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Old 12-09-2013, 03:58 PM   #15351
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Originally Posted by GotGarlic View Post
Her point is that Costco has low prices and still is able to provide their employees with a living wage and benefits. Walmart should be able to as well...
I'll bite on that.
I think what a lot of people conveniently forget is that membership fee.
I don't belong to a shopping club, but I do belong to Amazon Prime. "Free shipping" on Prime marked items... but that free shipping is costing me 79 bucks a year. It's up to me to get my use out of it. So is it exactly free?

I would imagine some of Costco's membership fees goes to offset higher wages. At least it seems like it should, as it's all part of their gross income.
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Old 12-09-2013, 04:09 PM   #15352
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Quote:
Originally Posted by pacanis View Post
I'll bite on that.
I think what a lot of people conveniently forget is that membership fee.
I don't belong to a shopping club, but I do belong to Amazon Prime. "Free shipping" on Prime marked items... but that free shipping is costing me 79 bucks a year. It's up to me to get my use out of it. So is it exactly free?

I would imagine some of Costco's membership fees goes to offset higher wages. At least it seems like it should, as it's all part of their gross income.
Maybe some of the membership fees do go to offset higher wages, but most members still get good prices when they figure in the membership fee. I have something called an Executive Membership. I get back 2% on everything I buy at Costco except Rx and tobacco. Most years I get back more than my Executive Membership fee.
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Old 12-09-2013, 04:13 PM   #15353
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Originally Posted by pacanis View Post

I'll bite on that.
I think what a lot of people conveniently forget is that membership fee.
I don't belong to a shopping club, but I do belong to Amazon Prime. "Free shipping" on Prime marked items... but that free shipping is costing me 79 bucks a year. It's up to me to get my use out of it. So is it exactly free?

I would imagine some of Costco's membership fees goes to offset higher wages. At least it seems like it should, as it's all part of their gross income.
Apparently, Costco's generous pay and benefits policies translate into more loyal workers. Their employee turnover rate is much lower, and according to this, it costs on average 1 to 1.5 times an employee's annual income to recruit and train a new one. This article actually compares Costco and Sam's Club, Walmart's warehouse store.

http://hbr.org/2006/12/the-high-cost-of-low-wages/ar/1
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Old 12-09-2013, 04:15 PM   #15354
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Sure they/you do. I didn't even mention item pricing. Just that the fees figure into what they can afford to pay.
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Old 12-09-2013, 04:16 PM   #15355
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Originally Posted by GotGarlic View Post
Apparently, Costco's generous pay and benefits policies translate into more loyal workers. Their employee turnover rate is much lower, and according to this, it costs on average 1 to 1.5 times an employee's annual income to recruit and train a new one. This article actually compares Costco and Sam's Club, Walmart's warehouse store.

The High Cost of Low Wages - Harvard Business Review
People due tend to be more loyal where they are treated better.
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Old 12-09-2013, 04:37 PM   #15356
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Sure they/you do. I didn't even mention item pricing. Just that the fees figure into what they can afford to pay.
I know. This article is comparing apples to apples, though - Sam's Club (owned by Walmart) charges a membership fee, too, but they pay their workers the same low wages that Walmart workers get.
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Old 12-09-2013, 04:50 PM   #15357
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Quote:
Originally Posted by GotGarlic View Post
Apparently, Costco's generous pay and benefits policies translate into more loyal workers. Their employee turnover rate is much lower, and according to this, it costs on average 1 to 1.5 times an employee's annual income to recruit and train a new one. This article actually compares Costco and Sam's Club, Walmart's warehouse store.

The High Cost of Low Wages - Harvard Business Review
This article is in synch with a CNBC show I saw about Costco. All positive. According to that show, Costco's markup on all their products is never more than 15%. Their massive buying power gets them best available pricing so they can be competitive.

I looked at the executive membership but decided against it as we don't spend enough on an annual basis to justify it. Members can go to the Costco customer service desk and they will tell you how much you spent in the last 12 months so you can decide for yourself.

We are pleased with the Costco experience for the high quality of their products, the pricing and that they are a well run company that's not out to squeeze every penny out of the consumer.

All that said, not every corporation has the same approach. Maximizing profits in the short term to appease stockholders is sometimes counter to the long term health of the business.
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Old 12-09-2013, 05:30 PM   #15358
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Sometimes the obvious way to save money in business isn't the best way.

I have a friend who used to work for AmEx in customer support. She's who you would get if you lost your money in a foreign country and needed help. Once she arranged for the return of a body from China. She managed to convince the Chinese to airlift the body by helicopter to a location where AmEx could take over.

One of the things she dealt with was roadside assistance. She refused to try to bargain with the towing companies. She just accepted the price they quoted. She had to hear about that. Then one day there was an enquiry from one of the big bosses. How was she managing to have the lowest amount of money spent on towing?

She explained. The tow truck companies liked her because she didn't try to squeeze them. When you try to squeeze them, not only are you not their highest priority, they make up for it by adding stuff to the bill. I'm not saying that the added stuff wasn't legit, but for her they usually just left that stuff off the bill.
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Old 12-09-2013, 06:35 PM   #15359
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I know. This article is comparing apples to apples, though - Sam's Club (owned by Walmart) charges a membership fee, too, but they pay their workers the same low wages that Walmart workers get.
oops, I should have quoted TL. I thought I got that in there quick enough
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Old 12-09-2013, 06:42 PM   #15360
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This article is in synch with a CNBC show I saw about Costco. All positive. According to that show, Costco's markup on all their products is never more than 15%. Their massive buying power gets them best available pricing so they can be competitive.

I looked at the executive membership but decided against it as we don't spend enough on an annual basis to justify it. Members can go to the Costco customer service desk and they will tell you how much you spent in the last 12 months so you can decide for yourself.

We are pleased with the Costco experience for the high quality of their products, the pricing and that they are a well run company that's not out to squeeze every penny out of the consumer.

All that said, not every corporation has the same approach. Maximizing profits in the short term to appease stockholders is sometimes counter to the long term health of the business.
Andy, I worked for an overhead door company from the very inception of it. I designed their letterhead, invoices, etc. They started out billing with handwritten bills on his mother's kitchen and a secondhand panel truck. At the end of that first year, they were a $1M dollar company. And they still had the same employees they started with. He had promised them that if they stuck it out with him, he would reward them. And he kept his word. As the company grew, so did the benefits for the employees. They all started out on the same foot. As the year progressed, they got BC/BS premium with full coverage, dental and eyes. In the second year they were able to start their 401K. Each year as the company grew and the profits increased, so did the paychecks for the employees. Christmas bonuses. Vacations. Paid uniforms. A summer weekend picnic at his mother's cottage in NH. On and on. He still has some of the original employees that started out with him. He has the absolute loyalty of his employees. He has never had to layoff anyone. I left only because I had accomplished what I was hired to do and I wanted to get back to doing Temp. work. But in thanks for all I had done, he paid for my BC/BS in full for the next ten years until the day I turned 65. Get a decent owner or boss and you will have employee loyalty. Something Walmart has yet to learn.
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