support families

and not all that long ago. Before home & car prices and health insurance got all 'wacky'.. It's not because wages are driving the prices up..It's GREED to "beat the projection", and for the owners of the corporations and the CEOs to strip all the cash out of he companies that are driving the workers' wages down. Not that many years ago, a guy could work at Sears and the wife babysit or have a part time job somewhere..and they could have a decent life.. go to the doctor when necessary, buy a car now and then, take vacations, own a house, and even send kids to college..

What changed?... Corporate cannibalism, and greed.. Certainly not the wages of the workers.

[jilln]

4. eminent domain

I'm glad to hear they treat workers well, but I'm pretty sure they've been guilty of using eminent domain to grab people's land. Obviously some big companies are better than others, but I am starting to think no company gets that big, and no politician rises that high without some really scummy dealing.



http://www.nationalreview.com/ponnuru/ponnuru021803.asp

This Land is Costco’s Land
Cities steal property, and give it to Costco.

Costco, the big warehouse chain, took a minor p.r. hit last year when the city council of Cypress, California, tried to kick a church off its land in order to give it to the company. But this case does not appear to be an isolated incident. The libertarian legal activists at the Institute for Justice say that Costco is a major beneficiary of local governments' abuse of their power to seize private property. They want to put an end to that abuse.

[Deja Q]

5. Costoco too benevolent? Or everyone else being too EVIL?

I didn't know Christian organizations like Wal-mart could claim to be Christian while doing very un-Christian things.

Oh well.

[bostonbabs]

6. just two of us

so I thought that we could not shop there...was I wrong.I thank my friend for dragging me there.Sam's Club is awful.This is quality.

[lovelaureng]

8. I really appreciate a company

that treats its employees right by paying them a living wage. Where greed is not part of the mission statement. It is a sad day when Costco is painted as a bad investment for shareholders because of doing the right thing. Greed never ceases to amaze me though.

[kaygore]

9. Guess we should shop at Costco and ditch the stock market

This only reinforces the fact that the "money guys" see employees as interchangeable and just simple cogs in the machinery of business. Yet, ironically, study after study emphasizes the importance of good employees to the health and well being of companies.

Years ago I used to market a basic education program that helped the lowest educated employees in companies gain critical skills to grow with their companies. I could predict the health and growth of the companies based on the companies' dedication to their employees. Every company that invested in its employees (and I don't mean management but the line guys--the lowest levels and up) have exceeded growth expectations. This is not true for many companies to which I presented who were not willing to invest in the workforce.

I am proud to be a Costco (and before that Price Club) member.I feel that Wal-Mart and Sam's Club are a blight on our country, economy, and souls.

Jim Sinegal will have a company that can weather hard times. WalMart and Sam's Club and those that invest or shop or are associated with the management of those companies will, I hope, rot in hell.

[GreenPartyVoter]

10. Why won't they come to Maine? We are stuck with Mall*Wart and Sam's Club