Handshake With Sam
While Wal-Mart’s founder, Sam Walton, steered his company’s growth over its first thirty years, he never let anyone forget that with such tremendous success come certain moral responsibilities. He led by example, and he did business with a handshake.
Today’s Wal-Mart has lost Sam’s way. That’s why we’ve proposed a new contract with Wal-Mart’s current leadership—to help Wal-Mart take its place as a responsible business leader for the new century.
Friday Blog Round-Up: Kudzu Edition
Posted by Alex Goldschmidt
DVD FORMAT WARS TAKE VIOLENT TURN, HIGH-DEF SLAUGHTER APPROACHING
Admittedly, the biggest news in the blogosphere this week was Wal-Mart’s decision to nix the HD-DVD player. While it doesn’t have much to do with employees’ wages or the company health care plan, which are more our forte here at Wal-Mart Watch, Wal-Mart’s actions have stirred deep emotions in lots of computer-savvy people.
Wal-Mart crowns Blu-ray the disc that matters [ValleyWag]
The high-definition disc battle is over, and Blu-ray has won. We can now move on to more productive matters. Why am I declaring victory? Not because of Warner’s switch to the format, and certainly not because of Netflix’s. Retailing is not a democracy. There is one vote that matters. No, it’s not the consumer’s—it’s Wal-Mart’s.
Consumerist reiterates a point we made last week, that Wal-Mart pushed HD-DVD players hard during the holiday season, less than two months before deciding to scrap the technology.
“We’ve listened to our customers, who are showing a clear preference toward Blu-ray products and movies with their purchases,” Gary Severson, head of home entertainment for Wal-Mart’s U.S. stores, said in a statement.
Thanks for buying all those HD DVD players on Black Friday, though.
After the jump, more on HD-DVD versus Blu-Ray, tech bloggers weigh in on Wal-Mart’s new Cloudbook, and Wal-Mart’s American roots spread overseas.
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Big Box Worries Come Back to Chicago
Posted by Alex Goldschmidt
Chicago has a long, proud history of fighting Wal-Mart. A brief respite from years of fighting the retailer ended this week when news of more votes on Wal-Mart issues came to the fore. From the Chicago Sun-Times:
Planner meets with Wal-Mart officials
Planning and Development Commissioner Arnold Randall said today he’s been meeting with Wal-Mart and union leaders to try and broker an agreement that might head off a repeat of the battle that gave birth to the vetoed big box minimum wage ordinance.
Randall disclosed his behind-the-scenes efforts at shuttle diplomacy one day after Ald. Howard Brookins (21st) said he’d been told by top mayoral aides that Mayor Daley wants another City Council vote before approving construction of a Chatham Wal-Mart at 83rd and Stewart.
Technically, all that’s needed for developers to break ground on Chicago’s second Wal-Mart and first super-center that sells groceries is administrative sign-off from Randall.
Politically, it’s another story.
After the jump, more coverage from the Sun-Times on Chicago’s Wal-Mart saga.
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Wal-Mart’s Customer Satisfaction Low Overseas, Too
Posted by Research Team
News from China of a Wal-Mart customer bringing two suits against the retailer: one for discrimination and the other for unsubstantiated claims about its products.
The first is a claim of discrimination against Chinese citizens: The plaintiff claims that not allowing Chinese customers to bring bags into the store is discriminatory because this is not the practice in the U.S. Even if a customer does bring their bag into the store, an associate tapes the bag shut upon entering. The lawsuit is for RMB1000 (around $130) and requests that Wal-Mart make a public apology.
The second suit is against Wal-Mart for selling herbal toothpaste with unsubstantiated and illegal claims of dental health benefits. The plaintiff is suing for twice the cost of the toothpaste (valued at under $1.00) and is requesting that Wal-Mart make a public apology.
Race to the Bottom: Profiting Off Poverty
Posted by Alex Goldschmidt
The U.S.’s recent economic troubles highlight Wal-Mart’s race-to-the-bottom business model. Whereas other retailers have a vested interest in seeing the U.S. economy do well, Wal-Mart is thriving in the current recession-like environment. In doing so, Wal-Mart has little to gain from paying its employees better wages or getting them off state-sponsored health plans. Though the retailer is constantly citing “the economy” for its weak sales and scaled-back expansion plans, the fact is that Wal-Mart profits off poverty.
Always low prices [The Economist]
“WE know the economy will be a critical factor this year,” said Lee Scott, the boss of Wal-Mart, as the world’s biggest retailer released its quarterly results on February 19th. Wal-Mart’s prospects do indeed reflect those of the economy at large—but not in the way you might expect. With America tipping towards recession, Wal-Mart is doing much better than in the past couple of years when the economy was booming. Sales increased by 8.3% compared with the same period last year, to a record $106.3 billion. Mr Scott concluded that in a volatile economy Wal-Mart was “well positioned to succeed”.
