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Transcommercial Costco Revisited
Jamais Cascio, 19 Jul 05

A year ago, we posted a brief piece on the warehouse retailer Costco, identifying it as a proto-"transcommercial" company (what does "transcommercial" mean? Alex Explains It All here). July must be Costco month or something, because a couple more articles about the company popped up recently. They're worth pointing to simply as a reminder that it is possible to be a profitable large retail company and still pay fair wages, give good benefits and be considered a good place to work by union and non-union employees alike.

The UK's Financial Times has a good piece on the company (subscribers-only), but this article from the Labor Research Organization is actually more informative. Both pieces note that Costco pays well above industry average, and has both higher productivity and much lower employee turnover than its competitors; the LRO article also notes that the Costco CEO Jim Sinegal chooses to make only $350,000 annually (compared to $5.3 million for the Wal*Mart CEO).

The model is expanding, too: Robert Price, son of the founder of Price Club (a forebear to the current Costco and source of its employee-friendly policies) has started a line of warehouse retailers operating under similar standards in Central America, the Caribbean and the Philippines, Price Smart.

(Update: The New York Times has a Costco article this week, too (see what I mean about July?), with some interesting details about the CEO's rejection of Wall Street Analysts who say he's "too benevolent" to his employees.)

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Comments

Yeah, "the Street" didn't like it when Henry Ford decided to pay his workers $5 per day either (twice the industry average).

I've found that the employees at Costco are generally more helpful & knowledgable than those at Wal*Mart. Part of that, I'm sure, is the lower turnover and the higher job satisfaction. Whether or not this continues to be profitable remains to be seen. I hope so. Costco rocks.


Posted by: Brock on 19 Jul 05

It warms my heart to hear that Costco is a good employer, but I had to give up on my membership.

Costco is great for when you've just moved into a place, but I find it makes it too easy for me to shop compulsively. Specifically, to buy yummy, unhealthy food, like trays of fancy muffins, bags of frozen meatballs, and crates of instant soups and such.

Oregon has a bare-bones employee-owned membership discount chain called Bi-Mart. Prices are about halfway between Target and Wal-Mart. I go out of my way to buy stuff there, because it is local and labor-friendly.


Posted by: Stefan Jones on 19 Jul 05

We were debating whether to continue most of our co-op shopping at Costco and this post made me reconsider their value as a retailer. Their $9 smoke detectors are saving us tons but I would rather have fresh ingredients than frozen prepared foods. Making the most of a membership takes some serious shopping, but with 10 of us in one home it still saves us in the long run. Thanks for reporting on smart, socially responsible businesses.


Posted by: Jennifer Evonne on 19 Jul 05

Paul Graham wrote an essay on PR firms a while back. This sudden slurry of Costco articles smells a whole lot like the work of a public relations team.
Per Graham's essay, this doesn't mean that articles aren't true, just that there isn't some invisible Costco zeitgeist moving through the media.


Posted by: Dan Hook on 21 Jul 05



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