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Big box stores are dying. JCPenney, Sears, Best Buy, and more are shuttering stores and recasting their strategies.
“They were hit by a perfect storm of competition from the Internet and supermarkets,” Steve Brazier, CEO of market research firm Canalys, said in a report last year.
Even mighty Walmart, once indispensable, recently admitted that sales were suffering.
Yet Costco has remained strong throughout the recession. The company has continued to grow and see sales increase.
Costco’s founder Jim Sinegal credits the company’s unusual business strategy with its success.
Sinegal, whose company has been called the “anti-Walmart,” invests in employees and limits the items he sells.
CEO Craig Jelinek says he views people as an investment. Costco pays its employees an average hourly wage of $11.50 to start. After five years, they make $19.50 an hour and get an 'extra check,' a bonus of more than $2,000 every six months, according to Slate.
Costco workers pay a 12 per cent out-of-pocket premium for benefits, while Walmart workers pay 40 per cent. This results in lower turnover and more skilled workers, Costco CEO Craig Jelinek said.
His salary is about $650,000. While that compensation is hefty, Walmart CEO Mike Duke earned $18.1 million last year.
Small business owners are among the wealthiest people in their communities, but don't have bottomless budgets like bigger corporations. Costco's members magazine has been known to feature small business advice.
Unlike many mass-market retailers, Costco tries to act as a curator of great values. This makes customers feel like they're on a 'treasure hunt' and are pleasantly surprised by the new items they find there.
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