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.
The High Cost of Low Prices: Wal-Mart’s Supplier Factories
Posted by Alex Goldschmidt
As Wal-Mart struggles to produce greener electronics, safer toys, and better conditions in supplier factories, this article details just how complicated such processes can be. It’s also exposes the long-term costs of low-cost production, for workers, consumers and the environment. Additional material, including a blog from Chinese factory worker Wang Fengping on the Wall Street Journal’s website.
Toxic Factories Take Toll On China’s Labor Force [Wall Street Journal]
Over the holidays, millions of American children received Chinese-made toys powered by cadmium batteries.
Cadmium batteries are safe to use. They are also cheap, saving American parents about $1.50 on the average toy, compared with pricier batteries.
But cadmium batteries can be hazardous to make. In southern China, Wang Fengping worked for years in plants that produced cadmium batteries for the likes of Mattel Inc., Toys “R” Us Inc. and Wal-Mart Stores Inc. Like hundreds of her colleagues, Ms. Wang regularly inhaled the toxic red cadmium dust that filled the air in the plant.
Now, at 45, Ms. Wang is often too weak to walk. Her kidneys have failed, and her doctors have identified cadmium poisoning as the likely culprit. About 400 other workers at her former employer, Hong Kong-based GP Batteries International Ltd., have been found to harbor unsafe levels of cadmium, a toxic metal like mercury and lead that can cause kidney failure, lung cancer and bone disease.
In recent months, Americans have discovered the dark side of their reliance on cheap Chinese goods. From lead-tainted toys to contaminated pet food, the safety of Chinese products is suddenly an American obsession.
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“The End of the Sam Walton Era”
Posted by Alex Goldschmidt
In a lot of ways, Sam Walton represented the best intentions of Wal-Mart. His Rules for Building a Business emphasized employee-friendliness, and what became the world’s largest corporation started as his locally-owned business. Wal-Mart has moved away from Sam’s philosophy in the decade and a half since his death, opting instead to scrimp on employee benefits and customer service. Today’s Morning News brings word of another aspect of Sam’s legacy falling by the wayside: the early Saturday morning meetings. What was once a dedicated gathering every week will become an impersonal meeting held in the high school basketball court once a month. As the culture continues to change in management, so too does the company’s values.
Wal-Mart Alters Regular Saturday Meeting [Northwest Arkansas Morning News]
The legendary Saturday morning meetings that have long been at the heart of the Wal-Mart culture will dwindle to just one meeting per month.
And executives won’t be funneling into the home office for the soon-to-be monthly meetings, but will gather down the road at Bentonville High School where a larger auditorium can house the growing crowd of department managers required to attend.
Wal-Mart confirmed the news, announced Saturday at the meeting, but declined to make further comments as “details have not been worked out,” a company spokeswoman said.
To many, the move signifies the end of the Sam Walton era. Sam Walton strongly believed in the value of the Saturday morning meetings as a time to communicate, plan strategy and gain a competitive advantage.
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AdAge to Wal-Mart: Your Tagline is Awful
Posted by Media Team
Wal-Mart took a gamble on its new advertising campaign. The company invested millions in “Save Money. Live Better,” the disputed brainchild of marketing firm Martin Agency. The campaign met a mediocre receptionwhen it launched last September, and now Advertising Age calls the slogan “poorly punctuated” and forgettable. This is only the latest in a long line of marketing blunders for Wal-Mart. As the company continues to struggle with its marketing strategy, wouldn’t it make more sense for Wal-Mart to invest some of that money in long-term, sustainable solutions to its image problems? Employee-friendly practices and socially responsibile policies would go much further than any magazine ad ever could.
Your Advertising Slogans Are Crummy. Can’t You Do Better? [Advertising Age]
After wading through the recent onslaught of holiday ads, I’ve come to the conclusion that many major businesses do a poor job of communicating their identities by using meaningless phrases in taglines or slogans.
I first noticed this when I saw an odd commercial where a baby was hitting a button that said “easy” on it. As items fell off store shelves the TV ad made no sense if a viewer didn’t understand what store the button represented. When Staples was mentioned, it seemed like an afterthought. Advertising copywriters probably thought they created a clever concept, but there was not a unique connection between the store and the slogan “That was easy” (which oddly appears in all lowercase in the print ads).
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The Tesco Effect: Wal-Mart to Open Smaller Format Stores in 2008
Posted by Alex Goldschmidt
Wal-Mart was already having trouble expanding in the United States when UK retail giant Tesco announced its plans to open stores in California last year. Tesco - whose business model incorporates several different store sizes and formats - could potentially break in to the urban markets that have proved all but unreachable for Wal-Mart. The company has now announced plans to open smaller stores: 20,000 square feet is about half the size of a large supermarket, less than a tenth the size of an average Supercenter. Will the notoriously stubborn retailer be able to compete on Tesco’s terms?
Wal-Mart goes small to take on UK’s Tesco [Financial Times]
Wal-Mart will open small-format grocery stores in Arizona this year under the trade name, “Marketside”, going head to head with the new Fresh & Easy markets being rolled out in the US by Tesco, the UK grocer.
The new pilot stores are about 20,000 sq ft, a 10th of the size of the Supercenters that have been driving Wal-Mart’s growth over the past two decades.
The stores, likely to be open by the summer, are the first new concept launched by the retailer in the US for a decade, and are being developed as the company slows its planned growth of Supercenters.
