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Thread: Egads! Costco can't be serious!

  1. #126
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    Quote Originally Posted by Chris Ryser View Post
    In my area in Canada, Costco is paying over $ 40,000 p.year (40 H work week) salaries to employees working at the food counter serving hot dogs and pizza slices.


    If taht is really the case, what I said to Cocisland has no validity whatsover. I thought they were paying a high wage to opticians because they had to.

    $40k to concession workers? You've got me stumpe!?

  2. #127
    CL Fitter/Optician/Mommy SarahMP584's Avatar
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    In my particular area of California, Costco pays better than ANYONE, and they dont just hire ANYONE either.
    The only way they will hire from the outside is if you have both licenses and enough experience.
    I have been in the biz for 5 years now, and as much as i HATE retail and HATE working every weekend, They are paying me TWICE as much as the doctors office I worked at. TWICE AS MUCH!

    I am sorry, but I have a california mortgage to pay!

  3. #128
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    the price is not too cheap

    Quote Originally Posted by drk View Post
    We just got a Costco in the neighborhood. Check out these prices :drop:

    Ovation CR39: $89.99/ pair
    Ovation poly: $99.99/pair
    AR coating: $29.99


    What the #$%% is going on here!? That's below my acquisition cost!
    your lab must be happy having you as customer paying more than these prices, I would at least, even better than these! prices in our area are far better than what you are paying.

  4. #129
    What's up? drk's Avatar
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    Just a note:
    It's slight hyperbole, but not much.

  5. #130
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    Blue Jumper Costco Optical pays twice as much....................

    Quote Originally Posted by SarahMP584 View Post
    They are paying me TWICE as much as the doctors office I worked at. TWICE AS MUCH!

    I am sorry, but I have a california mortgage to pay!

    I believe we now have arrived at a turning point of this thread. I am now listing the findings of the resulting post's:

    1) Costco get the best reviews by Consumer Report

    2) Costco hires only opticians that are certified and have experience

    3) Costco pays their employees twice the rate the independents do.

    4) Costco sell Essilor PAL's at prices, Optiboard members say, are below their purchasing cost.

    5) Costco most propbably purchases all other items at much lesser cost or rock bottom.

    6) Their optical labs have top notch equipment, and we can assume that their lab employees must be treated in a similar way the front store opticians are.

    7) They are making money. We can assume with good conscience that the optical department is NOT a lost leader selling at or below cost.


    Here is my apropriate posted "Wisdom To Start The Day" that fits very well into this theme and should make everybody think:

    The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market.

    It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.
    Milton Friedman


    Opticians and business owners like ODs and MDs should look more into changing their business behaviour has a missing point somewhere.

    In Germany 45 years ago an optician opened a second store somewhere on the second floor of an office building. Second floor stores were considered discounters and were blocked from purchasing brand name lenses and frames by strong associations. This optician suddenly got blocked by his regular suppliers.

    He fought them in his own way and used to offer lenses to his patients in the following manner: " Would you like to have a Zeiss lens or something better ? And then sold the other lenses.

    As he happened to be the president of the German Maste Opticians he also talked about at the optical congress. Zeiss and the others gave in and supplied him again.


    It would be interesting to see some further comments and helpful hints instead of bashing the smart guy. :finger:


  6. #131
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    Quote Originally Posted by Chris Ryser View Post
    4) Costco sell Essilor PAL's at prices, Optiboard members say, are below their purchasing cost.

    5) Costco most propbably purchases all other items at much lesser cost or rock bottom.
    Companies like Costco and Walmart are revolutionizing the entire retail industry because they are eliminating complete chunks of the product distribution network. They own their own labs. Their labs purchase in bulk directly from the manufacturer to get quantity discounts, bypassing even the manufacturer's sales and marketing departments and the associated overhead.

    But purchasing in bulk requires them to limit product selection, for both lenses and frames. This leaves some opportunity for independent retailers to offer product niches that Costco does not offer.

  7. #132
    What's up? drk's Avatar
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    The problem for my type of business, is, dare I say it, that as manufacturer's products become better and better, "choice" is less and less of an important variable, so it's getting tougher to compete.

