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Old 02-15-2014, 09:59 PM  
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Rejecting Walmart Strategy, Trader Joe’s Pays Employees A Living Wage And Wins

We’ve watched as places like Walmart, Papa John’s, Target, Applebee’s and other businesses continue to pay sub-par wages while claiming their only option for profit, given the economy and their being “forced” to provide employees with insurance, is to either cut employees’ hours and/or their wages. This miserly strategy is justified and implemented despite the fact that research shows that raising wages would actually “benefit workers, the industry and the overall economy.”

Yet in the midst of Scroogian thinking, a handful of smarter businesses have stepped to the forefront to reject this “austerity” model for a different philosophy right in line with research: pay a good living wage, offer benefits and maximize one of your most important “assets”: your valued workforce. Top on that list of smart retailers is Costco; Tulsa-based convenience chain, QuikTrip, and consumer favorite, Trader Joe’s.

Trader Joe’s is particularly notable as a store that inspires an almost cult-like appreciation from its customers. Founded by its namesake, Joe Coulombe, the precursor of Trader Joe’s was a convenience store launched in Los Angeles in 1958 with the rather unimaginative name, Pronto Market. Deciding it wouldn’t be in his best interest to attempt to compete with the ubiquitous marketplace leader, 7-Eleven, Coulombe ultimately decided to specialize; rumor has it he got the idea of a “South Seas motif” while on a trip to the Caribbean, where he noticed American travelers enjoying and bringing back to the States unique items with an island flair. He opened his first official “Trader Joe’s” in Pasadena in 1967 (the original store is still there!) and it was an immediate hit; a 2008 Business Week article made the point that Trader Joe’s “sells twice as much per square foot than other supermarkets.”

Given its profitability, one might assume that, like Walmart and Target, it was operating under the strategy of categorizing employees as a “business cost” that needs to be minimized and kept under tight control. One would be wrong. From The Atlantic:

Many employers believe that one of the best ways to raise their profit margin is to cut labor costs. But companies like QuikTrip, the grocery-store chain Trader Joe’s, and Costco Wholesale are proving that the decision to offer low wages is a choice, not an economic necessity. All three are low-cost retailers, a sector that is traditionally known for relying on part-time, low-paid employees. Yet these companies have all found that the act of valuing workers can pay off in the form of increased sales and productivity. [Emphasis added.]

QuikTrip, Trader Joe’s, and Costco operate on a different model, Ton says. “They start with the mentality of seeing employees as assets to be maximized,” she says. As a result, their stores boast better operational efficiency and customer service, and those result in better sales. [... ]

The approach seems like common sense. Keeping shelves stocked and helping customers find merchandise are key to maximizing sales, and it takes human judgment and people skills to execute those tasks effectively. To see what happens when workers are devalued, look no further than Borders or Circuit City. Both big-box retailers saw sales plummet after staff cutbacks, and both ultimately went bankrupt.

There is also the issue of consumer perception. Places like Walmart and Papa John’s, one a retailer, the other a food service provider, both suffered and continue to take negative PR hits for paying low wages, “nickel-and-diming” employees on the issue of insurance benefits, and appearing to place the burden of economic change and demand on the backs of their workforce, all the more galling when company CEO’s are making multimillion dollar profits. Consumer good-will and the general perception of a business tend to take a beating when those at the helm come off as greedy, unethical, and denigrating of their workforce.

Trader Joe’s, Costco and Quik Trip, on the other hard, have engendered loyalty and expanded their public good will with positive, worker-protective strategies that exhibit the importance they place on their most valued asset: the people working for and with them, whose skills and hard work are essential to a healthy bottom-line. And that is, after all, the goal of any smart company.

Given its profitability, one might assume that, like Walmart and Target, it was operating under the strategy of categorizing employees as a “business cost” that needs to be minimized and kept under tight control. One would be wrong. From The Atlantic:

Many employers believe that one of the best ways to raise their profit margin is to cut labor costs. But companies like QuikTrip, the grocery-store chain Trader Joe’s, and Costco Wholesale are proving that the decision to offer low wages is a choice, not an economic necessity. All three are low-cost retailers, a sector that is traditionally known for relying on part-time, low-paid employees. Yet these companies have all found that the act of valuing workers can pay off in the form of increased sales and productivity. [Emphasis added.]


http://www.addictinginfo.org/2013/03...wage-and-wins/
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Old 02-16-2014, 09:12 AM   #46
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Been to Costco.

Again, different business models. Heck, with Costco you hand them over at least 50 dollars before they will let you buy anything. They also get that 50 bucks every year you want to buy from them.
That's why you compare them to Sam's.

Same store model.

Different wages.

Yet, Costco makes it work without paying below poverty wages.
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Old 02-16-2014, 09:14 AM   #47
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Don't forget Hobby Lobby. They pay over 11.00 an hour.
Hobby Lobby is the playground of the rich.
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Old 02-16-2014, 09:16 AM   #48
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Why should Walmart have to adjust when the taxpayers help subsidize their workers?
This taxpayer subsidy you're talking about is present for all employers so it's irrelevant to the competitive balance between Walmart and Trader Joe's.
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Old 02-16-2014, 09:19 AM   #49
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Originally Posted by patteeu View Post
This taxpayer subsidy you're talking about is present for all employers so it's irrelevant to the competitive balance between Walmart and Trader Joe's.
Yes, all companies actively teach their employees how to receive government assistance in an attempt to not pay them higher wages.
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Old 02-16-2014, 09:21 AM   #50
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This taxpayer subsidy you're talking about is present for all employers so it's irrelevant to the competitive balance between Walmart and Trader Joe's.
When was the last time you heard about wages at Costco or Trader Joes being so low that their employees had to apply for public assistance?
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Old 02-16-2014, 09:24 AM   #51
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Originally Posted by Loneiguana View Post
Yes, all companies actively teach their employees how to receive government assistance in an attempt to not pay them higher wages.

