Hmmm…
Interesting story here. Basically, it appears that Walmarts treating their employees like crap is finally starting to bite them in the ass.
From one quarterly earnings report?
Hey, I’m an engineer not a Wall Street financial analyst 
But I did find it funny that there was finally an article that pointed out the obvious that if you treat employees badly you know they might not actually do a good job.
This was from Forbes (yes, online, but still Forbes.)
The headline had a horribly egregious mistake in it.
“Sails Proof” instead of “Sales Prove.”
Egads, people, are there no copy editors anymore?
The copyediting error is in the hyphen instead of an em-dash.
"Walmart Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails
Proof That You Get What You Pay For"
Seems to be an apples/oranges comparison to me, they operate under completely different models. Walmart is an open to all, everything to everyone retailer, while Costco operates on a paid membership, buy in bulk basis. I’d rather see a comparison of pay to sales between Sam’s and Costco, since Sam’s is the membership model branch of Walmart. Including Target and JC Penney in the comparison, as the article does, muddies the comparison further.
Take it for what it is - an opinion piece with an agenda. It is only nominally a finance article.
From the article
I have to say, as a regular user of Costco and Trader Joe’s, I find the overall positive vibe of the stores to be refreshing, and in stark contrast to stores like Pathmark and K-Mart, where shopping just sucks.
There are a lot of other articles out there on this news, and they all pretty much say the same thing. WalMart is having trouble keeping its shelves stocked, it is at the bottom of the customer satisfaction scale, its same store sales increases are much lower than CostCo, And, as mentioned, they are kicking Sam’s butt in sales per employee - which makes one think that saving money on salaries isn’t such a smart idea after all. Paying a living wage seems to have a good return on the investment.
All I know is that CostCo people always seem to be hustling - while going to WalMart, which I do as infrequently as possible, is profoundly depressing.
Penny’s is indeed a bad comparison, since they had special problems.
Holy shit. I knew Costco membership was expensive but that’s ridiculous.
That stat has nothing to do with pay to sales ratio - or pay scales in general - and could, without further context, simply mean that Costco hires less employees than Sam’s.
All I’m saying is that this article uses poor analysis techniques to help make the author’s point. It’s a common practice,especially in an opinion piece. Don’t read too much into it without seeing all the data (which I haven’t).
Yeah, but if you buy 30 tonnes of mayonnaise, it ends up being a very reasonable charge per-sandwich.
Sigh. From the linked article (this is a quote from BusinessWeek)
Another article on this mentioned that Costco increased employment in line with the increase in stores. And of course one of the points of the article is that the decrease in staffing has meant that WalMart has not been able to keep its shelves stocked, which has hurt sales.
By the way here is a table from last November, showing that Costco’s sales per square foot was over double that of WalMart back then also. Its employee turnover rate was 1/3 that of WalMart.
If you search for Costco versus WalMart you’ll get lots of articles from lots of business publications with the same message.
I’m happy to pay the membership fee not just to get access to large number of Kleenex tissues (which we go through) but to get the wonderful crusty bread they get from a local bakery, and which is better than not just supermarket bread but most bakery bread.
the Costco executive membership fee ends up running us $2/week, and for that we get a free Amex card and grocery prices that save us far more than $2/week for the items we buy. And this year we got back almost triple that in rebates.
I don’t know that there’s a race to the bottom. If there is, no one told the tech industry, the banking industry, the movie industry, the energy industry, or the pharmaceutical industry.
Retail has always been crap for employees because of the low margins.
There are three sides to every economic transaction involving a corporation: the business owners, the customer, and labor. In most cases, only two of these three can be winners. So if management is shaking hands with labor and both are smiling, then you as the consumer probably just got shafted. In the case of retail, business and the consumer do well, workers get shafted. Business always wins though, so basically it’s either the worker or the consumer who gets the short end.
Was there anything in the article that Wal-Mart will stop treating it’s employees like dirt?
But the facts in this case show otherwise. Costco is paying employees more, has good sales and a rising stock price, gets more out of their employees, and a fairly happy set of customers. (Happy enough to keep renewing their memberships.)
I find this thread quite odd - it seems conservatives are quite upset about evidence that not treating employees like shit can be good for the bottom line. I wonder why.
“Labor” still loses with Costco because Costco uses substantially less of it. It’s a good way to look generous, but there’s no free lunch here. Costco hasn’t found some magic formula where they sell cheap goods, pay employees well, and still make money. They make money because they have 96,000 employees in 618 stores, which comes out to 155 employees per store. Wal-mart, by contrast, employs 2.2 million people in 10,773 stores, or 204 employees per store. Wal-mart generates $213,181 in revenue per employee. Costco generates over $1 MILLION per employee.
I gleaned all this data from here:
http://finance.yahoo.com/q/ks?s=COST+Key+Statistics
http://finance.yahoo.com/q/ks?s=WMT+Key+Statistics
Now this high productivity/low employment model has a lot going for it aside from good PR. I’d rather have a few good employees than lots of poorly trained ones. The downside is that Costco isn’t going to be hiring the types of people who normally have trouble getting employment: high school kids, the elderly, homemakers looking to supplement household income, etc. In other words, the less productive people in the workforce who simply aren’t going to generate $1 million in productivity to justify their higher pay.
Not conservatives in general but Wall Street seems to have its knickers in a perpetual knot over the fact that Costco puts so much money into its workforce — money that, in its NSHO, should be going to the investors in the form of dividends. If Costco could just get the same performance while paying minimum (or below) with no benefits, they reason, the world would be an ever so much better place.
Costco doesn’t put much money into its workforce though. Less than Wal-mart does. I think the real issue is that despite spending only 1/4th what Wal-mart does on labor, they make lower profit margins. There’s just no excuse for that.
And if the Costco model was extended to the entire retail economy, the unemployment rate would be 20%.