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 very long time in a way that key rivals Target and Walmart clearly did not.
While it took labor shortages and public pressure to force Target and Walmart to improve wages and worker benefits, Costco (COST) -) has generally been considered an industry leader. The chain has regularly placed on Glassdoor's "Best Places to Work" report coming in at #92 in 2022.
Related: Kroger, Walmart, and Costco give customers a gift they don't want
Costco has a 3.9 out of 5 on Glassdoor's ratings system, which is based on feedback from actual employees. Walmart (WMT) -) has a 3.4 while Target (TGT) -) has a 3.5 on the same scale. The warehouse club's reviews are largely positive with the statement below being fairly typical:
"Competitive salary, excellent benefits, great support from management, collaborative environment," the poster shared.
In general, workers' biggest complaints were the company's limited adoption of technology and that the chain's members could sometimes be pushy. Costco has generally been considered a good place to work that takes care of its employees.
That's why the chain's latest problem may surprise members and shareholders.
Image source: Kevork Djansezian/Getty Images
Costco faces unionization efforts
As we've seen recently with Starbucks (SBUX) -), management generally does not want its 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 generally make under $15 a an hour in wages at the barista level, want to unionize. At Costco, which has famously led the way in wages in the big box retail space, pay is apparently not the chief concern of the chain's Norfolk, Va., store, which just voted to unionize.
"Costco workers in Norfolk, Va., voted overwhelmingly yesterday to join Teamsters Local 822, marking the union's first organizing victory at the wholesale retailer in two decades. The 238-worker group 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 boosts wages and pension contributions by the employer 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 organizing," according to the Teamsters.
Costco workers want more than wages
The Teamsters press release actually never mentions wages.
"Organizers cited safety as a major concern, along with having a voice, on-the-job respect, a fair grievance procedure, and respect for seniority as key issues behind seeking union representation," according to an email sent to RetailDive.
Costco did not return that media outlet's request for comment on the unionization efforts.
The chain's CFO Richard Galanti did talk about his company's efforts to reward and retain workers during the company's first-quarter earnings call.
"We want to do as much as we can for our employees. And certainly, you know, there were several increases starting with the front-line worker premium during the initial year of COVID.," he said. "We kept half of that in there, which -- you know, we kept one of those $2 an hour in there, which was like $400 million a year. Again, we've also benefited from stronger sales and productivity, so we were able to afford that."
He noted that many of Costco's employees stay long enough that they reach the top of the chain's wage scale.
"You know, over half of our employees are top of scale, and they're getting increases, irrespective of some of the extra things we've talked about every March. And then, as you go from a new employee over the first 9,000 or 10,000 hours, you're getting constant increases that are more — significantly more," he added.
While the presence of a union could be a drag on Costco's stock going forward, the 2022 agreement did not appear to impact the chain which has seen its share price climb by 48% in 2023. That's likely largely because of the chain's resilience in a tough economy which has helped Costco steadily grow its membership.
Costco, unlike Walmart and Target, has seen a very limited impact of retail theft.
Costco's shares, at Friday's close of $671.60, are up 47% for the year with just four trading days left. They hit an all-time intraday high of $681.91 in Dec. 18 and finished that day with a market capitalization of $302 billion.
With Friday's close, the market cap is down to $298 billion, about 29% below that of Walmart but nearly four times that of Target.
Walmart is up 10.5% for the year. Target is down 5.3%.
