EDITORIAL: Costco's money-saving efforts to eschew PR are precluding it from valuable opportunities

Costco CEO Jim Sinegal has figured out one way to keep prices low.

Costco CEO Jim Sinegal has figured out one way to keep prices low.

Sinegal was interviewed in a story in The Miami Herald last week which examined which drug stores offer the cheapest prescription drugs. The company, one of the country's leading warehouse club retailers, apparently offers the biggest savings through its pharmacies, particularly on generics. But it's no wonder that nobody ever hears about it. The CEO actually offers up the fact that the company has no dedicated PR department as one reason why its drug prices can't be beat. "We have to save money wherever he can," he told the reporter, adding that he takes all media calls himself. Now that's a new one - the belief that not having a PR team is a factor that helps Costco sustain its reputation for, and ability to commit to, cheap drugs. PRWeek has reported the company's lack of interest in communications before in a Corporate Case Study on March 17 (see prweek.com archives). Our reporter noted that the chief PR contact is the CFO, and that PR tactics are used for new store openings, but rarely tapped at any other time. The obvious point is that The Miami Herald need not have done such a thorough investigation of the cheapest prescription sellers out there if Costco had taken advantage of the PR gold mine that information represents. Costco is also a leader in corporate social responsibility within the communities it serves, saying it is not just a strategy for gaining market share, but part of its DNA. But who knows about it outside of PRWeek readers? Maybe even Sinegal would see the benefits of promoting these facts more aggressively. But it would be difficult to defeat his attitude that a PR team is nothing more than a cost center, because it is genuinely rooted in the company's stated mission - keeping overheads and profit margins low, so customers reap the benefits and remain loyal. Perhaps one should employ an analogy straight from the cardboard-box-laden shelves of Costco itself to drive home the importance of a strategic PR program, particularly for a company its size and complexity. Storing and sustaining relationships and reputation are crucial for companies that depend on public goodwill. A single isolated incident can jeopardize that goodwill. And just like that box of 2,000 diapers that seems pretty pricey at the time, it's far better than being forced to make the 2am emergency run to the convenience store, especially when you are not sure what brand you may be forced to grab. Savage's belated apology is truly sorry Michael Savage, fresh from his firing by MSNBC, apologized for referring to a gay caller to his TV program as a "sodomite" on the air and saying, "You should only get AIDS and die, you pig." I would like to meet the advisor who urged him to do this. With apologies to 99% of our readers, those who don't need a course in Expressing Regret 101, I must point out that such demonstrations of public remorse are more than meaningless if those expressing them are not credible and sincere. A public exposed to that kind of nonsense will only turn away from even the most legitimate appeals when it is forced to witness that sort of empty gesture.

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