Hacker News Reader

Comment by toss1 | Hacker News Reader

True, but Employer-B now has employees who DGAF about anything in the business, and often have an adversarial, even 'eff them! attitude to the business.

Employer-B's customer service and general care of its facilities & inventory will suck, and they will have much higher turnover costs, even if they have better products.

So, what is the relative advantage?

Moreover, the article was specifically about the tradeoff in executive pay vs low-end pay, and how a small sacrifice at the top made huge differences both for the low-level employees and for profits overall

View on HN

There’s a reason Walmart and Dollar General are crushing others, and it’s because either their customers can’t afford good customer service or they don’t care for it and choose to shop there anyway. The proof is literally the fact that mom and pop stores and others like Sears went out of business, customers preferred saving $5 over good customer service.

As I prefaced above, this is true for business where customers aren’t differentiating between vendors except on price.

Yes but what he’s saying is that if you take that money from high executive pay then you can offer both. You have three variables rather then just two, most businesses ignore the executive pay. That’s where the example breaks down. Now if you want to keep executive pay high then yes a lot of people select price over service and you are correct. But those aren’t the only two variables then it’s a lot more variable. Pardon the pun.

The grocery business is, and has been for a very long time, a low margin business. You’re not going to get phenomenal service at any grocery store.

That said, anecdotally, I do the grocery shopping and prefer WalMart. The produce is better, there’s a larger selection, and I can get the odd household item while out for groceries without paying an extortionate price. I’m saving at least 10% on my grocery bill without even trying. Hell, Walmart even does free curbside pickup where the other grocery chain wants to charge me.

Don't know about Dollar General, but isn't Walmart successful because they're big enough to dictate terms to their suppliers and simply squash their smaller competition with convenience?

They started small at some point, and there are many factors contributing to their ability to offer the lowest price.

Most DG are out in more ruralish areas where there's simply less choice, and/or the cost of exercising that choice is more pronounced. Drive an extra 15-20 min to save 30c on milk? Probably not worth it to many folks (cost of gas is more, might make you late for work, etc).

Had a lot of discussions with the former manager of our local DG, and... while not 'eye-opening', it was interesting to hear the pressure she was under. $x/week budget to schedule all the staff, targets to be hit (dollar targets, merchandising display targets, etc). It's "retail", but the numbers she had to play with were pretty low given the volume, imo. FWICT, she wasn't on more than perhaps the equivalent of around $13/hr, although I do think there were small performance bonuses thrown in. But, I think she was 'salaried', so lots of 50-60 hour weeks for probably not much more than ~$35k?

This is a somewhat ruralish area, and this was also... 4 years ago? She's moved on since then, and we lost touch so I don't know if things have changed much with the newer managers or not.

FWIW, she did keep that store ticking over. She was a bit bristly at times with other staff, but ... there was a pretty noticeable decline in staff behaviour, sheving, cleanliness and overall experience at the store within a couple weeks of her leaving, and it's never quite recovered. I'm guessing had they paid her an extra $100/week she'd have stayed and continued going above and beyond, but... .hey... profits...

Enormous selection, and economies of scale (massive purchasing & warehousing ops reducing costs, lower cost/sqft of store area, etc.) are also reasons that Walmart, Dollar General, etc. can out-compete local stores.

It is not only lower labor costs. And they are clearly willing to spend on the appearance of customer service, paying 'extra' people to be greeters, etc.

Viewing it as if the people who produce your products and services are a mere cost instead of an asset is stupid.

And, just because a lot of "successful" finance types implement this view, dies not mean that they are also not stupid.

Oversimplifying is not a solution to most problems.

I have had no better customer service at Mom and Pops than at Walmart, maybe it is just my area.

People are willing to put up with shitty service to save a couple of bucks. Not everyone, but almost everyone. People prove it time again. See the success of no frills airlines like Ryanair and Spirit.

Amazon is a pretty good example of people willing to pay more for being able to return anything for almost any reason. There’s more comfort behind the click so more people buy noticeably more.

I still prefer Southwest over Spirit and any other airline but i’m just one anecdote.

For some reason in these scenarios the workers, who literally construct the product, are always framed as the adversary, and a sunk cost that needs to be avoided if at all possible. Workers are keeping the business from being as successful as it could be by being a monetary drain on the business instead of, in fact, being the business.

Labor costs are the biggest, if not one of the biggest costs for any employer, and it happens to be one the employer can sort of control.

Again, I’m not making anyone a hero or adversary, I’m just pointing out that some businesses can’t survive unless they compete on price, and that means lowering their own costs. It’s quite a blessing to be able to work in a high margin business.

Reply on news.ycombinator.com