Why Costco is a good big box store
This post is public.
I know some of you are aware I love Costco (even though I was afraid of it when I first entered one). I'm a huge cheerleader. So why do I love it? Here's an interview with the CEO to explain -- http://www.fastcompany.com/magazine/130/thinking-outside-the-big-box.html?
A few highlights:
Wall Street grumbles that Costco cares more about its customers and employees than its shareholders; it pays workers an average of $17 an hour and covers 90% of health-insurance costs for both full-timers and part-timers. Yet revenues have grown by 70% in the past five years, and its stock has doubled.
Do suppliers still balk at your policy of not marking products up more than 15%?
There will always be people who are going to be reluctant to sell to us. They use a lot of different excuses, but when you cut through all the defecation, the fact is, they don't want to see our prices on their merchandise.
What's your stand on universal health coverage?
We should have it. I think that in the wealthiest nation in the world, it's a shame and disgrace that we don't. We try to provide a very comprehensive health-care plan for our employees. Costs keep escalating, but we think that's an obligation on our part.
And while he doesn't explicitly state it, I think this is how the store sets itself apart from their main competitors:
Customers shop with us for value. They don't shop with us for cheap prices on cheap merchandise. They expect us to deliver value on quality.
His philosophy reminds me of the founder of IKEA, another large store I have a lot of respect for. You can make a profit without sacrificing the standards for your employees and customers. So what if it's not as big a profit margin as it could be.
I know some of you are aware I love Costco (even though I was afraid of it when I first entered one). I'm a huge cheerleader. So why do I love it? Here's an interview with the CEO to explain -- http://www.fastcompany.com/magazine/130/thinking-outside-the-big-box.html?
A few highlights:
Wall Street grumbles that Costco cares more about its customers and employees than its shareholders; it pays workers an average of $17 an hour and covers 90% of health-insurance costs for both full-timers and part-timers. Yet revenues have grown by 70% in the past five years, and its stock has doubled.
Do suppliers still balk at your policy of not marking products up more than 15%?
There will always be people who are going to be reluctant to sell to us. They use a lot of different excuses, but when you cut through all the defecation, the fact is, they don't want to see our prices on their merchandise.
What's your stand on universal health coverage?
We should have it. I think that in the wealthiest nation in the world, it's a shame and disgrace that we don't. We try to provide a very comprehensive health-care plan for our employees. Costs keep escalating, but we think that's an obligation on our part.
And while he doesn't explicitly state it, I think this is how the store sets itself apart from their main competitors:
Customers shop with us for value. They don't shop with us for cheap prices on cheap merchandise. They expect us to deliver value on quality.
His philosophy reminds me of the founder of IKEA, another large store I have a lot of respect for. You can make a profit without sacrificing the standards for your employees and customers. So what if it's not as big a profit margin as it could be.