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Posted: 6:00 a.m. Friday, June 21, 2013

Costco vs. Walmart: Who wins?

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By Clark Howard


Do you love to hate Walmart and to love Costco Wholesale? Maybe Walmart isn't as bad as it seems....

Costco Wholesale has long been considered one of the best large employers in America. That's because they believe, like I do, that companies who romance their workers have workers that are the best at romancing customers. If you treat an employee well, they're more likely to smile and serve the customer well, right?

Let me give you an example. If an item doesn't have a barcode, a Costco employee runs back into the store to find the price so you are not left waiting.

Meanwhile, Costco charges minimal markup: 14% on all items, except Kirkland Signature labels (their house brand) at 15%.

Wall Street hates Costco -- even though all the analysts shop there on the weekends! They want the wholesaler to run the prices up on people, but that's not what the store is about.

Costco pays high wages compared to normal retail, offers very good health care, and a huge amount of vacation. They don't fear Internet competitors because they're almost always cheaper than them.

At the same time, Walmart is routinely a whipping boy for the media and customers alike. But I don't see Walmart as evil.

Yes, a recent report from the Congress blasted them for costing local and state governments because they pay so little their employees have to go on various forms of public assistance. Yet Walmart is no different than most retailers.

It is a fact of life that most retail employees are part time, they don't make high wages, and they don't get good benefits. But Walmart has never been good at managing its public image, so they get trashed even though they're pretty on par with other retailers.

I would look at it differently. I would say it's not that Walmart is the bad guy, it's that Costco is the exception to the rule in retailing.

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