Thee opposite would be the workers unionize and the Union teaches the workers how to strike and demand wages the business cannot support and then one morning the stores are closed and it looks like downtown Detroit 2014. Success!!


It would seem that these Walmart folks are there by choice. If an individual makes a decision you disagree with, is that person always wrong?
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Old 02-16-2014, 09:29 AM   #52
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Originally Posted by HonestChieffan View Post
Thee opposite would be the workers unionize and the Union teaches the workers how to strike and demand wages the business cannot support and then one morning the stores are closed and it looks like downtown Detroit 2014. Success!!


It would seem that these Walmart folks are there by choice. If an individual makes a decision you disagree with, is that person always wrong?
Why would a union ask for pay a business can't support?

Unions are there to protect jobs, not ruin a company so there are no jobs.

And you completely ignore the fact that all union contracts have to be signed and agreed to by management. If management signs a contract that will bankrupt them, are they not at fault as well?

Union/management negotiations are suppose to be that, negotiations, with both sides agreeing too and accepting a contract that helps both sides profit.

Not just the workers, not just the company. Non-union workers usually only get a deal that benefits the company.

Unions want strong, profitable companies because that means more jobs.

Oh, I don't fault workers who choose working at Wal-mart over having no job. Of course, I also understand that with a 6 percent unemployment rate and that very basic fact you need an income to feed yourself that there is little actual choice for a lot of people and the job they have.
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Old 02-16-2014, 09:34 AM   #53
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Originally Posted by PunkinDrublic View Post
When was the last time you heard about wages at Costco or Trader Joes being so low that their employees had to apply for public assistance?
That doesn't have anything to do with what I said. I don't follow Costco or Trader Joe pay scales though, to answer your question directly.
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Old 02-16-2014, 09:49 AM   #54
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Hobby Lobby is the playground of the rich.
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Old 02-16-2014, 09:50 AM   #55
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That doesn't have anything to do with what I said. I don't follow Costco or Trader Joe pay scales though, to answer your question directly.
Wasn't your original premise that if companies like Costco and Trader Joes pay their employees better, eventually Walmart eventually have to adjust to the competition?
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Old 02-16-2014, 09:53 AM   #56
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Originally Posted by PunkinDrublic View Post
Wasn't your original premise that if companies like Costco and Trader Joes pay their employees better, eventually Walmart eventually have to adjust to the competition?
My original point is that if Costco and Trader Joe's have superior business models (employee pay is only one aspect), then to the extent that Walmart competes with them, they'll have to adapt to remain competitive. I don't expect Costco and Trader Joe's to put much upward pressure on Walmart's employee compensation in the Obama economy.

P.S. BTW, the reverse is true too. If Walmart's business model proves superior, what with the subsidies and such, Costco and Trader Joe's might have to adapt. That's more likely, IMO, but still probably won't happen.
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Old 02-16-2014, 10:12 AM   #57
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My original point is that if Costco and Trader Joe's have superior business models (employee pay is only one aspect), then to the extent that Walmart competes with them, they'll have to adapt to remain competitive. I don't expect Costco and Trader Joe's to put much upward pressure on Walmart's employee compensation in the Obama economy.

P.S. BTW, the reverse is true too. If Walmart's business model proves superior, what with the subsidies and such, Costco and Trader Joe's might have to adapt. That's more likely, IMO, but still probably won't happen.
Employee salaries are a pretty vital piece of any business model. The argument I always here from conservatives for paying such low wages is that the profit margins are so thin that they are forced to pay these poverty level wages. Companies like Costco, Hobby Lobby are proving that it's total bullshit.
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Old 02-16-2014, 10:14 AM   #58
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Originally Posted by PunkinDrublic View Post
Employee salaries are a pretty vital piece of any business model. The argument I always here from conservatives for paying such low wages is that the profit margins are so thin that they are forced to pay these poverty level wages. Companies like Costco, Hobby Lobby are proving that it's total bullshit.
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Old 02-16-2014, 10:17 AM   #59
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Employee salaries are a pretty vital piece of any business model. The argument I always here from conservatives for paying such low wages is that the profit margins are so thin that they are forced to pay these poverty level wages. Companies like Costco, Hobby Lobby are proving that it's total bullshit.
Not to mention QuickTrip. You know, that convenient store chain that caters to all income levels, always has lower prices from gas to peanuts and pays their help pretty damn good.
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Old 02-16-2014, 10:31 AM   #60
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Actually what these examples prove is not one is right, one wrong. It proves different business models coexist. A successful business model is the one that returns the desired result to ownership. Thats why we have Target vs Kmart vs Walmart vs Costco vs Sam's Club. And on and on in any sector targeted at any given audience.

Employee pay is not some weapon to be used on the battlefield for business. Its one small piece of the business itself. If We are competing over a fixed resource...there are only X number of people available to stock shelves in a trade area and there are two stores needing shelf stockers, pay will go up as they compete for a resource.

Walmart may choose to stock shelves at night. Costco in the day. Trader Joes may choose to not hire stockers but rather ask all employees to be mindful of stock and when a unit is low, go get more and restock the shelf. There are differences in jobs, expectations, and as a result pay.

Just as pricing is not a stand alone decision. Nor volume. Its all about the balance between the cost side and the return side. And 100% determined by the business objective the business sets for itself.
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