Uniqlo, Costco, and Trader Joe's are among the large retailers that are making more money by hiring more retail employees, which runs counter to the conventional wisdom.
The big challenge for any retailer is to make sure that the people coming into the store actually buy stuff, and research suggests that not scrimping on payroll is crucial. In a study published at the Wharton School, Marshall Fisher, Jayanth Krishnan, and Serguei Netessine looked at detailed sales data from a retailer with more than five hundred stores, and found that every dollar in additional payroll led to somewhere between four and twenty-eight dollars in new sales. Stores that were understaffed to begin with benefitted more, stores that were close to fully staffed benefitted less, but, in all cases, spending more on workers led to higher sales. A study last year of a big apparel chain found that increasing the number of people working in stores led to a significant increase in sales at those stores.
(thx, david)
Jonah Lehrer on what our brains are up to when we're shopping at Costco.
As I note in How We Decide, this data directly contradicts the rational models of microeconomics. Consumers aren't always driven by careful considerations of price and expected utility. We don't look at the electric grill or box of chocolates and perform an explicit cost-benefit analysis. Instead, we outsource much of this calculation to our emotional brain, and rely on relative amounts of pleasure versus pain to tell us what to purchase.
Greg Allen's ode to Costco, flatscreen TVs, and bottomless jars of peanut butter.
So we go to Costco for lunch and formula Friday, my dad, the kids and I, and it's a flatscreen frenzy. Like Rodney King-grade looting frenzy; every cart has a flatscreen and a bale of toilet paper, and I'm like, I have a flatscreen I don't even watch, and yet I want another one. I couldn't fit that box in the car, and I still want one. My dad and his wife bought the biggest flatscreen in the Triangle last spring, and I can see he wants one, too.
The kid's sitting in the cart, and she sees a guy carrying a 19" flatscreen, and she goes, "Look! He has a tiny one!" and the guy looks at her, looks at the box -- I'm not making this up, my dad told me; he was investigating the flatscreen aisle while I was in the bathroom -- and goes and puts it back, and picks up a 23" flatscreen.
I'm still working through the toaster-sized box of Mach3 razor blade refills that I bought at Costco almost four years ago.
Costco is selling Mexican Coke made with sugar instead of high-fructose corn syrup, at least in the San Francisco area. "Costco has conformed to CA and U.S. rules, such as CRV (the sort-of deposit you pay for the bottle) and 'nutrition' labeling, so everything appears to be nice and legal." (via serious eats)
Comparison of Costco's labor practices with those of Wal-Mart. "While Wal-Mart pays an average of $9.68 an hour, the average hourly wage of employees of [Costco] is $16."
