The "Anti-Walmart" Costco

The Ny Times has a fascinating article on Costco. It's the kind of good advertising you just can't buy. Here's an extended quote:

Some Wall Street analysts assert that Mr. Sinegal [CEO of Costco] 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."

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, [Mr. Sinegal] 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."

...Eighty-five percent of Costco's workers have health insurance, compared with less than half at Wal-Mart and Target. Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco's 113,000 employees. "They gave us the best agreement of any retailer in the country," said Rome Aloise, the union's chief negotiator with Costco. The contract guarantees employees at least 25 hours of work a week, he said, and requires that at least half of a store's workers be full time.

Why is Costco playing nicer than the other kids? Is it a good strategy, or a personal choice on the part of the CEO? Of course, Costco jobs still aren't that great, and while the CEO earns "only" $350,000 per year, his stock options are currently worth upwards of $150 million. It's inspiring to know, however, that even in the world of discount retail, Walmart's race to the bottom isn't the only way to win. I'll end with my favorite quote from the article:

There is little love lost between Wal-Mart and Costco. Wal-Mart, for example, boasts that its Sam's Club division has the lowest prices of any retailer. Mr. Sinegal emphatically dismissed that assertion with a one-word barnyard epithet.