Ashiley Lutz’s blog:

http://www.businessinsider.com/costcos-simple-strategy-2014-9

This post is a response to Ashiley Lutz’s blog on Costco. In Ashiley Lutz’s blog, she writes that Costco is consistently outperforming competitors like Wal-Mart and Target. She attributes this to two main reasons. One is Costco’s differentiate strategy- concentrating on driving sales. The other is the relatively high wages for its employees.

I do agree with Ashiley’s first point. Costco sells fewer items than Wal-Mart but increases sales volume they offered. It means that although Costco cannot be as competitive as a department store like Wal-Mart is, it is really doing well for a grocer.

However, I do not agree with the fact that the high wages contribute to Costco’s good performance. As what we learned in class, employees are motivated by values like respect, recognition, involvement, and fair treatment. Under paying employees is a disincentive, but high pay is not incentive. Only when people are getting satisfaction from their work can they be fully engaged in what they are doing. Zappo offers its employees a relatively low wage. However, it creates a family-like atmosphere and provides free food, dental benefits, etc. All of its employees are striving to make Zappo a better company and earn its company good word-of-mouth. It is not just pay, but also ensures every employee know they are valuable and how they do their job makes a difference.