How Costco Became the Anti-Wal-Mart

The New York Times ^ | July 17, 2005 | STEVEN GREENHOUSE

[TaxRelief]

... Some Wall Street analysts assert that CEO Jim 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. ...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."

...Costco's stock price has risen more than 10 percent in the last 12 months, while Wal-Mart's has slipped 5 percent. Costco shares sell for almost 23 times expected earnings; at Wal-Mart the multiple is about 19. Mr. Dreher said Costco's share price was so high because so many people love the company. "It's a cult stock," he said.

[Extremely Extreme Extremist]

Wal*Mart sells cheap crap.

So the toothpaste I buy is of a lesser quality than it is at a Target or Costco?

[Rebelbase]

I like Costco too. Milk for $2.05 gallon, 36 eggs for $2.50, a bunch of eight or so good looking banannas for $1.25 and a four lb. bag of frozen stawberries for $6.50.

[Extremely Extreme Extremist]

the reason why people work at WMT is because often they can not get work elsewhere, and employee morale is genally rock bottom

Totally untrue. Lots of people work at Wal-Mart as a second job.

[Gabz]

If the conditions at WalMart were poor, the employees at WalMarts around here would vote with their feet and could easily find work somewhere else.

You've got that right. I've been shopping in the same Walmart for about 2 1/2 years now........and most of the faces of the employees remain the same. There are rarely any openings, and when there are the applicants out number the positions something like 10 to 1 because they are one of the better paying employers in this area. And they also promote from within the ranks, which is why the faces remain familiar.

I'm sure that like any other major retail chain, there are some managers of some stores that leave a great deal to be desired, but apparently those are the exceptions rather than the rule.

[Moonman62]

Your posts keep making more and more sense. But as to whether Costco is overpriced, I don't know. I find it hard to believe that Wallstreet would pay too much when it seems to be a bit unhappy with management.

I wonder what the p/e was in 1995 before it made that big 1000% run the following five years.

[GBA]

I was a very loyal Price Club/Costco shopper in Arizona and was happy to see them move here to NC not long after I did. But then came the last election and their support for the Dems was outed (at least for me). Though I like Costco better, I had no choice but to switch to Sam's Club. I was just shopping at Sam's about an hour ago over my lunch break.

[randog]

If it's a brand name, then probably not.

[Extremely Extreme Extremist]

If it's a brand name, then probably not.

C'mon. Stop blowing smoke up my behind. This is nothing but an urban myth. "Don't buy a TV at Wal-Mart because some of the components may be missing and it'll turn to junk." LOLOL you Wal-Mart bashers need to find a new addiction.

[randog]

"Don't buy a TV at Wal-Mart because some of the components may be missing and it'll turn to junk."

Did I say that? I said that Wal*Mart sells cheap crap; prove me wrong.

[GBA]

"Where else can it get a great TV, and 20 pounds of flap meat (skirt steak)in the same place."

Sam's Club.

(If you want the best oil for the Hummer? Amsoil. It's way better than Mobil One)

[AuH2ORepublican]

"Last night on "Without A Trace" the missing person worked at fictional Mega-store called EveryMart. The wages were so low that the lowly employees had to clean houses, be drug runners or sleep with the boss to support themselves and their families. And the only place they could live was in run-down, drug infested rent by the week motels. The heroine of the story became a drug runner to avoid the hearing aid her little boy needed. In real life, that young mother would probably have been provided the need hearing aid through one of WalMarts special programs."

---

Yeah, I saw that. Something tells me that executive producer Timothy Busfield buys into that whole "Wal-Mart-is-the-Devil" nonesense.

[superiorslots]

I sell employee benefits and see companies froma different side. It is without fail the companies that treat their employees well are usually always prosperous and do well even in bad times. Their employees just do that extra 10% because they WANT to.

Companies that treat their employees as expendible and like cattle(basically like crap) are always grasping...though staying on. I have insurance with the owner of one company thta treats his employees like crap. The turnover is unbeleiveable and you can sense employees are there just until something better comes along.

I've been in the business for 25 years and have seen this countless times. Every report I've seen also backs up what I'm saying.

[Dan from Michigan]

I don't shop at the blue zone Costco OR Chi-mart.

[NotSoFreeStater]

Wal-Mart and Costco are side by side near my house and both do a great business.

[Irish Queen]

In what region do you live? Workers in high unemployment areas are more likely to be unhappy with a job they feel they are forced to take.

My son is a department manager in a WalMart in Idaho. He's worked for Wal-Mart for a year and a half. His store is in a college town, so there is a fair amount of turnovers in employment. There are "special needs" workers who probably wouldn't be working at all if there wasn't a WalMart in the area. Plus, there are the misfits who never fit in anywhere because they are plain difficult to get along with.

My husband is in construction. Last month the owner of the company heard him tell a middle-aged laborer, "Stop your belly aching, shut up and dig." The owner called down my husband for telling the worker to "shut up". But the belly aching laborer was fired two days later by the owner for whining to him about the hot weather (low 90's), warm drinking water, and how the pine needle duff was making his skin itch.

[Gabz]

That may be true where you live.........but it is sure not the case for the Walmarts I am familiar with.

[Uncle Hal]

Costco is very well run. Their prices are the lowest on almost everything, every day. I go to the store to buy paper products, booze, medicines, coffee, meats etc. You have to buy in bulk. But that is why their prices are so low.

[Gabz]

Walmart sells the same "cheap crap" (using your words) that every other retailer sells.

[Eagle Eye]

Noting wrong with being pro-worker. In fact it is very capitalist to take care of all your resources, especially the people.

[NotSoFreeStater]

Costco is well run. They have a wide range of products at low prices( milk is $1.00 cheaper than most stores and you can buy it by the gallon). The employees where I shop have all been very helpful and friendly. They sell all types of books - I've seen Ann Coulter's latest right next to Michael Moore's. Can't buy booze here in Maryland. Got to protect the Mom & Pop liquor stores.