Chapter 5: Costco and Differentiation

Costco has come under fire in the past for paying its workers above minimum wage as well as giving other nonessential benefits. Wall Street analysts feel that the profit margin is too low to offset the cost of the higher wages. However, this is how Costco and other companies like Starbucks choose to differentiate themselves from their competition. Very few companies view their employees as an investment these days. Rather, they view their workforce as a cost that they try to keep as low as possible. Not Costco. It believes that if you invest in the people that come in contact with the customers on a daily basis, you get a better employee and therefore a better experience for the customer. This tends to create repeat business and in turn revenue for the company.