Tuesday, August 29, 2006

TCS: Wal-Mart and Toddler Economics TCS: Wal-Mart and Toddler Economics

TCS Daily: Wal-Mart and Toddler Economics agrees that it is important to look at how Wal-Mart makes its money, but then goes on and compares Costco to Wal-Mart. The basic dynamic is that Cosco pays 1/4 the number of employees per dollar of sales twice as much each, thus resulting in a better labor cost, while paying a "living wage". Fine, as far as that, but this is a customer oriented business, and the Costco way is to have the customers do all the work, including heaving heavy bags of furtilizer, whereas Wal-Mart provides an army of helpful employees. If Wal-Mart were to follow the Costco model, it would have to fire nearly a million of its associates. As with pretty much of economics, there is no free ride.

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