Costco has a reputation for being a good employer. The retailer paid above-average wages and seemed to understand the value of retaining employees for a long time in a way that its main rivals Target and Walmart clearly did not.
While it took labor shortages and public pressure to force Target and Walmart to improve workers' wages and benefits, Costco (COST) – Get a free report He is generally considered an industry leader. The chain has been regularly included in Glassdoor's “Best Places to Work” report, ranking 92nd in 2022.
Related: Kroger, Walmart and Costco give customers a gift they don't want
Costco has a 3.9 on Glassdoor's rating system, which is based on reviews from real employees. Walmart (WMT) – Get a free report has a 3.4 while Target (TGT) – Get a free report It has a 3.5 on the same scale. Warehouse Club reviews are largely positive and the following statement is fairly typical:
“Competitive salary, excellent benefits, great management support, collaborative environment,” the poster shared.
Overall, workers' biggest complaints were the company's limited adoption of technology and that chain members could sometimes be aggressive. Overall, Costco has been considered a good place to work that takes care of its employees.
That is why the chain's latest problem may surprise partners and shareholders.
Image source: What works Djansezian/Getty Images
Costco faces unionization efforts
As we have seen recently with Starbucks (SEX) – Get a free report, management generally doesn't want their stores to unionize. Adding a union gives workers a unified voice and adds a layer between management and employees.
In many ways, it's easy to see why Starbucks workers, who typically earn less than $15 an hour at the barista level, want to unionize. At Costco, which has led the way on wages in the big-box retail space, pay is apparently not the main concern for the Norfolk, Va., store chain, which just voted to unionize.
“Costco workers in Norfolk, Virginia, voted overwhelmingly yesterday to join Teamsters Local 822, marking the union's first organizing victory at the wholesale retailer in two decades. The group of 238 workers seeks strong representation to address years of concerns and improve working conditions.” according to a statement from the Teamsters union.
The warehouse club reached a national agreement with the union in 2022.
“The national agreement increases wages and employer pension contributions and provides members with higher semi-annual bonuses and a more flexible attendance policy, among other workplace improvements. Many Costco workers in Norfolk cited the national contract as a catalyst for the organization,” according to the truckers.
Costco workers want more than wages
The Teamsters' press release actually never mentions salaries.
“Organizers cited safety as a major concern, along with having a voice, respect at work, a fair grievance procedure, and respect for seniority as key issues in seeking union representation,” according to an email sent to Retail Diving.
Costco did not respond to that news outlet's request for comment on the unionization efforts.
The chain's chief financial officer, Richard Galanti, spoke about his company's efforts to reward and retain workers during the crisis. first quarter results call.
“We want to do everything we can for our employees. And certainly, you know, there were several increases starting with the frontline worker premium during the initial year of COVID,” he said. “We kept half of that there, which… you know, we kept one of those $2 an hour there, which was about $400 million a year. Again, we've also benefited from increased sales and productivity, so what we were able to afford.”
He noted that many of Costco's employees stay long enough to reach the top of the chain's pay scale.
“You know, more than half of our employees are at the top of the ladder and are getting raises, regardless of some of the additional things that we've talked about every March. And then as you go from new employee to employees first 9,000 or 10,000 hours, constant increases are obtained that are greater, significantly greater,” he added.
While the presence of a union could be a drag on Costco stock in the future, the 2022 deal did not appear to affect the chain, whose stock price rose 48% in 2023. This is likely largely due to to the resistance of the chain in a difficult situation. economy that has helped Costco steadily increase its membership.
Costco, unlike Walmart and Target, has seen very limited impact from retail theft.
Costco shares, closing Friday at $671.60, are up 47% for the year with just four trading days left. They reached an all-time intraday high of $681.91 on December 18 and ended that day with a market capitalization of $302 billion.
As of Friday's close, the market capitalization has dropped to $298 billion, about 29% less than Walmart's but nearly four times Target's.
Walmart is up 10.5% for the year. The target is down 5.3%.
