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.
Wal-Mart’s Hard Sell
Posted by Laura Jack
From the Financial Times:
Joseph Kizelnik is an imposing figure: 6ft tall, with a full silver beard, while his waistcoat, white shirt and black Hasidic coat add to his stately aspect.
Kizelnik likes to say that he is not sure exactly how many grandchildren he has - it was 33 at the last count - and he likes to chat amiably, often in Yiddish, with the customers at his Auction Mart discount store, which sells washing machines, toys, electronics and other goods in a nondescript shopping plaza in Monsey, 35 miles north of New York City.
In October, at a public meeting held at a local village council chamber, Kizelnik was not smiling. He was addressing a gathering of potential opponents of plans by Wal-Mart, the largest US retailer, to build a 215,000 sq ft “Supercenter” store on State Route 59, on the derelict lot where a drive-in cinema once stood. The site is next to the small store Kizelnik has operated for seven years.
“We should make petitions. We should make protests. That’s the way it is going to work,” he declared with inspired wrath before a 100- strong crowd. “We are the ones who elect the officials in this community. And we are the ones that break them.”
Wal-Mart, he warned, would be bad for the traffic on the area’s main road, where, just a few weeks before, a mother was killed as she walked back from visiting sick members of the community. And it would be bad for crime: “This is a place where we leave our doors unlocked. If Wal-Mart comes in you are going to have to put bars on your windows. They will bring in very low-level people, and if these low-level people come in they are going to follow us to our homes, and ransack our homes.”
Kizelnik’s impassioned contribution was part of an unusually diverse line-up that chilly autumn evening: the village deputy mayor, two candidates for state and county office, a representative of the Pathmark supermarket that also sits adjacent to the proposed Wal-Mart site, and an environmental activist.
At the back, black-hatted men from Monsey’s Hasidic Jewish communities drifted in and out of the crowd, chatting discreetly to each other, sometimes with their wives, one or two with children tagging along. And at the very back stood the head of the local United Food and Commercial Workers union, accompanied by several thickset lieutenants in jackets and ties.
Such is the universe of the latest Wal-Mart “site fight” - one of many battles fought, mostly in vain - by people who want to stop the American retail behemoth from opening a store in their neighbourhood. These battles are part of a larger national war over the growth and influence of Wal-Mart. The struggle has become part of the American political landscape, even as the store itself has become part of everyday American life.
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Fortune: The Unending Woes Of Lee Scott
Posted by Laura Jack
From Fortune Magazine:
The world’s biggest retailer had a lousy 2006. There were personnel problems, like the resignation of Sam’s Club marketing head Mark Goodman and the embarrassing ouster of Julie Roehm, the young advertising whiz Wal-Mart had hired away from DaimlerChrysler. There were legal troubles: In October a Philadelphia jury ordered Wal-Mart to pay $78 million to a class of 185,000 workers who claim they were denied breaks and forced to work off the clock.
There were also business woes: The company took a $900 million charge after its forays into Germany and South Korea turned sour. Same-store sales growth turned negative in November before rebounding to 1.6% in December ahead of analysts’ predictions of 1%, but still skimpy. (Same-store sales at Costco and Target were up 9% and 4.1%, respectively.) And Wal-Mart’s stock, currently about $48 a share, was flat in an otherwise strong year for stocks.
Then there were the public relations fiascoes. Wal-Mart had to sever its relationships with political consultant Terry Nelson and former Atlanta mayor Andrew Young. Nelson had a hand in the race-baiting “Harold, call me!” spot in the U.S. Senate race in Tennessee, and Young, while speaking on behalf of Wal-Mart, accused Jewish, Korean, and Arab shopkeepers of selling spoiled food to inner-city blacks…
“I know [Scott] has the support of the family,” Gilliam says. She points out that Scott has been forced to spend a considerable amount of time fighting persistent (and unfair, in Gilliam’s view) attacks by two union-funded anti-Wal-Mart groups - Wal-Mart Watch and Wake-Up Wal-Mart - who complain about employee pay and benefits (see “Attack of the Wal-Martyrs"). Those campaigns may have hurt. According to a 2004 McKinsey & Co. report, 2 percent to 8 percent of Wal-Mart customers surveyed have ceased shopping at the chain because of negative press.
Getting back its mojoIt’s true that Scott faces huge challenges. With expected sales of $350 billion for the fiscal year ending this month, Wal-Mart is such a behemoth that increasing the top line by 10 percent means adding $35 billion in yearly sales. That’s roughly equal to the combined revenues of Staples, Barnes & Noble, Starbucks and Nordstrom…
When Scott does acknowledge problems, his diagnoses seem off. In an October meeting with analysts, Scott blamed Wal-Mart’s surprisingly weak same-store sales growth on high gas prices and on store remodelings. HSBC’s Husson says, “They’ve done remodels before - they should know what the effect is.” As for gas prices, Scott predicted sales would rebound when energy prices fell. Prices did fall, from $3 a gallon in August to $2.30 in late December, yet Wal-Mart’s slide in same-store sales growth continued, from 2.7 percent and 1.8 percent in August and September to - 0.1 percent and 1.6 percent in November and December. While December’s number was touted as a rebound, it was well below the 3.3 percent retail average for the month.
