Why Wal-Mart Will Never Pay Like Costco [Costco has 1/3 as many employees per dollar of sales]

bloomberg.com [link only] | August 27, 2013 | Megan McArdle

[MIDad23]

Exactly! Walmart vs. Costco is apples to oranges.

[WVKayaker]

... It says that Costco has three times as much revenue per employee as Wal-Mart. This means that the average Costco employee is three times as productive as the average Wal-Mart employee. ...

Revenue is only gross sales number. It does not reflect the reason for business---PROFITS! Also, which company contributes more to the economy? I would suggest that it is the one that rewards more back to it's investors, and employees more people! Which company has more customers because of their commitment to low prices?

From Ask.com- What is the annual profit at Walmart? 15.6 billion. (2.2 million employees.)

From Money.cnn.com- Costco Annual profit (last year), $1.7B. (160,292 full and part-time employees)

[Jane Long]

Well, I prefer Costco over Wallyworld OR Sam's Club - not that I don't shop at all, on occasion.

And, guess what? I'm NOT a lefty dim AND I love gun rights and loathe unions.

[RegulatorCountry]

I suspect Costco has much higher average purchase.

[SeminoleCounty]

Costco sells so much in bulk that it can have such per-employee output

Fact is that there are companies who are quite successful and can compensate employees well for it. A company that invests in their people get a nice return

Another company that compensates employees well is Publix, the grocery store chain in the SE. Publix is employee-owned and has some sweet retirement plans that keep their employees long term

WalMart can only base their success on low prices based on bad Free Trade deals. The WalMart formula will eventually blow up as there will not be enough well paid folks to continue shopping at WalMart. In many areas WalMart survives solely on folks on some sort of government assistance

[Theo]

Betcha can’t find non-Chinese apple juice at Sam’s Club.

Costco sells apple juice that’s made from non-Chinese apples.

Why do I care? Because I have 4 children who like apple juice, and I don’t want to poison them.

Just venting. Not at you. At Sam’s Club.

[WellyP]

“It means that Costco is selling higher end goods.” We go about every 6-8 weeks and resupply with the good stuff, preserved artichoke hearts, nice big chunks of assorted cheese, beef and pork "logs", higher end products. If you buy smart and have the space to store "stuff" it pays to shop there.

[dfwgator]

[CdMGuy]

We (wife and myself) shop at Costco, TJs, WalMart and Ralphs Supermarket, the California division of Kroger.

There is no comparison among these four stores except between Ralphs and WalMart.

We have a limited number of recurring items which we purchase in Costco. We purchase specialty items at TJs which are not available at the other stores. Plus, TJs has attractive prices and numerous unique food items.

We split main grocery shopping between Ralphs and Costco. Even with a Ralphs club card, WalMart usually is less expensive. Plus, the WalMart branded food products are of a high quality. Just the same, there are many items available at Ralphs that are not at WalMart. Produce and meats at Ralphs are a higher grade.

As to worker quality, Costco and TJs definitely have a higher quality, frequently better educated and more motivated staff. They appear to work harder and faster. Service is a high priority at these two stores. On the other hand, low prices seem to be the high priority at WalMart. Their workers seem to be less educated and mostly minority (Hispanic in California). Fast service is far less of an issue. For WalMart to pay more, they would have to either raise prices or likely lose money. If they raise prices, they likely would have fewer customers, and the customers would be looking for a much higher level of service from the employees. WalMart would have to stop hiring using their current criteria. In other words, the lower educated WalMart workers presently employed would no longer be hired by the “new” WalMart.

[SeminoleCounty]

A far better comparison would be Sam’s Club vs Costco.

---

Costco more successful, by far, and pays better than Sam’s Club. Sam’s Club is just WalMart w bulk items

[afraidfortherepublic]

My husband doesn’t like apple juice, so I never buy it. I’ll check it out the next time I’m there. :)

[SeminoleCounty]

Costco is owned by a lib Dem.

---

WalMart now offers benefits to Homosexual couples....and makes its money based on Free Trade with Communist China (although WalMart is trying to get away from imported food from Communist China)

Neither are conservative

[nascarnation]

Actually Costco is publicly traded on the NASDAQ.
But top management is Dem friendly.

[nascarnation]

Costco more successful, by far,

I'll accept your premise if you provide evidence....

[blue state conservative]

If Costco has three times the sales per employee maybe it is because they have far fewer employees per store. I can never find anyone to help me in that store, except the guys selling cell phones, and I don’t think they work for Costco.

[ansel12]

LOL, you clearly despise Walmart and love Costco, and it sounds like it is about a lot more than shopping.

Your emotions are spilling out on the page.

[Theo]

Last time I was there, I couldn’t find a single brand that contained non-Chinese apples. Maddening.

[Jane Long]

And your projection is underwhelming.

[Sgt_Schultze]

Costco caters to a wealthier client than Walmart. There are ten times as many Walmart stores than there are Costcos making Walmart's service area per store smaller. Here is a link to an article that describes many of the differences between the two businesses.

[milkncookies]

“The membership concept is very important to us. First,membership provides a way for us to pre-select the demographics of our customer base without having to do all the extensive research that would otherwise be required.
Business owners and managers,licensed professionals, and people who work for governments, utilities, hospitals or
banks tend to be more stable than many others. We take less risk in accepting their checks. Second, dealing exclusively
with selected groups makes it possible to communicate with your customers effectively. Instead of communicating with the whole world, you communicate one-on-one with the people you want to reach. Finally, someone who pays for a membership in an organization makes a form of commitment. They have a built-in reason to come back.”
Sol Price, Founder, Price Club

“The Costco concept is aimed at college educated households, with $70,000 to $80,000 per year household in
come, and with two cars. It’s a completely different business model than Wal-Mart.”
Mark Husson, analyst,Merrill Lynch

“There’s an old story they tell at Costco Wholesale Corp.: A Costco customer goes into one of the Issaquah based chain’s warehouses and sees Polo Ralph Lauren shirts that go for $60 retail selling for $37. The customer says, “I’ll take four in white and one in blue.“A customer of rival Sam’s Club sees the same display and says, “I don’t care how good a shirt it is, I’m not spending that much.”
Puget Sound Business Journal

http://www.coriolisresearch.com/pdfs/coriolis_understanding_Costco.pdf