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Costco vs. Walmart - The Life and Thoughts of Zach

Aug. 20th, 2004

12:36 pm - Costco vs. Walmart

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Here's a cool article from that bastion of progressive politice Business Week. The article explains how even in the world of Big Box big business retail, companies are able to be more productive, have more profits, sell more product, etc if they pay their workers a higher wage than Walmart.

It seems that by every proportional metric imaginable Costco which pays a higher wage is able to beat Sam's Club (the Walmart unit with which it directly competes). Costco has way fewer employees but moves almost the same volume. Costco makes more profit per employee. Costco makes more profit per square foot of store space.

Higher wages simply mean more efficient and dedicated workers and that really translates into good business. A lot of us could have told you this a long time ago but it seems that Wall Street still doesn't understand it, despite the numbers.

Comments:

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From:ryanfirewitch
Date:August 20th, 2004 06:00 pm (UTC)
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That makes sense. I like Costco A LOT.

I don't plan to buy any caskets there, in spite of Chicago being one of the trial markets for that product line. ;-)
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From:kakistocracy
Date:August 20th, 2004 06:04 pm (UTC)
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The thing is, I just don't think Sam's Club is about good business or about maximum profitability. I think it's about imposition and control. They would rather be the biggest than the best.

Then, in turn, consumers are more interested in the biggest, in the lowest prices, without being as concerned about quality. It's like, circular reinforcement.
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From:kniedzw
Date:August 20th, 2004 06:31 pm (UTC)
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If only there were one within sixty miles of my home....
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From:mrscake
Date:August 21st, 2004 04:04 am (UTC)
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What you say makes sense. The one positive thing about Walmart is that they employ one of my cousins. She has Down's Syndrome and works there as a greeter.
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From:herbivorous
Date:August 21st, 2004 05:14 pm (UTC)
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DUH!

As somebody who's now in the position to, at some point, be paying employees, I _know_ that if I want to retain a good employee, I have to pay significantly higher than minumum wage, and not dick them around. Can this not be any more self-evident? Sheesh.
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From:dsjones
Date:August 24th, 2004 06:48 pm (UTC)
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Plus, when I worked for Wal*Mart, The turn-over rate was so high, I'm sure they could cut costs by RETAINING employees. Retaining them with proper pay, insurance worth a damn and a feeling of self-worth.

I also saw bad things with Walgreen's. The last half of my 3 year jaunt with them I was an Assistant Manager, hence more involved with budgets and such. I was amazed at how Walgreen's 'cuts corners' when trying to make the projection for the quarter. They put a freeze on hiring, when there are MANY vital positions that need filling thus making the remaining (already worn) employees work as two people instead of one. Another one was they cut the hours. Many of the clerks I had under my supervision NEEDED 40 hours to just pay basic bills with no frivolities. But Walgreen's needed to make the books look more enticing and reach that projection, so many of my clerks were knocked down to 34 hours (the minimum hours you can work a week and still be considered 'full time'). All that does is create a messy concoction of Upset, Angry, Underpaid employees and most don't stay.
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From:(Anonymous)
Date:April 7th, 2005 02:37 pm (UTC)

Capitalism

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No one is putting a gun to people's heads at Walmart to continue to work there. If conditions are so bad, then they should just leave. And that is just what they do. Walmart's turnover rate is 60%, which by the way is below the national average of 66% for the retail industry. Walmart's strategy is low cost leader. You don't become the low cost leader by paying your cashiers 6 figure salaries. It's not rocket science. I saw monkeys on animal planet that can swipe a gallon of milk at a check out counter just yesterday. If their strategy is low prices, it makes sense for them to pay low wages, import $15 billion in goods from China and have inferior benefits. Everyone wants to be able to buy a loaf of bread, a half gallon of milk and cheese for $4. If you aren't looking for low prices, you are a moron. And for all of you hippies who hate corporate america, you wouldn't be wearing your birkenstocks and "make love not war" pins if it wasn't for corporate america. you would be walking around naked and starving.
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From:zarfmouse
Date:April 7th, 2005 04:51 pm (UTC)

Re: Capitalism

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Oh yah! Well if you ARE looking for only low prices YOU are the moron. Nanana booboo.

Interestingly enough I have never worn birkenstocks OR made any kind of pins.

Were this anything other than an anonymous comment I'd go out of my way to actually debate these points. Does Harris Bank actually pay you to troll anti-capitalists?

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