The secret of Wal-Mart’s meteoric rise over the past five decades has been its obsession with low prices. It got into trouble in 2005-07 when it focused less on “always low prices” (its longstanding motto) and more on expansion. Sales growth, productivity and profits fell, while Target and other upmarket rivals snatched market share. Wal-Mart, the biggest private employer, became a favourite public whipping boy because of its health-care, gender and labour policies. In February last year Mr Scott’s job was said to be on the line.
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Wal-Mart, Self-Conscious About Popularity, Conducts Survey
Posted by Alex Goldschmidt
Wal-Mart’s spokespeople sounded kinda cranky in their response to Tuesday’s report from the University of Michigan. The University’s American Customer Satisfaction Index ranked Wal-Mart last among major retailers for customer satisfaction, to which Wal-Mart’s spokespeople said “That is, like, so not true!”
To counter U of M’s assertions, Wal-Mart conducted it’s own survey. While Wal-Mart’s poll “wasn’t scientific or anything,” the retailer is standing by its findings.
“We found out that at least half the lunch room likes us,” one spokeswoman said. “And that’s not even counting the lunch ladies.”
Wal-Mart frequently uses “the customer” as an excuse for the company’s irresponsible business practices, and though Wal-Mart’s survey was neither objective nor statistically accurate, they’re still pretty sure all that wage-cutting is paying off.
Wal-Mart disputes customer satisfaction survey [Morning News of Northwest Arkansas]
A university report on customer satisfaction released Tuesday and Wal-Mart’s in-house survey paint two different pictures of how content shoppers are with the retailer.
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Wal-Mart’s Stellar Customer Service in Action
Posted by Alex Goldschmidt
A piece in the New York Times last year discussed marketing to Muslims and the challenges the demographic faces in the marketplace. Despite the article’s statement that Muslims are a potentially lucrative - and untapped - market, Wal-Mart seems to have done little to incorporate them into customer service training. The company moved to do “sensitivity training” for employees only after a cashier insulted a Muslim customer. Wal-Mart was ranked lowest this year in a customer satisfaction index from the University of Michigan.
Wal-Mart Apologizes to Muslim Woman [Associated Press]
Wal-Mart Stores Inc. apologized to a Muslim woman who said she was mocked because of her face veil.
“Please don’t stick me up,” a cashier told the shopper on Feb. 2, according to The Council on American-Islamic Relations.
Wal-Mart apologized Monday in a letter signed by Rolando Rodriquez, a vice president and regional general manager. It was released Tuesday by the council’s Nevada chapter.
“I can assure you that the associate in question was disciplined in accordance with our employment policies as a result of the situation,” Rodriguez said without disclosing details.
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Wal-Mart Leans on International Stores for Growth
Posted by Alex Goldschmidt
A flurry of stories in the news today about Wal-Mart in the United Kingdom. After announcing 2007’s fourth quarter sales yesterday, Asda came out as one of Wal-Mart’s strongest units. Not surprisingly, a second series of announcements make known Wal-Mart’s intentions to expand in the country. Up until now, Wal-Mart has had trouble expanding in Britain, as the country’s strict zoning laws make Wal-Mart’s sprawling supercenters difficult to build. But as Wal-Mart meets increasing opposition and market saturation in the U.S., foreign markets - even with all their challenges - are starting to look pretty good.
Wal-Mart unveils strong overseas growth, led by Asda [Reuters]
Sales from Asda stores open at least a year, a key gauge in the industry, rose in the “mid-single digits” excluding the positive impact from fuel…
Wal-Mart, the world’s largest retailer, is increasingly turning to its international operations to dazzle investors as its U.S. business struggles with limited growth and flagging sales at its near-4,100 stores.
Asda set to call an end to its recovery plan [Financial Times]
Much of the credit for the continued improvement in Asda’s performance will go to Andy Bond, who was brought in as chief executive in March 2005. Mr Bond is expected to say at a news conference today that much of the recovery has been achieved and Asda will concentrate on growth…
After missing profit targets in his first year, Mr Bond has since turned the business round and Wal-Mart said yesterday that Asda had beaten internal sales and profit forecasts.
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Wal-Mart’s Poor Customer Service Damaging Company Growth
Posted by Alex Goldschmidt
Wal-Mart’s 4Q sales report highlights many of the problems facing the company: market saturation in the U.S., continuing problems with apparel and home goods and a weak economy that has customers using holiday gift cards to buy food.
Add to that: poor customer service. Wal-Mart scored the lowest of any retailer on the American Customer Satisfaction Index from the University of Michigan, earning it the title of “Worst Customer Service in America.” This is the second time Wal-Mart has earned the title in the last three years. The retailer’s grocery department has been at the bottom of the list every year since ACSI started tracking in 2004.
In this interview on CNBC, Claes Fornell of University of Michigan’s Business School explains that Wal-Mart’s poor customer service record is only going to hurt the company, especially in a period when retailers are struggling to maintain their customer base.
As we mentioned earlier, Wal-Mart must improve the way it treats its employees if it intends to stay competitive. It’s the only sustainable way to improve customer satisfaction, and will undoubtedly earn more money than it costs.