Paying higher wages and better benefits to employees? Even with the stock analysts telling them they're being too generous? Inconceivable!
'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."
'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."'
(h/t +Wendy Cockcroft)
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How Costco Became the Anti-Wal-Mart – New York Times
Costco Wholesale, the nation’s fifth-largest retailer, pays its workers 42 percent more on average than its closest rival, Sam’s Club.
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This makes me want to shop at Costco. But that statement that it's better to be an employee or a customer than a shareholder irks me. Kind of sums up why people hate Wall St so much right now.
Yes, the stock analysts come off as real dicks here. "Yeah, yeah, very nice you're paying them so much, but you should really pay them less and increase your profits."
The question is whether a company's primary duty is to its mission, members, customers, or investors/shareholders. Each results in a somewhat different policy.
Unfortunately, we don't have a nearby Costco. I like to show support with my wallet, however limited that support may be.