Costco receives high marks from consumer advocate

Retailer lauded for treatment of employees
"This stores is a good place for someone who would normally go to a high-end store but would also like to save on costs." -- Clark Howard, host os consumer-advocate radio show

At first glance Costco looks just like any other warehouse store.

A vast expanse of concrete floor underlies a bare-bones retail space where member shoppers purchase groceries, linens, soap, electronics and other department store items in large quantities at deep discounts.

But shoppers will soon notice a difference, predicts Clark Howard, host of Atlanta's popular consumer-advocate radio program, The Clark Howard Show .

"The quality of the merchandise is much higher, and Costco attracts a higher-end consumer as a result," Howard said. "Their stores are also much, much, much cleaner."

Costco will open its first store in Augusta at the Village at Riverwatch, the MGHerring Group and city of Augusta announced Thursday.

The mega-retailer operates 573 warehouses worldwide, mostly in the U.S., Puerto Rico and Canada, according to the company Web site. It charges a basic annual membership fee of $50.

When told of the news, Howard said he was excited for Augusta.

A Consumer Reports reader survey in July rated Costco as No. 1 out of the 11 most popular retail stores in America. The survey's 30,666 readers gave the store excellent or above-average marks across the board for its merchandise, value and prices, although they gave lower-than-average marks for its checkout wait time.

The typical Costco allocates about 30 percent of its space for groceries, 30 percent for linens and housewares, Howard said. The remaining 40 percent is a mix of items Howard calls "the treasure hunt."

Goodies include state-of-the-art electronics, high-end computer equipment and designer clothing. Howard and his wife recently saw a $148,000 diamond ring at their local Costco.

"This store is a good place for someone who would normally go to a high-end store, but would also like to save on costs," Howard said.

One way Costco keeps quality up and prices down is a policy that says no item can be marked up by more than 14 percent, he said.

Costco is just as generous to its workers as it is to its customers, says Steven Greenhouse, a business columnist for The New York Times . In his book The Big Squeeze: Tough Times for the American Worker , Greenhouse said a Costco employee earns $11.50 per hour to start. That amount jumps to $19.50 after 41/2 years.

"(Costco CEO Jim) Singal has made it clear that a huge retailer can pay its workers well and still thrive," Greenhouse wrote.

Costco's business concept is similar to that of other warehouse clubs. The difference lies in how well the company implements it, Howard said. Satisfied employees mean low turnover, less theft, and better service.

"Have you ever heard the expression, 'Never buy the horse, buy the jockey?' " he said. "It's not just the concept that matters, it's how you execute it. And Costco executes like nobody's business."

Reach Carole Hawkins at (706) 823-3341, or carole.hawkins@augustachronicle.com.

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