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Why Costco Blows Away Wal-Mart

Although you've often read my thoughts about Costco on my Web site, it's been hard for me to find a good piece that sums up why I like their stores so much worth posting here. That is, until I discovered ABC News' revealing story about Costco (free text link below).

Much of the story focuses on Costco CEO Jim Sinegal, treated like a celebrity among his admirers and, not surprisingly, his employees. In fact, Sinegal insists his company's identity hinges on creating and maintaining a "first-name-basis" environment with everyone. Even down to the "Jim" nametag he wears when visiting Costco stores.

If you haven't been Costco, one of the unusual things -- besides great prices and selection -- you'll see there: Friendly people enjoying their work. What's more, Costco's turnover rate is five times lower than that of Wal-Mart and employees make as much 40 percent more an hour than at Sam's Club, Wal-Mart's warehouse counterpart.

Talking about Wal-Mart, I finally had a chance to view the documentary Wal-Mart: The High Cost of Low Price.

Most people know that the Walton family is the richest family in the world and collectively are worth more than $100 billion. What most people do not know, and what the video revelas is that they donate less than 1 percent of their income to charity. Contrast that to Bill Gates who donates nearly 60 percent of his income and is the Time person of the year for his philanthropic endeavors. 

Wal-Mart was in the news late last month for the very issues that the video discussed.

California ordered Wal-Mart to pay $172 million to thousands of Cailfornia employees who were illegally denied lunch breaks. In the same federal prosecutors in Chicago investigated whether it had improerly transported returned goods classified as hazardous wastes.

By comparison, Costco is my absolute favorite store to shop in. I am frequently absolutely amazed when I see how well they run their stores. I have never seen any business operate more efficiently.

ABC News December 2, 2005

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