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You've probably heard of the "Walmart effect", where the kinder and gentler Walmart of at least a decade ago used it's massive buying power to lower prices for consumers. Since then Walmart has driven enough competitors out of the market and saturated said market to the point that it's prices are no longer a bargain. Instead, Walmart's massive buying power has been turned on workers and suppliers, driving down wages and working conditions, with the savings sent directly to Sam Walton's (who's probably turning in his grave) billionaire brats. And determined to dominate every market as well as traditional department store stuff, Walmart has now pushed competitors aside to become the nations largest retailer of just about everything.

Costco is different... While Walmart insists on carrying everything the Main Street local stores carry 24 hours a day (thanksgiving included), Costco does pallet scale retailing of mass market merchandise. While Walmart tries to carry a dozen models of bicycles and every cheap accessory, At Costco you'll maybe find two models of bicycle and maybe a helmet and light. This is the secret of the "Costco effect"- Costco gives you the benefit of their enormous buying power for mass market items like a bicycle, and when you need a tire or maybe a better seat you'll shop your local bicycle shop for those items. And by not plopping down a store in every neighborhood, whether the neighborhood wants it or not, Costco gives you reason to shop local stores when it's not worth the trip to their often more distant stores.

To illustrate the workings of the "Costco effect", let me describe my purchases of this month. For a start, I'm 70 miles from the nearest Costco and before that one opened in October I was 150 miles away from the nearest Costco... Thus my "Costco runs" are now weekly affairs at most, and before the new Costco opened monthly. I've done the usual grocery shopping, buying 6 and 8 packs of canned goods at Costco and perishables at my local grocery store. I've also been upgrading my tools and shop equipment, that effort absorbing 'round $600 this month. I've been needing a new cordless drill for a while, and as I work a lot in concrete I need the most powerful one I can get with a hammer function. Costco has a good deal on a 20 volt Dewalt hammer drill and impact driver combo for $200, which was Home Depot's black friday "sale" price for the same item. That's an excellent deal for all but the most extreme uses, but I needed the more powerful Milwaukee with bigger batteries... Which I bought from the local hardware store for $300. Been looking for a small tool set to carry in the cars and sidecars, and Costco had the best deal with an American made Craftsman set for $100, now marked down to $80... 'bout the same price as the Chinese made Craftsman sets at Sears. I supplemented that set with a few bigger wrenches I had laying around, and sets of hex and torx sockets made by Lisle, a small Iowa tool manufacturer. I was still looking for a better floor jack and Costco had one for $100 that goes down as low as 4" to get under my cars and up to 18" to get the car up where it's easier on my back to work on. Shopped local, but anything equivalent was at least $150. My "local" Costco didn't have the jack in stock yet, but I was in the big cities last week and bought one at the Costco there... My back is much happier now! Didn't shop any on thanksgiving... Costco was closed, so why bother. But friday I bought some more sockets to supplement the ones in the set from Costco from regional hardware store Mac's, wasted time at Sears tool department where the only American made Craftsman tool sets started at $400 on sale and the farmers were hoarding them up, and then had a lunch and bought some canned goods and a warm comfy hoodie at Costco. Today, rode back to the local hardware store for an easier on the back snow shovel Costco don't carry.

So folks, that's the "Costco effect"- How Costco saves consumers dollars on mass market merchandise in major markets, while leaving opportunities for small local businesses to cater to our needs for specialty merchandise. Add in the living wages that Costco pays that allows Costco employees to funnel more dollars back into the economy, and we have a "Costco effect" that benefits workers, consumers, and businesses of all sizes instead of funneling wealth to the few like Walmart does!

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7:03 PM PT: Made the Rec list and spotlighted, thanks!


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Originally posted to GearheadGrrrl on Sat Nov 30, 2013 at 05:52 PM PST.

Also republished by In Support of Labor and Unions and Community Spotlight.

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