    I understand that more efficient cost structures can be achieved in any "immature" industry, and that is the "beauty" of free economics. Hooray.

    I will concede that if indeed Costco (other than overhead) could independently operate their opticals at a worthwhile profit as opposed to "loss-leading" or "membership clubbing*" I would have less of an axe to grind. We still don't have the COGS figure from the Costco manager. I would say if that's "off budget", she's going to do pretty well.

    Overall, while I would prefer to judge everyone associated with the eye care industry by professional standards, I realize that the further away from the "end user" any layer of the industry is, the less likely they are going to recognize professionalism. That's why we have to flex our professional muscles to stop too much abuse, but the little guy's ethics and $2.50 will buy you a cup of Starbucks. The regulating authorites are tepid regarding heathcare consumer protection, at least for now.

    Having said that, I do still draw a line in the sand when our services are being "pimped out" to generate foot traffic. Our acceptance of mass-merchandizers' pimping our services to make a buck is a line we all have unfortunately had to cross a while ago. This is a new line, though, however feeble resistance may prove: if your optical is "loss-leading" and you are selling at artifically-low prices, I think you are predatory and I think you may just have a problem with the FTC.

    Does that scare you, Costco, et al? Good. Class action, baby. A lot of damaged opticians want new gas grills...


    *To be fair: are not prepaid vision plans a type of "membership club"? Hmm...

  8. #133
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    What is you basis

    drk

    My experience with firms such as Costco is that they do not sell below cost. Most do not understand there huge buying power. They buy properly and sell aggressively. The format of a warehouse store is based on a very limited selection of products with a high volume of sales. In the early days of that industry they would work on cost plus 12% to 15%. They made money at that due to huge volume.

    The warehouse store business has matured and they now have a spread of markups. The average warehouse store does more than 100 million dollars per location. Costco is known for have higher than average volume stores with some locations exceeding 250 million dollars in sales per location. The optical departments are not broken out. Vision Monday does include them in the top 10 largest retail optical.

  9. #134
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    COSTCO has its place

    Quote Originally Posted by Chris Ryser View Post
    I believe we now have arrived at a turning point of this thread. I am now listing the findings of the resulting post's:

    ...

    2) Costco hires only opticians that are certified and have experience

    3) Costco pays their employees twice the rate the independents do.

    ...
    Here in British Columbia, Canada COSTCO is amoung the highest payer, but not to start. Most newly certified opticians start at $16-18.00/hr CAD (Canadian dollars) and eventually rise to maaximum $26.00ish/hr CAD after about 2-3 years of scheduled raises. They have an union-type of progression for hourly wages, and accept only the best candidates for employment.

    They do have their presence in our optical industry and customers like them.

    But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional opticals should be able to compete.;)

  10. #135
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    Blue Jumper But they also have limited frame/lens selection.................

    Quote Originally Posted by tmorse View Post
    But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional optical should be able to compete.
    During the times opticians had to actually buy their frames, pay for it and eat them when they would not sell...........instead of getting consignment merchandise they can send back any time they want to. They could very probably buy the same frames for half the price or less and compete even better.

  11. #136
    Master OptiBoarder OptiBoard Silver Supporter Barry Santini's Avatar
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    Quote Originally Posted by tmorse View Post
    But they also have limited frame/lens selection and their opticians do work in a warehouse environment, so traditional opticals should be able to compete.;)
    People don't need or want limitless selection...
    what they really want/need is comprehensive guidance

    Barry

  12. #137
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    Redhot Jumper People don't need or want limitless selection...

    Quote Originally Posted by Barry Santini View Post
    People don't need or want limitless selection...
    what they really want/need is comprehensive guidance
    This now means we have completed the circle and established even the last fact that Costco has a limited selection which seems to be another positive point..

    They have now all the qualifications established for a successful optical business.

