Posted on 07/20/2005 12:54:46 PM PDT by Ace of Spades
ISSAQUAH, WASH. - Jim Sinegal, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, crows about Costco's private-label pinpoint cotton dress shirts.
"Look, these are just $12.99," he said while lifting a crisp blue button-down inside Costco's cavernous warehouse store here in the company's hometown. "At Nordstrom or Macy's, this is a $45, $50 shirt."
Combining high quality with stunningly low prices, the shirts appeal to upscale customers — and epitomize why some retail analysts say Sinegal just might be America's shrewdest merchant since Sam Walton, the founder of Wal-Mart.
(Excerpt) Read more at chron.com ...
If only you could freeze lettuce or bananas...
So? Walmart has done the same.
I was a teamster for 29 years.
The company I worked for was union nationwide when it moved to my state, so I had no choice in the matter of being a union member.
I was not enamored with the union's politics, but as for pay and benefits it was fantastic.
My employer was and still is the most successful in it's field,even though they were paying nearly twice as much in wages and benefits as its competition.
The biggest reason for their success was that they made all employees produce. No goon here!
Are all high school kids working at Wal-Mart slackers and thieves? No. Do some of them (less than desirable employees) become better employees from wal-Mart's training and mentoring programs? Would you agree that it's a good thing someone is giving these kids a chance rather than not?
The point is, Wal-Mart could treat its employees better and still make money.
No, the point is that Wal-Mart controls their go to market strategy and it will only change when they cannot attract the people they need to be successful. No one can argue with Wal-Marts success, your experiences notwithstanding. If Wal-Mart treated their employees poorly, they wouldn't be able to attract 600,000 new employees every year.
If Mr. Costco want to grow like Wal-mart, his model will have to change.
I don't get it what does his political donations have to do with this? And it seems like a link to the info would have taken less space. Good for Costco. Better then the Walmart starvation wages it appears. And I do not give a damn who he contributes to or what his politics are.
First, every Costco I’ve ever been in is under 20 years old. I know a bunch that are under 10 years old. What that means is that they simply haven’t been around long enough for pension and h&w issues to significantly impact them. That will change, it’s just a matter of time.
Issue two is that in the case of their stores where unions represent their workers they’ve got an open ended obligation. I’m referring specifically to those stores that are/were represented by the IBT. Those employees in Central States and New England funds are going to be screwed. Meanwhile, Costco is legally obligated to make up current and future shortfalls for retirees/future retirees that never worked a single day for their company.
That’s one of the inherent evils of defined benefit and multi-employer pension plans.
Anyway at this point they aren’t impacted too heavily. Later on it will change and they’ll have to start cutting back. When they start consolidating positions you’ll have just what everyone else has – declining workforce (declining union membership) that has to float an ever increasing pension plan.
Over the next 5 – 10 years you’re going to see (especially regarding Teamsters) one of the biggest retirement waves there have ever been.
Also, over the next 15 – 30 years (or whenever) they’re going to have a changing of the guard. He’s pushing 70 now. He isn’t going to live forever. I have no idea as to their structure but you can bet their executive committee and/or board are going to have certain concerns regarding his replacement. They’ll be looking for someone that is more business oriented and not everyone’s friend.
If that doesn’t happen with his replacement, it will eventually. Bank on it.
Finally, they always recite the “happy employee equates to low turnover” mantra. That’s good AND bad.
Most jobs at a place like Costco are semi-skilled at best. Those aren’t really the sort of thing you want to provide as a “career” – especially if you’re paying a premium in the process (compared with the competition).
My experience has been that anytime you have someone performing a mundane, tedious, semi-skilled function they will be at their most productive somewhere between 18 months and three years. It’ll slowly decline to about years 12 – 15 and then significantly thereafter.
In that scenario you want people to turnover between years 3 and 5. If you can encourage them to move on around year 4 it’s the best of both worlds. They’ve made a premium and in exchange you’ve gotten the most productive work out of them. And – most pensions require five years to be vested so you dodge a bullet there.
But that’s not how it works. You’re paying a premium for someone to run around as floor washer or working a pallet jack. They have absolutely NO reason to go elsewhere to improve their lot in life because they’ve got it easy where they are.
