retail news in context, analysis with attitude

Nice column in the San Diego Union Tribune by Dean Calbreath in which he writes about recently deceased retail pioneer Sol Price, who “kept his prices at rock bottom by such practices as slashing advertising to near zero, eschewing credit cards and limiting executive salaries. He reasoned that even if he lost some customers through some of those steps, he’d attract even more by offering low prices.

“One thing that Price did not skimp on, however, was his workers.

“Price Club’s written policy was that workers would be paid at ‘close to the highest prevailing wages in the community.’ Unlike many of his retail competitors, Price maintained good relations with union members - and made sure that nonunion workers got the same benefits as union workers did.”

Price also took a unique approach to executive salaries, Calbreath writes: “In an age when some of his peers were making 40 or 50 times the median salary of their workers, Price kept his salary at around a 10-1 ratio. (Today, the ratio at America’s top firms is more like 500-1.)”

“The thing that was remarkable about Sol was not just that he knew what was right,” Costco CEO Jim Sinegal tells Calbreath. “Most people know the right thing to do. But he was able to be creative and had the courage to do what was right in the face of a lot of opposition. It’s not easy to stick to your guns when you have a lot of investors saying that you’re not charging customers enough and you’re paying employees too much.”

“We think the stockholder comes last,” Price told Wall Street analysts in 1985. “But if you do the other three jobs well, (the stockholder) will be taken care of.”
KC's View:
If more executives and boards of directors took such an approach, we might not be in the financial straits that we are in. Instead, too many people are just looking out for themselves and their own bank accounts.