Costco vs. WalMart

February 16, 2004 at 6:50 pm | Posted in Rants | Leave a comment

I usually don’t buy stuff at Costco (except for their $1.50 hot dogs), since I don’t need or want to buy in bulk, but James Flanagan’s article (registration required) in the LA Times shows that compared to Walmart, they do value their employees enough to try to keep their turnover low. We are truly in a sad state when Wall Street punishes CEOs trying to keep both shareholders and employees happy. One thing’s for sure though – I’d be buying a Costco membership before I ever set foot inside a Walmart.

Excerpts in extended…

Some excerpts:

  • Much of corporate America is driven today by the belief that to be competitive, companies must cut their employees’ wages and benefits.
  • Nowhere is this creed held more devoutly than among the supermarket chains that are enduring a strike and have locked out their workers in Southern and Central California.
  • Interestingly, 56 of Costco’s stores are unionized. The company picked up these outlets when it bought the Price Club chain in 1993.
  • Nor is Costco about to embrace another fad sweeping corporate America: offshoring. “We have a call-center operation here,” Sinegal says, gesturing across the firm’s Issaquah, Wash., headquarters complex. “We could move it to Bangladesh or somewhere. But what kind of a message would that send to our employees? Not a good one, I think.”
  • If Costco has a weak spot, it is on the bottom line. The company earns about 1.7 cents for each dollar of sales, compared with 2.5 cents or more for the supermarket chains and 3.5 cents for Wal-Mart.
  • “I don’t see what’s wrong,” (Costco CEO James) Sinegal says, “with an employee earning enough to be able to buy a house or having a health plan for the family.

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