At first glance, big box stores look an awfully lot alike. Beloved by consumers, they are scorned by local retailers. All of them want to deliver shareholder value to investors. None of them welcome unions. But beyond that homogenous exterior, big box stores differ from one another significantly, and not just because of the merchandise they sell. Here are three that have opened outlets in New York City with above average employment practices and community outreach efforts.
Here is some background information of three big box
stores–Costco, Lowe’s, and Target–as well as description
of worker treatment and effects on the community:
Legendary for high wages and low turnover, this warehouse club has beaten back Sam’s Club–a competitor run by Wal-Mart–through a strategy that dates back 24 years. By offering a mix of low-cost necessities and brand-name indulgences, and everything in bulk, Costco draws a wide demographic of shoppers and pumps up total sales.
Treatment: Wages start at $10 an hour; the average is $16.97 an hour. Compare that to $10.38 an hour for Wal-Mart’s metropolitan New York stores. Eighty-six percent of employees receive health insurance (Wal-Mart: 47 percent). For years, Wall Street analysts pounded the company for its generosity, but investors have stopped listening: Costco stock today is just as expensive as Wal-Mart’s in future earnings per share. CEO Jim Sinegal has long maintained that happy workers reduce turnover and increase customer satisfaction, and last year a Business Week analysis proved him right: The typical Costco employee brings in higher profit than does one at Sam’s Club.
Solidarity: Costco has 56 unionized stores, none in New York City. “We did try organizing five years ago,” recalls Patrick Purcell, organizing director of Local 1500 of the United Food and Commercial Workers. “But when we did a comparison of what workers were receiving, there wasn’t much difference.” Still, he says, having some stores unionized keeps up pressure to maintain wages and benefits.
Collateral Damage: The Long Island City store has hurt, but not killed, local supermarkets, according to Richard Lipsky, a lobbyist for the Neighborhood Retail Alliance. The Brooklyn and Staten Island locations have done less damage. Still, when Costco tried to open a scaled-down store on the West Side of Manhattan five years ago, a coalition including Lipsky’s group, community activists and labor unions blocked it. Another location, in Harlem, also failed. Sinegal has not ruled out another try. “It’s just difficult to come up with a site that would make it feasible,” he says. “Real estate is expensive.”
Relatively new to New York City, Lowe’s debuted on Staten Island and opened its second store, in Brooklyn, last year. The No. 2 home-improvement chain, Lowe’s can be expected to open more stores in the five boroughs, since it is serious about gaining market share in metro areas. Rival Home Depot, with 600 more outlets nationally, just opened two new innovative, car-free locations in Manhattan.
Treatment: Eighty percent of Lowe’s 160,000 employees work full-time, and the chain offers flexible shifts for working mothers, two weeks paid vacation after a year, 401(k) matching, and accrued sick time that can be used should one adopt a child. Its comprehensive health insurance coverage is affordable but not cheap. (For a variety of reasons, however, only 52 percent of Brooklyn employees are enrolled.) Stock analysts regularly give the chain high marks for customer satisfaction, which may say something good about employee satisfaction as well.
Getting Involved: To pave the way for its entrance in Brooklyn, Lowe’s held two community meetings and also took advice from the Gowanus Canal Community Development Corporation on landscaping issues. The result: a public esplanade on the ever-promising Gowanus with benches and tables, as well as a mural on the back wall for which a contest was held. The store’s location is so out of the way that it has caused little traffic congestion–though that could also hamper sales.
Collateral Damage: As for knocking out small local businesses, Home Depot did that years ago when it opened in neighboring Red Hook, says Matt Mazzone, the manager and son of the owner of Mazzone True Value Hardware in Carroll Gardens. “We’ve felt very little impact,” he says. “Most of the studies show that when the second big box comes in, they more compete with each other than with the little guy.”
Like Costco, this trendy discounter of clothing and household goods appeals to people of all, or at least most, tax brackets, which means the opening of one in the middle of a city is something of a civic event. Targets make a splash in other ways too, making overtures to community institutions when they open. The big question is whether the company ever follows up once the novelty wears off.
Treatment: By reputation, Target pays better than average for retail work and offers substantial benefits. The company, however, does not release any information publicly. In New York, it has made efforts to recruit in the immediate vicinity of its stores: Before an outlet opened in Brooklyn’s Atlantic Terminal Mall last summer, Target partnered with the city-run Workforce 1 Career Center and sought applications through the office of Councilmember Letitia James. Of the 40 applications received from constituents, about 20 ended up working at the store; roughly half are managers.
Getting Involved: Though the company’s corporate giving–second most generous in the country, according to Forbes magazine–focuses on Minneapolis-St. Paul, where the corporation is headquartered, all store managers get discretion over local grants, from $1,000 to $3,000. (Nonprofits can apply for the funds online.) But in New York, the chain hasn’t been so ready to be active in the local business community. The store in Queens at first joined the local commercial organization, the College Point Board of Trade, but hasn’t paid the $100 dues in the last couple of years, according to board president Fred Mazzarello; the store also hasn’t participated in the group’s annual dinner, Memorial Day parade or other functions. “They threw a few dollars around at the start, signed up for membership,” Mazzarello says, “but otherwise we have had very little luck getting them to cooperate.” Calls to the College Point store were referred to headquarters, which did not return several messages.