While Wal-Mart stores in Miami, Boston and San Francisco endured a weeklong employee strike in May and Amazon's Leipzig, Germany, facility staged a similar walkout demanding higher pay, Costco Wholesale, America's second largest retailer, continued to sail serenely along with a remarkable turnover rate of only five percent among workers and less than one percent with executives.
In fact, Costco is positively thriving. Sales are up a whopping 39 percent over the past five years and the stock price has doubled since 2009. Why?
Unlike the House of Mr. Sam, Costco pays hourly workers as average of $20.89 per (as compared to Wal-Mart's hourly rate of $12.67 per).
Eighty-eight percent of Costco employees also receive company-sponsored health insurance (Wal-Mart claims “…more than half its employees do.”).
And, drum roll please, Costco has no problems with unions. 'They are philosophically much better than anyone else I've worked with,' says Rome Aloise, a Teamsters vice president. Compare that with Wal-Mart's positively hostile attitude towards unions and union organizers (which was documented in 'The high price of low cost.').
Costco makes its profits through annual membership fees,
So, why is Costco so employee-friendly when Wal-Mart, and the rest of the retail industry, treats them so like so much chattel?
“We believe a happier work environment will result in a more profitable company,” says Costco CEO Craig Jelinek. “I (just) think people need to make a living wage with health benefits. It also puts more money back into economy and creates a healthier country. It's that simple.”
Shocking, no? Well, it is unique, at least in retail. “Most retailers see their employees as a cost to be minimized and typically end up underinvesting in them,” says Zeynep Ton, an M.I.T. professor.
That ends up creating the scenario we've all experienced at just about every Wal-Mart store one can name: “…surly employees in stores engulfed in chaos, (and) an environment that makes ordering online look a lot better,” notes Ton.
And how, exactly, is Wal-Mart dealing with surly cashiers? Replacing them with 10,000 self-service checkout systems. As you might expect, Costco doesn't seen any benefit in replacing humans with machines: “(Our) employees do the work more efficiently,” states Jelinek.
Of course they do. Because Costco cares about their employees. Wal-Mart, and the rest of the retail industry sees workers as a necessary, and expendable, evil. And, that my friend, is today's tale of two retailers. You decide which model will win in the long run. Am I predicting a world without Wal-Mart? Stranger things have happened.
P.S.: Wal-Mart pays multiple public relations firms millions of dollars annually. Costco doesn't see the need for outside PR counsel.
Thanks med guy. We reserve our pro bono services for charities such as the Leukemia & Lymphoma Society and Young Survival Coalition.
great blog- i was just in a meeting about costco (apploi related) and heard these numbers as well and how they have no turnover. just a thought- why don’t you approach them and do some pr pro-bono…