The Costco Effect Highlights How New Costco Stores Transform Local Economies: 'Surrounding Businesses Raise Wages Up To 40% More'

Benzinga

Costco’s higher wages are pushing nearby businesses to raise pay by as much as 40%, creating a positive local ripple effect that contrasts sharply with the Walmart Effect. Surrounding stores often see more foot traffic and higher revenue as Costco becomes a regional shopping destination. Shoppers visit less frequently than Walmart customers but spend far more per trip.

Transcript

00:00It's Benzinga, bringing Wall Street to Main Street.

00:02Costco's rising wages create a different kind of big-box ripple effect,

00:06according to the YouTube channel Micro.

00:08Costco effect shows that businesses near new Costco locations

00:11often raise wages by up to 40% to compete with the retailer's high pay.

00:15Ceramic businesses near Costco stores really benefit from higher foot traffic,

00:19more customers traveling from wider areas, and increased revenue.

00:23This is in contrast to the Walmart effect,

00:25which results in higher local business closures and depressed wages.

00:28According to a Reuters report, Ceramic businesses saw higher foot traffic and revenue

00:32because Costco became a destination that drew shoppers from a wider area.

00:36Costco shoppers visit the store half as often as Walmart shoppers,

00:39but spend more than twice as much per trip.

00:42For all things money, visit Benzinga.com.

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