The Formula That Made Costco the Anti-Walmart

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Costco storeBy Ashley Lutz

Big-box warehouse store Costco (COST) is often compared with Walmart's (WMT) Sam's Club. Both stores are places where people go to buy in bulk and save money.

But while Walmart employees are striking for higher wages and healthcare, Costco has among the happiest employees in the business. Costco also offers the occasional brand-name, like Coach, alongside leather sofas and crisp dress shirts.

The quality of products and happy employees make Costco the "Anti-Walmart," writes Steven Greenhouse at the New York Times.

He details the six-part strategy by CEO Jim Sinegal that helped Costco get there.
  • Sell a limited number of items. Despite Costco's large store volume, it only sells four toothpaste brands. Walmart sells 60. Selling fewer items increases sales volume and helps drive discounts.
  • Rely on high volume. People go to Costco to buy in bulk. Buying large amounts of products helps keep costs down for Costco.
  • Pay workers well. The average salary of a Costco employee is $17, twice that of Walmart. This results in low turnover and a better-trained staff.
  • Have customers pay for memberships. Costco shoppers pay in order to buy merchandise at the store.
  • Aim for high-end customers. Costco does this by offering higher-quality items and occasional brand names.
  • Don't advertise. This saves Costco 2 percent of its budget each year.
Although Costco it's lauded as the "Anti-Walmart," it's also worth noting that the warehouse retailer has a completely different core customer. While Walmart sells single rolls of toilet paper to accomodate people who can't afford a whole pack, Costco caters to upper middle class shoppers who get a kick out of a bargain.


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terry

Somewhat stupid comparison. A better compare would be to Sam's, Walmart's box store. As far as the tiny work organizing effort that took place most of the picketers were bused in union people. Give us a break and investigate before printing this BS.

December 02 2012 at 7:09 PM Report abuse rate up rate down Reply
Gloria

I cannot believe to what level of chriminality weman are allowed to persue in Internet.
Doesn't any one reylice thatwe could be a dummed society.?May god have a mercy on us all..and hope we will have the stringhth to prau in there native language

December 01 2012 at 11:55 PM Report abuse rate up rate down Reply
freethedems2012

Evan has the hots for those fat Walmart shoppers in their skimpy clothes

December 01 2012 at 8:38 PM Report abuse rate up rate down Reply
Bob Moody

Please, there is a big hate for Wal-Mart. They abuse their own dedicated employees, they abuse their relationship with their suppliers, and they abuse their worker in foreign factories. It would be one thing if they were not aware it was happening, but they do it because they can afford to. They value the fines and penalties and compare them to paying suppliers appropriately or treating their employees legally, and when the fines are less that the cost of properly conducting business they consciously choose the least costly alternative. Hey it is just business, business the Wal-Mart way.

November 29 2012 at 11:35 AM Report abuse rate up rate down Reply
Drew Poe

The real comparison is not Costco to Walmart. It it Costco to Sam's Club, Walmart's bulk retail division. Sam's does the same things that Costco does and sells things in bulk to customers who wish to buy in bulk and charges a membership fee to shop there. The comparison to the Walmart stores in general is laughable. And dont tell me that all Walmart workers are striking. It is a tiny minority, probably 5%, who are mostly dupes of an organization called OUR WALMART, affliated with the United Food and Commerical Workers Union (formerly afflilated with the AFL/CIO). I personally would rather speak for myself than have my meager wages taken and given to a corporation (a union is a corporation you know) to speak for me and gives money to progressive and democratic political causes I am vehemetly against.

November 29 2012 at 10:47 AM Report abuse -1 rate up rate down Reply
lvh44leo

This article is a joke Costco is not worried about or anti Wal Mart ,Costco is first class they are not trying to destroy other Grocery companies. Wal -Mart is like a Plague sweping the country the more Grocery chains and small Grocery stores they destroy makes them a more powerful force in feeding Americans. Wal-Mart is now to big with 450 Billion in gross sales per year and soon no stores will be able to compete and stay in business then we will have a real Mess and higher prices. NO MORE WAL-MARTS ,

November 29 2012 at 9:48 AM Report abuse rate up rate down Reply
1 reply to lvh44leo's comment
pdbliz

Also,,,I know several supervisors,,,,,,that told me,,,,,both stores share ideas.!!!!!!!!!!!!!!!!!
KIND OF,,SHAMMING THE PEOPLE,,,,,,,,,,,,,,,,,LIKE WASHINGTON IS DOING.!!!!!!

November 29 2012 at 9:51 AM Report abuse -1 rate up rate down Reply
pdbliz

To all concerned,,,,,,Costos.....Walmart,,,,,,name brand handbags,,,,dollar store................ALL CHINA......May say,,,,packaged in America,,but,,where was it shipped from before packaging,,,,,,CHINA.!!!!!
Name brand high dollar tennis shoes and ect,,,,,,,,,,CHINA,,,,,,,,,BY,,CHILD LABOR,,,,,,,!!!!!!!!!!
Mainstream Media,,,REPORT THIS.!!!!!! Are you scared the WHITE HOUSE will come down on you.??????

The MAIN STREAM MEDIA is the one trying to destroy companies and people.!!!!!!!!!!
All the brain child of WASHINGTON DC.......THE WHITE HOUSE.!!!!!!!!!!!

November 29 2012 at 9:45 AM Report abuse +1 rate up rate down Reply
ironmikemiata

sorry but I don't need a 10 pound jar of mayo for a ham & swiss sandwich

November 29 2012 at 9:39 AM Report abuse rate up rate down Reply
jsondheim404

I am a Costco devotee despite being single and living alone. Many like me pool-purchase. Their staff is terrific. Stores are clean and cashiers are super efficient.....not to mention Costco's irresistible bakery! I never give Walmart a thought...for many reasons--their coercion that supports exploitation of producers (many in third-world countries), disregard of employees, company politics, etc! Consummate 1%ers.

November 29 2012 at 9:35 AM Report abuse rate up rate down Reply
jsondheim404

I am a Costco devotee despite being single and living alone. Many like me pool-purchase. Their staff is terrific. Stores are clean and cashiers are super efficient.....not to mention Costco's irresistible bakery! I never give Walmart a thought...for many reasons!

November 29 2012 at 9:33 AM Report abuse +1 rate up rate down Reply