Scott may yet turn things around, of course. Bets in China and India for instance, may start paying off. But Wall Street is not likely to put up with a 2007 from Wal-Mart that looks anything like the year that just ended.
AP: Wal-Mart will defend reputation in ads
Posted by Nu Wexler
From the Associated Press:
Wal-Mart will defend reputation in ads
By MARCUS KABEL, AP Business Writer
Sun Jan 7, 5:33 PM ETWal-Mart Stores Inc. will run national television ads starting Monday praising its record as an employer and corporate citizen, taking its arguments straight to the public in an ongoing battle over its reputation with unions and other critics.
The world’s largest retailer, increasingly a lightning rod for politicians as well as labor unions and other activists, cites the legacy of late founder Sam Walton in a folksy 60-second ad. A 30-second ad focuses on Wal-Mart’s health insurance plans for its more than 1.3 million U.S. employees.
“It all began with a big dream in a small town, Sam Walton’s dream,” a narrator says as one ad starts with a black-and-white photo of Sam Walton and a grainy shot of Walton’s first five-and-dime store in what is now the chain’s headquarters town of Bentonville, Ark.
“Sam’s dream. Your neighborhood Wal-Mart,” the ad ends.
Both ads recite key points Wal-Mart has been making to reporters for months about its record, but the ads now take the arguments straight to the public.
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Wal-Mart Dolls Made By Sweatshop Labor
Posted by Russ Fagaly
From the the Associated Press via BusinessWeek:
The pouty Bratz dolls so popular as Christmas presents are made at a factory in southern China where workers are obliged to toil up to 94 hours a week, among other violations, a labor rights group said in a report released Friday.
The report by U.S.-based China Labor Watch and the National Labor Committee details allegations of harsh working conditions, especially during peak delivery months, and of violations of workers’ rights to injury and health insurance.
The edgy, urban-styled rival to Barbie is made by a subcontractor in the southern export hub of Shenzhen, as is typical of many products sold in the U.S. and elsewhere.
Workers are paid the equivalent of 17 U.S. cents for each doll, the report said, while the dolls retail for US$16 (euro12) a piece or more.
Calls to the Van Nuys, California, headquarters of MGA Entertainment Inc., which launched the Bratz brand in 2001, were not answered and there was no immediate response to an emailed inquiry to the company’s public relations office.
Calls to the China-based spokesman for Wal-Mart Stores Inc., a main distributor of the dolls, went unanswered Friday.
The allegations in the report describe practices found at many Chinese factories producing name-brand products for export. They include required overtime exceeding the legal maximum of 36 hours a month, forcing workers to stay on the job to meet stringent production quotas and the denial of paid sick leave and other benefits.
The report shows copies of what it says are “cheat sheets” distributed to workers before auditors from Wal-Mart or other customers arrive to ensure the factory passes inspections intended to ensure the supplier meets labor standards.
It said workers at the factory intended to go on strike soon to protest plans by factory managers to put all employees on temporary contracts, denying them of legal protection required for long-term employees.
More than 120 million Bratz dolls have been sold since the toy debuted in 2001.
- Click here to learn more about Wal-Mart’s supplier relationships.
Wal-Mart Works On Image, With Mixed Results
Posted by Laura Jack
From Women’s Wear Daily:
Wal-Mart president and chief executive officer H. Lee Scott appeared on the Rev. Al Sharpton’s radio show in July to discuss ways the world’s largest retailer is changing corporate practices.
In 45 minutes, Scott answered tough questions from Sharpton, the activist minister and former presidential candidate, and his audience, about the company’s stance on unions, its record employing minorities and attempts to build more stores in urban areas. It was an image-molding move by Scott to go along with Wal-Mart’s environmental initiatives, a program offering $4 generic drugs and the retailer’s quick response to help in the aftermath of Hurricane Katrina.
Welcome to the new Wal-Mart, which has spent hundreds of millions of dollars in the past three years on a campaign to improve its reputation that experts believe is one of the most ambitious and aggressive in U.S. corporate history. The company has not significantly improved its reputation, but experts and data suggest it hasn’t lost ground either, despite well-organized opponents.
December, a make-or-break month because of holiday sales, will test Wal-Mart’s effort in the battle for consumers’ perceptions. There are indications that, along with merchandise miscues and disruptions because of store remodeling, the ethics issues raised by critics of the world’s largest retailer are giving some shoppers pause just when Wal-Mart is trying to kick-start U.S. sales that fell 0.5 in November, the first same-store decline in almost a decade.
“They’ve been humbled,” said Paul Argenti, professor of communications at Dartmouth’s Tuck School of Business. “The market has humbled them, and I think they are starting to realize that public relations and reputation is not just window dressing. I think they’ve seen how deeply it can affect you.”
Wal-Mart’s image problems have been linked to the company’s flat share price, difficulty expanding into potentially lucrative urban markets and, according to the retailer’s own data, loss of 2 percent to 8 percent of shoppers turned off by negative press.