  13. #138
    OptiBoard Professional sharon m./ aboc's Avatar
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    Costco

    I am a certified optician and contact lens fitter at Costco and they even paid for my ABOC and NCLE exams and re-certification fees. They pay for every employees exam 2 times...after that (if you don't pass) you have to pay yourself.
    Everything in the above posts is true except Costco has a very good frame selection. I worked at Sam's previously and they have a very limited frame selection but more lens options and are alot more expensive. Even Walmart is more expensive when it comes to contact lenses or spectacle lenses.
    If you've ever read anything about Jim Sinegal the C.E.O. of Costco. He doesn't make an exorbinate amount of money like the C.E.O.'s of Wal Mart. I've met him and he is a very down to earth man.
    One more thing...I only work part-time and my health insurance at Costco is so much less expensive(3 X less for a family) than my husband's (retired phone company) that we dropped his and picked up mine. Costco is indeed good to their employees.
    DRK, I am not afraid of a class action suit.
    Last edited by sharon m./ aboc; 02-01-2007 at 11:15 AM. Reason: added
    sharon

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    Big Smile Calling drk..............................

    drk...............Maybe you want to make a comment on the outcome of the thread you started?

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    Quote Originally Posted by Chris Ryser View Post
    drk...............Maybe you want to make a comment on the outcome of the thread you started?

    HA, HA, Ha....yeah,....what a trouble maker!:)

    This has to be one of the quickest-longest threads ever!

    I'll buy the first round for dear ole drk!


    :cheers: :cheers: :cheers:

  16. #141
    small but mighty! Nettie's Avatar
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    I'll buy him the second round.:bbg:

  17. #142
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    Thanks. Maybe I need one or two.

    Seriously, though, Nettie, do you have to figure in COGS for your store or not? That's critical to this discussion!!!

    Chris, the outcome of the thread is this: either they have set a new world's record on making low profit margins work, or they are "nursing at the breast" of the wholesale club host.

    I would like to know the answer, although the evidence is gathering for the former.

  18. #143
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    Blue Jumper either they have set a new world's record ................

    Quote Originally Posted by drk View Post
    Chris, the outcome of the thread is this: either they have set a new world's record on making low profit margins work, or they are "nursing at the breast" of the wholesale club host.

    I would like to know the answer, although the evidence is gathering for the former.
    I would believe that they have NO new world record....................I would rather believe that they concentrate on good and smart purchasing and without getting any consignment merchandise.

    From the recent posts I would say that they purchase quantities of lenses which in general are big time overpriced since they are being made in the far east and cost the manufacturers a fraction of the cost when still produced on this continent. They can bring the price down to brass tags and Costco can still make a fair profit on them.

    The same could probably apply for frames which they purchase instead of getting them on consignment with warranties and so forth.

  19. #144
    OptiBoard Professional sharon m./ aboc's Avatar
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    Costco

    And, did I mention they pay time and a 1/2 on Sundays and anything over 8 hrs. in one day? It's true........................... I'll stop now!!


    Chris Ryser:
    "Nursing at the breast of the wholesale club host." I love that line and I think I'm going to use it.
    Last edited by sharon m./ aboc; 02-01-2007 at 10:49 PM.
    sharon

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    Redhot Jumper They pay overtime.....................................

    Quote Originally Posted by sharon m./ aboc View Post
    And, did I mention they pay time and a 1/2 on Sundays and anything over 8 hrs. in one day? It's true........................... I'll stop now!!
    I wish you would not stop and give some more.
    In Canada it's the law to pay time and a half for anything over the 40 hour work week. And it is double time if you have to work on your day off and official holidays.

    This thread has evolved from being a Costco bashing idea into a serious reminder of what wrong in the optical trade.

    Here we are getting postings from Costco opticians that declare they are making better salaries than the optical retailers in the regular retail stores that work at much higher selling prices. These Costco opticians all have optical certification and experience.

    I believe the basic wrongs in general in the retail are:

    1) OD's and MDs are using many untrained employees and train them themselves according to their own taste.

    2) chains will do the same in all the open states.

