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Comment by SeanLuke | Hacker News Reader

Through ambiguous verbage, this author very carefully skirts an unfortunate fact which ruins his argument. And that is: Trader Joe's has a very high number of employees per square foot. TJs is swarming with employees. They're trained to do every task and can fill in for one another. My local TJs, a microscopic one and the smallest in DC by far, usually has over 15 employees, often 20, day and night. I know: I counted them.

I think that this guy is saying that Wal-Mart can't do what Costco does because it has more SKUs and thus a higher density of employees. But TJ's density is much higher still, and it pays like Costco does.

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The (female) author's point isn't that "Wal-Mart can't do what Costco does because it has more SKUs and thus a higher density of employees." It's that Wal-Mart, Costco, and TJ's have so many differences on so many axes that it is quite silly to make naive comparisons between their level of employee compensation while ignoring everything else that makes them different.

I find this example particularly baffling, as one visit to TJ's should be all one needs to recognize that it's not even in the same category as a store like Wal-Mart.

He is saying its a fundamentally different business. A higher number of SKUs necessitates a much larger space and lower per employee productivity.

A Trader Joes customer is willing to pay for customer service and a Walmart customer is not. As a society we may say well thats an unacceptable attitude on the part of Walmart's customers and then put them out of business. But at the end of the day its not like Walmart's executives would be the ones picking up the tab, its the customers.

One thing is that Trader Joe's has a much higher profit margin on their produce. Its customers are willing to pay these because they like the tradeoffs of good customer service and the stuff that the store has.

Walmart's customers are not willing to pay that. They're willing to deal with no customer service and bad quality for rock-bottom prices.

It's a big difference that showcases the two business models. When I know exactly what I want to buy, (A thing of Lemon Pledge, some Worcestershire sauce, and a package of cue chalk) Walmart is wonderful. When I'm not quite sure, a store with good customer service beats Walmart every day. I would never buy a bicycle at Walmart, for example.

TJ is a grab bag of expensive and inexpensive items often justified by a difference in lifestyles, e.g foodies and hipsters. They're a different target demographic than Walmart and Costco, most of their inventory is comprised of their own brand, and they control their entire supply chain. Most shoppers at TJs have half empty carts or use baskets.

Quite the fundamental difference.

>>I think that this guy is saying that Wal-Mart can't do what Costco does because it has more SKUs and thus a higher density of employees. But TJ's density is much higher still, and it pays like Costco does.

It isn't the density per se, it is the density of a a much larger store that doesn't have the margins that trader joes has. They are two fundamentally different business models. Retails stores targeted at upscale consumers can afford to spend on salaries to give the service that their customers want. Wal-Mart needs low prices and lots of products to satisfy theirs.

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