By Dana Blakenhorn
The Street, May 29, 2014
Costco's secret is that it continues to profit even though it pays wages that satisfy its employees. More proof came in the latest Glassdoor survey. Its list of the 25 best companies based on compensation listed Google at No. 1 and Facebook at No. 3. Costco was No. 2 and was the only retailer on the list. That doesn't mean Costco pays as much as Google. The results are based on surveys of employees. It means Costco employees are nearly as satisfied with their treatment as those at Google. ...
The secret comes into focus when you compare Costco's results with its closest competitor, Walmart's Sam's Club, which came in a few weeks ago. As Walmart management said on its conference call, "Sam's Club had a tough quarter," performing "below expectations," with same-store sales down slightly from a year ago. ...
In its latest quarter, Costco, on the other hand, logged overall same-store sales growth of 4%.
The simple implication from this is that many people are driving right past Sam's Club outlets to go to Costco. I do it all the time. The question Wall Street never asks is why.
Most suspect it's because Costco has higher-end merchandise, which attracts a higher-end clientele. But that's not why.
The main reason is because when I walk into a Costco store the people working there are happy. Good wages translate into happy employees, and happy employees make for happy customers. You don't have to pay Google wages to make this happen, but you do have to pay significantly more than the minimum wage, and Costco does that. ...
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