Wal-Mart (NYSE:WMT) may be the king of huge-volume retail, but is it the best stock in the industry?

Wal-Mart is indeed a giant: It's the only retailer on the Dow Jones Industrial Average and a recession-proof stock thanks to its low-cost sales model. But there's a heated rivalry going on with Costco Wholesale (NASDAQ:COST), where founder Jim Sinegal's brilliant leadership uncovered a secret weapon. This trick lets Costco compete with Wal-Mart and even Amazon.com (NASDAQ: AMZN) on product prices while also treating its employees to high wages and great benefits -- and still make a generous profit.

In the video below, Fool analyst Anders Bylund will clue you in on Costco's secret weapon, which lets the company run head-to-head with new-age online retailers like Amazon while crushing staid dinosaurs like Wal-Mart.

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