So they decide to be a life-long item scanner or warehouseman. Each and every contract you’re going to have to sweeten the pot or they will damage or destroy your business. You’ll also have to deal with increasingly silly work rules.
That’s how it always happens. Just follow Costco over the coming years and you’ll see it with them too.
When you pay a decent wage and provide decent benefits then you can attract a better quality of employee, get a more motivated employee, reduce turnover (thus reducing costs), reduce employee theft (thus reducing costs), and probably operate with fewer employees (thus reducing costs). That sounds like a pretty smart business plan to me, and the fact that Costco share prices rose 10% over the last year while Walmart share prices fell 5% seems to indicate that the markets agree.
I hear HP is getting ready to put the screws to their employees. I think I'm going to do some of my own professional screwing and start buying the company printers and plotters elsewhere.
I never said all high schoolers are thieves. However, if Wal-Mart treated people better, that wouldn't *have* to attract 600,000 new people every year.
Costco is not expanding as fast as Wal-Mart, but I think, in the end, their business model will prove to be more stable. There's only so much more Wal-Mart can expand.
Walmart has no problem allowing unions, so long as they are Communist Chinese unions.
Going back several months to the biased story from which you are getting your half-information, some Wal-Mart employees who have not completed the probationary period required to qualify for full benefits may resort to public assistance, JUST LIKE EMPLOYEES OF ANY OTHER COMPANY.
Just like employees of other companies, when they have fulfilled the probationary period they get full benefits.
It just so happens that in many states (21 to be exact) Wal-Mart is the state's largest employer, therefore it should come as no surprise, that Wal-Mart might have the most probationary employees collecting some sort of public assistance in those states.
But don't let facts stand in the way of your prejudices.
I sometimes shop at the Issaquah store. I also have a Sam's card and I shop Wal-Mart also. Sam's is more blue collar.
Wal-Mart has Communist Chinese unions here in the United States!
Oh my God! How could this happen?
Lots of reasons for this:
1. Hostility in some spots to Wal-Mart's inexorable expansion.
2. A slew of employee lawsuits, notably one claiming discrimination against 1.6 million women. Wal-Mart denies that but warns that the suit could lead to material, unestimatable losses.
This kind of uncertainty is what hurts their share price since EPS was up almost 19% last year. Their balance sheet is solid and their earnings power is unmatched in the industry. They also have huge piles of cash.
Capital spending eats up $.86 of every dollar of cash flow as they continue to rapidly expand. When capital projects start accounting for a smaller portion of cash flow, leaving more for the dividends, buybacks, and debt repayments their share price will increase dramatically.
Now, now, now, you know that Walmart will close down a store in the states rather than accept a Union. But their stores in China are all unionized, communist Unions being entirely acceptable I guess.
All I'd like to know is when did a company called "Kirkland" (the Costco brand) become what has got to be one of the largest, most product-diverse companies in the world?
From food, to electronics, to lawnmowers, to pants, to patio furniture...amazing, and I don't think I've ever read anything about them. Never even heard of them til about 2001. Maybe I will research them out of curiousity, now that I'm thinking about it.
I love investing and Wallstreet, but there is no doubt in my mind that wage earners get the least benefit from our economy, mainly because the government screams inflation and puts the brakes on the economy every time the market favors labor. It's good to see a CEO that cares about his people as much as his shareholders, and only takes a modest salary for himself.
Providing the actual data rather than just a link was entirely appropriate and a highly-effective thing to do. It screams out viscerally that this guy is a Democrat, and not just a lukewarm one - look at some of the extremists whose campaigns he has funded (although you could have gotten that just by reading to the end of the story - doesn't it make you feel warm and fuzzy inside when a CEO pats himself on the back by telling everybody how little he makes, as a multiple of the salary that other employees make, and how rotten the other CEOs are who make larger salaries, but then it turns out that he has stock worth $150 million - typical Democrat hypocrite)...
I think I read somewhere that economists claim that we need a permanent pool of unemployed workers of roughly 5% to help keep labor costs in check.
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