How Costco Became the Anti-Wal-Mart | Hacker News Reader

How Costco Became the Anti-Wal-Mart

nytimes.com

19 pointsbrett10 comments

I really hate it when people falsely claim that the fiduciary responsibilities of a public company includes maximizing profits at every opportunity. Thinking long-term and win-win is the truly responsible CEOs job. Costco is the Google of discount warehouses. Wal-mart is Microsoft.

I'll be surprised if Google lasts as long as Microsoft. They sure as hell won't last as long as WalMart. Not a chance.

As has been pointed out, MSFT could destroy half the revenue of google tomorrow by adding an ad blocker to IE. It's probably their long term goal (they do have a long term, you know) to take that revenue, and so they don't bother.

As for CostCo, they simply don't have any choice but to do the best for their shareholders, and that can mean a lot of different things, from apeing WalMart to contrasting with it. 17 dollars an hour (or whatever) for retail workers strikes me as ridiculous, but they may well have a good reason for it. Mom-and-pop shops usually pay minimum, WalMart a few bucks over minimum, while Costco pays more than factory wages. Maybe wages fall under their marketing budget...

Costco has a choice in how they do well by their shareholders. They're not forced to play by Wal-Mart rules if they decide to play a different game.

You think it's ridiculous to pay retail workers well. A lot of people think the same thing about Google's perks for engineers. Google has profited immensely from their thinking, and Costco has as well. There's more to running a successful business than what shows up on an SEC filing form.

...and if they _did_ play by Wal-Mart's rules, Wal-Mart would have an easier time beating them.

I love Costco. For me, the best quote of the article was this:

"The traditional retailer will say: 'I'm selling this for $10. I wonder whether I can get $10.50 or $11.' We say: 'We're selling it for $9. How do we get it down to $8?'"

"But Mr. Sinegal warned that if Costco increased markups to 16 or 18 percent, the company might slip down a dangerous slope and lose discipline in minimizing costs and prices."

Costco's strict attitude toward product markup reminds me of 37Signals frequent assertion that often constraints are a good thing to be embraced.

Costco also has parallels with Craigslist:

1) Wall Street can't understand why they don't "maximize revenue" by raising prices.

2) They are determined to never allow another company to come in under them and beat their prices.

Both companies stay focused on their customers and the long-term, rather than their critics and the short-term.

<blockquote>Costco's strict attitude toward product markup reminds me of 37Signals frequent assertion that often constraints are a good thing to be embraced.</blockquote>

Rails, Grails, Unit tests, woo!

While Costco does treat its employees a little bit better, people normally ignore the fact that Wal-Mart benefits a huge amount of low-income families who shop there. Costco in the other hand targets the upper-middle-class.

Poor families do not have the space neither the stable income required to shop wholesale.

I'd like to know more about their "don't advertise" strategy. Do upscale shoppers talk to their friends about the deal they got on Heinz ketchup?

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