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Comment by dopamean | Hacker News Reader

I worked at WalMart for 3 years. I worked overnight doing inventory management and I saw exactly what the CEO described. One thing I noticed that he didn't mention is that a large number of the people I worked with were part of that group of people waiting at midnight to buy their baby formula. I always felt like the wages at our store were subsidized by the government.

All of the people I talking about worked full time. They all had ungodly sums come out of their paycheque every two weeks to pay for health insurance (from what I understand it was not a great plan either). I don't really know what kind of point I'm trying to make here. On one hand it's nice that there are a lot of cheap options at WalMart for people on small budgets. On the other hand, it's sad that so many WalMart employees (in my own experience) are the ones who so badly needing to take advantage of those prices.

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That is why I like Costco better: the people who work there don't seem as downtrodden. Either I've been fooled by corporate propaganda or they really have figured out a way to make money, lower prices, and treat people relatively well. Walmarts feel like places of despair to me and Costcos like places of hope. I know how ludicrous that sounds, but the feeling is real. I often chat with workers at checkout counters to gut-test my theory, and it seems to hold up, though it could all just be confirmation bias.

Edit: there's one big difference, though. To shop at Costco you have to buy twice as much (plus typically pay membership fees). That step could be too steep for the people most living hand-to-mouth, even though it would save them money within weeks. So there could be sample bias here too.

> there's one big difference, though. To shop at Costco you have to buy twice as much (plus typically pay membership fees). That step could be too steep for the people most living hand-to-mouth, even though it would save them money within weeks. So there could be sample bias here too.

See the article Why Can’t Walmart Be More Like Costco?[0] for more on this.

0: http://www.thedailybeast.com/articles/2012/11/26/why-can-t-w...

You can often sift through McArdle's post to find the Yglesias or Salmon post she's citing and just read that instead. Here, the analysis seems to boil down to "sure, Walmart could pay every worker $3000/yr more and have Costco's margins, but who cares about a paltry $3000?".

The rest of her argument appears to be "I don't know if that would work for Walmart". Neither do I, but "I don't know" isn't a persuasive argument. :)

Did you even read her article? She gives a very clear reason.

Walmart sells 140k skus, sorted on shelves and available in small quantities, and has lots of cashiers so you can get in and out reasonably quickly. Costco sells 4k skus, mostly in bulk, and forces you to wait 20 minutes to leave the store.

You know what? You're absolutely right. I went down a little wormhole of McArdle-vs-Other-People link following, watched 12(!) minutes of her and Dean Baker going at it on video about whether the fed can reasonably call asset bubbles, and lost my place; I had a different McArdle post in my other window when I wrote this.

The irony is, I was particularly poorly served by the advice I offered here, since skipping straight to Yglesias totally screwed me up.

Sorry about that.

That's clearly one of the reasons she gives, but I wouldn't call it a clear reason. It doesn't make the point she cares about, as she herself says. Her claim (approximately) is "Costco's way may work for Costco but it wouldn't work here, because numbers and business". But people used to argue the same about how it would never work for Costco either.

I ran into this today when buying TP. I actually just wrote about it.

http://stfudamnit.com/2013/05/04/poverty-toilet-paper-and-th...

It's hard for people to make the comparisons between brands, sizes, so on and so forth. Australia recently passed legislation requiring supermarkets to list the price-per-unit-weight/volume alongside the product price. So on a food item, you'll see the price for the product, and also the price per 100 grams.

It means things are directly comparable across brands and sizes ("how does this 117g portion compare to this 270g one?"). It's a fantastic bit of legislation.

Britain also has this kind of legislation. But e.g. Tesco often tries to play around it, by listing, say, different kinds of apples sometimes by piece, sometimes by kg.

We have had this in the USA for as long as I have bought food. Next to the price on something like a pizza they note the price per ounce.

