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I think we're forgetting that the Walmart customer is not the Costco/Trader Joe's customer. I would argue that Walmart pays minimum wages because they can and
by calbear81 13y ago
I think we're forgetting that the Walmart customer is not the Costco/Trader Joe's customer.
I would argue that Walmart pays minimum wages because they can and their customer base doesn't really value the benefits of paying higher wages and 'participatory management' - primarily lower turnover and thus more engaged/invested employees who deliver better service and higher productivity. Walmart most likely sees their employees as replaceable and the average Walmart customer is driven by low prices and not great customer service. To that end, the lower the Walmart cost structure, the more margin they have to work with to stay competitive (without having to lower CEO salaries, etc. of course).
Costco and Trader Joe's are known for great customer service and easy return policies. Based on my observations, people who shop at Costco like to save money, but it's from a best value angle and not from an absolute cheapest I can get angle. The Costco consumer has to be willing to shell out an annual membership fee up front and you're buying in bulk which means you have to be able to pay for goods you use in the future. Trader Joe's wants to be the neighborhood store and that means they need happy employees, not employees who are thinking about how they're going to pay for the knee surgery they badly need.
I'm probably making broad generalizations of the different customer bases here but it's what I've personally observed.
- bluedino 13y ago>> I think we're forgetting that the Walmart customer is not the Costco/Trader Joe's customer. I would say the same for the employees. Your average Walmart worker would probably be washed-out in a shift or two at Trader Joe's. Everyone at TJ's is busting their ass, Walmart employees seem to just be standing around doing nothing but talking to one another.
- calbear81 13y agoI wonder if it's because the jobs at TJ are so coveted that employees know if they don't bust their ass, someone will happily take their position? I feel the same way about In-N-Out which pays above market, people there always seem to try a bit harder to be pleasant and helpful.
- tanzam75 13y ago> I wonder if it's because the jobs at TJ are so coveted that employees know if they don't bust their ass, someone will happily take their position? Yes, it's known as paying "efficiency wages." Which is mentioned in the article. The article suggests that TJ's limited SKU count and upscale clientele allows it to pay efficiency wages. Whereas Wal-mart has a massive SKU count and a lower-end customer base.
- omegaham 13y agoYou get what you pay for. With competitive pricing, you can fire someone and immediately get a high-quality replacement. Walmart, on the other hand, seems to scrape the bottom of the barrel with their employees. As long as the employees show up to work on time and don't steal merchandise, they're good.
- webwanderings 13y agoWalmart owns Sams Club which is equivalent/competitor to Costco.
- sixothree 13y agoWhich makes this article seem ingenuous. Why not just compare Sams Club to Costco?
- webwanderings 13y agoPerhaps because Walmart is the parent company?