    3) salaries are kept to low for qualified employees,

    At the suppliers end:

    1) Heavy discrimination in pricing between larger and smaller accounts. In the old days it was an extra 5 - 10 - 15% and today it has to be anywhere between 50 and 80%.

    The major suppliers can afford to grant these figures because their manufactruing cost in the far east have tumbled to the bottom, but they never adjusted their pricing towards the retailer downwards.

    This will allow Costco to make good profits while having a higher labor cost than the regular optical retailer. :finger:

  21. #146
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    Quote Originally Posted by Chris Ryser View Post
    I believe the basic wrongs in general in the retail are:

    1) OD's and MDs are using many untrained employees and train them themselves according to their own taste.

    2) chains will do the same in all the open states.

    3) salaries are kept to low for qualified employees,

    At the suppliers end:

    1) Heavy discrimination in pricing between larger and smaller accounts. In the old days it was an extra 5 - 10 - 15% and today it has to be anywhere between 50 and 80%.

    The major suppliers can afford to grant these figures because their manufactruing cost in the far east have tumbled to the bottom, but they never adjusted their pricing towards the retailer downwards.

    This will allow Costco to make good profits while having a higher labor cost than the regular optical retailer. :finger:

    Very good points Chris.



    In Costco's defense= What they are doing is nothing new. They are a reflection of what is happening in business TODAY. We can pick on them because it hits home, but they are no different than many other types of businesses. As a business, you either adapt, differentiate, or die.

    So..What are YOU going to do?

  22. #147
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    Blue Jumper So..What are YOU going to do?.......................

    Quote Originally Posted by Fezz View Post
    So..What are YOU going to do?
    As a business we are all in the same boat but some of us are on the flying bridge and some are in the engine room or the galley and some even on the head (if you know the nautical term).

    I have lately been following the business news more than I did over the last many years.

    The forecasts are not funny while the media is telling us how good everything is. Today's news has been that Americans have no money in their savings account because they have NOT been saving but blowing away their earnings on big houses, SUV's and expensive glasses.

    Savings:

    As I am a supplier to the optical retail and lab trade, considering that people will stall and delay the purchase of glasses as long as they can, I will sell less of my products. At such a point I will have to start adapting by making purchases only when needed, do certain jobs ourselves instead of farming them out.

    If an employee quits I will not replace him and burden the rest with a bit more work.

    Widen the field of customers

    In my own field I can also sidestep the optical trade and look for an enlarged customer circle in other industries, as the electronic industry for example which does a lot of vacuum coatings and so forth. There are many possibilities to bridge over more difficult times when you can diversify.

    Savings in Retail Optical

    Do some of the above. Purchase frames right out, instead of using consignment systems which will allow for some heavy discounts. Push less expensive PAL's and let the patients know about it.

    If you are not already doing it start tinting your own lenses, do your own add ons as UV, scratch resistant treatments and so forth. This allows you purchase untreated lenses at rock bottom price which you can sell at a lower price and still make a good profit margin with the add ons.

    However it will take some learning and sales psychology if you cant rely on the mass advertising done today , as the large manufacturing corporations would like you to buy their finished products and them make the profits on it.

    If the optical retail is not starting to adapt, ahead of whats coming our way..................the cheap readers available at the drugstores and other places will soon capture the market big time.

  23. #148
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    Chris, you're in rare form.

    Serious points to consider.



    Where's that COGS line item!?

  24. #149
    Optiboard Professional Bill West's Avatar
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    Nervy OD

    I doubt Costco sends a cost of goods report to their employees. You have a lot of brass asking her for it and putting her in danger of losing her good job at Costco. How's about you giving everyone your cog's sounds like you may be paying too much. I think you need to put your time and effort on YOUR OWN BUSINESS and while at it, mind yours.:finger:




    Quote Originally Posted by drk View Post
    Chris, you're in rare form.

    Serious points to consider.



    Where's that COGS line item!?

  25. #150
    What's up? drk's Avatar
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    Shut up, Bill.

    It goes to a point she makes: her optical is a profit center. I'm not being nosy, and I don't want the numbers, just the concept.

    Cool out.

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