I'm not sure it's a law though (I doubt it, at least it's not federal, as it's not in all stores). I imagine it could just as easily have been market pressure, as the supermarkets began to offer their own brands of products for cheaper than premium, it made sense to offer direct comparisons with as much information as possible.

It appears to be state regulated. I'd imagine that different types of stores are regulated different ways (e.g., coop vs. supermarket).

http://www.extension.org/pages/45117/is-unit-pricing-mandato...

That sounds right too. I'm not sure if it mandated or convention.

I think its just convention in the US. They dont have per weight prices at the coop grocery I go to.

Sometimes, though, you'll see one item's unit price in units of $/ea, while its competing item is in something like $/1000.

Thanks for that link. I read it and tried for an embarrassingly long time to write a coherent reply, but apparently can't do it. Megan Mcardle's blend of ideology and snark is like reverse catnip to me. If I were a cat, or something. Fortunately it's still gorgeously sunny here; I'm gonna go outside and atone for my foolishness by being happy.

I had no idea that the question Why can't Walmart treat its workers better, since Costco has proved it possible was not only a thing, but mature enough in the lifecycle of thingness for Mcardle to write an entire piece about how much it annoys her. I just arrived at it from observation in the stores. Well, that plus an article or two about Costco.

I had an evening a month ago where I had to return similar items to both WalMart and Costco. Each one should have been really quick, but Costco was very slow (about 30 minutes), With a rather rude cashier. Walmart took just 2 minutes and they were perfectly polite and helpful.

Strange that Walmart customer support was 100x better.

No doubt variance swamps our puny personal experiences, but for the little that it's worth I've had the opposite: instant return at Costco no questions asked, and a half hour lineup to return a wrong product I'd just mistakenly bought at Walmart. To be fair to Walmart, though, it wasn't their cashiers' fault. There were only two customers in front of me and both were so obstreperously difficult that it became an amusement to watch what ridiculous thing would happen next. One was returning a shopping cart full of dozens of items of clothing. The other was returning a single can of soup. Soup guy was the harder of the two.

I've also noticed, at my local Costcos (there's something like 5 within 30 minutes from my house), that there is a pretty large cadre of very long-term employees there. There's a few employees I recognize going on 10 years of employment there.

They're doing something right I think.

The membership is the too steep part for Costco.

It would be nice if CostCo allowed people of low income to apply for a financial aid in the form of free membership if their income was low enough. It's unfortunate that only the people with greater purchasing power get access to the lowest cost per item unit.

> ... free membership

The membership is the per member profit. Costco doesn't mark up items more than 14%. In some states they aren't allowed to require membership to access the pharmacy. If what you proposed was workable, I'd expect groups of people in an area to band together or have a middleman in order to only have one membership and break up bulk items.

(And technically there is such a middleman doing their best to lower prices - they are called Walmart.)

> ... greater purchasing power get access to the lowest cost ...

Same thing happens with the US health system - the uninsured pay the most for exactly the same procedures at the same place. At least in the case of Costco it is economically sensible because buyers purchase a bigger volume and the store has greater throughput. (Costco typically has 4,000 SKUs per store while a normal supermarket will be around 16,000.)

CostCo's profit is the memberships. It is a smart business model that is very successful. It just isn't designed for people who are living hand-to-mouth. Nothing wrong with that, its just how it is.

Or even a monthly installment.

What is this membership thing one needs to buy at, what sounds like, a supermarket?

Honest question, I've never heard of such a construction.

Costco is like what Makro is in the Netherlands.

One can shop at Costco for a 5% premium on purchases

And that 5% puts Wal-Mart back in competitive range without the stigma of being too poor for a membership.

Split a membership with a friend. Around $40 bucks split two ways.

I was under the impression that it is against their policy to do that.

I don't think it's just walmart employees that need those prices, it's anyone working that type of job. Most employees at small businesses doing the same work earn the same or less than a walmart employee.

I didn't mean to imply that I think it's only WalMart employees that need cheap goods. I was simply trying to comment on the irony of that.

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