Tuesday, July 12, 2005

The Costco Challenge: An Alternative to Wal-Martization?

The Costco Challenge: An Alternative to Wal-Martization?
I've never been to a Costco, so I don't know how it stacks up as a shopping experience, but this article clearly makes the case that they outshine Wal-Mart in terms of employee relations. Interesting numbers comparing the wages paid, employee turnover, and profit per employee expense. On all counts Costco appears to have the edge. They just need to continue to grow and compete with the Wal-Mart.

"While Wal-Mart pays an average of $9.68 an hour, the average hourly wage of employees of the Issaquah, Wash.-based warehouse club operator is $16. After three years a typical full-time Costco worker makes about $42,000, and the company foots 92% of its workers'’ health insurance tab."
"The study also revealed that Costco's labor costs are actually lower than Wal-Mart'’s as a percentage of sales. Its labor and overhead costs (classed as SG&A, or selling, general and administrative expenses) are 9.8% of revenues, compared to Wal-Mart's 17%.

1 comment:

David Simutis said...

Costco targets the small business owner, rather than the individual consumer, which is why its margins are higher.

I've got a Business 2.0 article around here somewhere about it.

And a Costco membership card in my pants. Er, pocket.