Re:Why Wal-Mart Will Never Pay Like Costco
by prostoalex on Thursday August 29, 2013 @12:41AM
(#6294303)
80% of Costco's profits comes from membership fees (source: http://www.businessweek.com/articles/2013-06-06/costco-ceo-c... ), so Costco is less dependent on changes in buying patterns, and sells pretty much at cost. Unless consumers start canceling their memberships en masse, Costco won't be in deep trouble.
Wal-Mart's profits, I'd imagine, are entirely from markups, and a slight change in consumer behavior (higher prices on gas, higher unemployment numbers, smaller paychecks) makes them a volatile player.
According to the data in the article, Walmart would have the same profit margin as Costco if they spent $3,500 more per employee annually. Ignoring part-time workers, salary-exempt, benefits etc., this is an hourly wage increase of about $1.75, still well under what Costco pays.