“I debated coming here,” said Leanne, 47, a homemaker from Beverly, Mass., who did not want to give her last name, as she shopped at the Wal-Mart in Danvers, Mass., outside Boston. A tight family budget keeps her coming back. “My concern is I hear more and more stuff about employees not being treated well with benefits and cutting their hours. I think this may be my last time here.” She has begun shopping more often at rival Target.
In northwest Arkansas, near company headquarters in Bentonville, where Wal-Mart employs about 20,000 people, articles in a local newspaper, The Morning News, on the retailer’s stricter employment policies and struggles with bad press generated more than 100 postings to the paper’s Web site from readers. Most complain about cultural changes at Wal-Mart, and many mention the mistrust engendered by an internal memo leaked to the press in October 2005 in which the retailer proposed cutting health care costs by reducing the number of fulltime and long-tenured workers.
“Our sales are down, and all my friends in Arkansas and Missouri say their sales are down,” wrote one reader. “Wal-Mart go back to what you do best — sell merchandise everyday consumers need for the lowest price and quit hiring overpriced p.r. people to tell everyday Americans how great a company you are. It is not working.”
Opponents of Wal-Mart are focused and well organized. Union-funded Wake-Up Wal-Mart launched its first television ad campaign Nov. 30, featuring three sales associates complaining about new employment policies that Wake-Up Wal-Mart said penalize working parents, long-term workers and older workers.
“[Company founder] Sam Walton would never have done this,” one associate says during the spot. Wake-Up Wal-Mart also started passing out leaflets at Wal-Mart stores in 100 cities labeled “This holiday season, what if Wal-Mart treated your family this way?”
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FTC Moves to Unmask Word-of-Mouth Marketing
Posted by Russ Fagaly
From the Washington Post:
The Federal Trade Commission yesterday said that companies engaging in word-of-mouth marketing, in which people are compensated to promote products to their peers, must disclose those relationships.
In a staff opinion issued yesterday, the consumer protection agency weighed in for the first time on the practice. Though no accurate figures exist on how much money advertisers spend on such marketing, it is quickly becoming a preferred method for reaching consumers who are skeptical of other forms of advertising…
Andy Sernovitz, chief executive of the Word of Mouth Marketing Association, said the FTC’s decision was an endorsement of the industry’s efforts to police itself. The Chicago-based association, which has more than 300 members, last year issued a code of ethics stating that marketers should disclose ties to sponsors.
The group has also tried to hold members accountable. Sernovitz said the group is reviewing the membership status of the Edelman public relations firm after Wal-Mart, one of the firm’s clients, reportedly gave positive comments to bloggers who then posted the comments without mentioning the source. Edelman later admitted that some of its employees had written the blogs.
- Click here (PDF) to learn more about the Wal-Mart/Edelman fake blog controversy.
Wal-Mart’s PR Firm Straddles the Enviro Fence
Posted by Russ Fagaly
Edelman is leading a $100 million advertising and lobbying campaign for the oil and gas industry. From National Journal via Potomac Flacks:
API’s Well-Oiled PR Drive
With congressional Democrats readying probes into oil companies’ profits and eyeing legislation aimed at curbing global warming, the American Petroleum Institute and its K Street allies are looking to assemble a $100 million war chest to rally policy makers and public opinion to their side, according to lobbyists.
The image and education effort, much of which will be coordinated by the PR firm Edelman, will include expensive television, radio, and print ads, tours of oil patch facilities for lawmakers and opinion elites, and financial contributions to sympathetic think tanks and industry-friendly organizations.
The API is asking the Independent Petroleum Association of America, the National Petrochemical and Refiners Association, and other oil and gas trade groups to participate in the multiyear effort. “Field trips to educate members [of Congress] may be the single most important thing to do,” says one lobbyist who calls the API’s plan “an industry-wide image program.”
PR Week on Working Families For Wal-Mart
Posted by Russ Fagaly
From PR Week:
Edelman’s recovery from its Working Families for Wal-Mart (WFWM) blog imbroglio hit an embarrassing snag when an anti-Wal-Mart group started posting disparaging information at the Web domain workingfamiliesforwalmart.com.
Wal-Mart Watch, a union-supported anti-Wal-Mart group, registered the domain name in April 2006, but started posting after Edelman’s blog troubles, according to Wal-Mart Watch spokesman Nu Wexler.
Its appearance resembles that of WFWM’s actual site, forwalmart.com, but the content is critical of the company and its firm.
Donna Lewis-Johnson, media spokesperson for WFWM and Edelman VP, said that forwalmart.com traffic has been consistently rising. She called the other site “a PR stunt. Its real world impact is nil.”
She added that the gaffe hadn’t affected Edelman’s relationship with Wal-Mart.
Meanwhile, Edelman chief of staff Derek Creevey said the firm is on track with all of its reforms promised after news of its blog mishap broke. He said that all staff has attended social media training classes, and that a review of the firm’s past work for errors is “more than 50%” complete.”
Creevey didn’t know whether results of the review would be made public, or not, but he said that no problems have been unearthed so far.
- Click here (PDF) to learn more about the Wal-Mart Fake Blog Controversy.
- Click here to visit Working Familes For Wal-Mart.