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Going Green Isn’t As Easy As It Seems
Posted by Alex Goldschmidt
Wal-Mart has been talking a really big game about its green program lately. Company reps love to talk about Hamburger Helper’s straighter noodles and concentrated laundry detergent, but it seems like Wal-Mart’s starting to run out of low-hanging fruit. This article from Reuters takes a look at Wal-Mart’s attempts to green its electronics, and the mission is proving harder than anticipated. As we mentioned in an interview with Treehugger, some of Wal-Mart’s business practices are simply unsustainable, and selling disposable electronics is definitely one of them. As one supplier says in the story, “low prices” is one of the reasons why these product are so environmentally damaging in the first place. Wal-Mart’s lofty environmental goals seem farther away now than ever, but the challenges will hopefully propel the company to substantive change. To help hold Wal-Mart to its environmental promises, and encourage the company to continue innovating, join our environmental task force here.
Wal-Mart faces hurdles in green electronics [Reuters]
A campaign to reduce packaging has been a success for Wal-Mart Stores “green” campaign, but a move toward environmentally friendly electronics is proving that changing the mechanics of a TV is much more complex than changing the mechanics of a cereal box.
Manufacturers that sell goods in Wal-Mart’s stores have responded quickly to the company’s request to cut packaging waste, slashing the size of cereal boxes or bulking up toilet paper rolls to eliminate the need for extra cardboard centers.
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Wal-Mart’s Spying Tactics Come Under Fire Once Again
Posted by Media Team
CIOZone, a professional social network for Chief Information Officers, takes an in-depth look at Wal-Mart’s 2007 surveillance scandal and the ethical questions that continue to surround the company’s surveillance techniques. We’d like to take this opportunity to say “hello!” to our many faithful readers in Bentonville, AR. Thanks for visiting - it’s nice to know you care.
Wal-Mart Spying: Good, Bad, Or Just The Wave Of The Future? [CIO Zone]
Wal-Mart is used to finding its name on the front page of The New York Times and The Wall Street Journal, but in March of 2007 it found itself making news under very different circumstances.
Wal-Mart officially apologized to the Times and retail reporter Michael Barbaro after a member of its internal security organization was found to have secretly taped conversations between Wal-Mart employees and the Times reporter. Not only did Wal-Mart apologize to the reporter, chief executive H. Lee Scott phoned the chief executive of The New York Times to personally offer an explanation and convey the information that the technician involved, who had 19-years with the company, as well as a supervisor, had been fired.
But the matter did not end there. Weeks later, the fired technician, Bruce Gabbard, went public, telling The Wall Street Journal he was part of a larger, sophisticated surveillance operation at Wal-Mart. Gabbard said the retailer employs a variety of means, including software that can monitor every key stroke on the retailer’s network, to keep tabs not only on employees but also on its board of directors, stockholders, critics of the company, and in at least one instance, on a consultant, McKinsey & Co.
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WSJ: Reputation More Important Now Than Ever
Posted by Alex Goldschmidt
An article out today from the Wall Street Journal emphasizes how important a good reputation is in a slow economy. With fewer dollars to go around, companies are striving even harder than usual to be on their best behavior. For Wal-Mart, a company criticized on multiple aspects of its business model, now would be an excellent time to get your act together.
The company certainly recognizes the threat: recent attempts at improving employee health care and environmental progress show that the company knows it can’t afford the criticism much longer. But so many concerns remain. Just this week accusations of sweatshop labor flew at Wal-Mart from two different continents, and it was only days ago that Wal-Mart lost a court case trying to avoid paying its fair share of property taxes in North Carolina. Corporate responsibility is a holisitic notion: go all the way or go home. Wal-Mart’s success in a slowing economy depends on the retailer making substantive changes to its business model.
As Economy Slows, Reputation Takes On Added Meaning [Wall Street Journal]
As the nation’s economy cools, some well-known companies are stumbling in painful ways. Starbucks is switching chief executives and struggling to reconnect with customers. Circuit City Stores is trying to right itself amid skidding sales and a more than 70% drop in its stock price last year. And the pharmaceutical industry seems to have lost its ability to develop meaningful new drugs.
What’s gone wrong? The details vary but, in each case, companies with longstanding records of success are acting as though their trusty playbooks suddenly have vanished.
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Wal-Mart’s Effect on Local Economies
Posted by Alex Goldschmidt
An article in this month’s Federal Reserve Bank of Minnesota’s gazette publication examines Wal-Mart’s effect on local communities. From the fedgazette:
[Wal-Mart] kills jobs and downtowns, say critics, and destroys community character. It’s been accused of discriminating against women, using illegal immigrants, requiring work off the clock and being overly aggressive in stopping the formation of labor unions among its workers.
It’s been blamed for sprawl and traffic congestion, as well as aesthetic offenses. For example, as the company upsizes from discount stores to supercenters in many towns, it often leaves behind an empty shell whose only visitors are the weeds that crop up in the unused parking lot, which might itself be in view of the new store. That new store, critics contend, probably received infrastructure upgrades that Wal-Mart strong-armed from local communities, lest it find a better offer elsewhere. The company adds a final dash of salt to the wound by repeatedly fighting (and mostly winning) property tax assessments on its stores.
The study finds that retail wages fell in every county examined with a Wal-Mart store, and that employee benefits were better in counties without Wal-Marts. Additionally, and perhaps most notably, the authors found that poverty rates were significantly higher in counties containing a Wal-Mart store. These findings seem to counter the authors’ assertion that Wal-Mart’s impact on local economies is minor.
This report is one of several dozen inquiries into Wal-Mart’s impact on local communities. Other such reports have examined Wal-Mart’s heavy reliance on public subsidies, the company’s influence on wages and stores’ damage to local ecosystems. Previous reports as well as scholarly papers and investigations can be found in our Research Center. More articles and reports on Wal-Mart’s negative impact on local economies can be found here.
Wal-Mart Has Minor Effect on Local Economy, Fed Says [Bloomberg News]