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Wal-Mart and Apple Battle
for Turf
By Ronald Grover
AUGUST 31, 2006
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The retail behemoth isn't happy about
the iPod maker's plans to offer movie downloads through iTunes. Has
Wal-Mart met its match?
The guy from Bentonville, Ark., surely
isn't on any of Hollywood's leading man lists. A 23-year Wal-Mart Stores
(WMT ) veteran, David Porter is the person at the retail giant who
orders DVDs and slashes prices to move them. But this summer, Porter has
been one of Hollywood's hottest acts, taking meetings with top studio
brass like a producer with a hot script. His pitch: Wal-Mart isn't
happy.
That prospect tends to send shivers
through Hollywood's Gucci-toed corner offices. As the largest seller of
DVDs, Wal-Mart accounts for roughly 40% of the $17 billion in DVDs that
will be sold this year, a financial lifeline to big-spending studios.
But now Wal-Mart's video business faces a potential threat by Steve Jobs
and Apple Computer (AAPL ), which in mid-September, sources tell
BusinessWeek, plans to announce it will start offering movie downloads
from its iTunes store.
The notion of kids running around with
full-length movies on new, wider-screen iPods that Apple is expected to
unveil as well is causing grief in Bentonville, according to Hollywood
executives. The $312 billion a year retailer, they say, wants
concessions that could include lower DVD wholesale prices.
PLAYING THE HEAVY. With Wal-Mart CEO
H. Lee Scott assigning his point man Porter to roam the halls of major
studios, skittish executives have for months delayed giving Jobs the
rights to distribute their movies through his new service. The price
Apple hopes to charge, now set at $14.99 for new releases and $9.99 for
older movies, has risen from Jobs's initial plan to offer new flicks for
$9.99, say industry insiders.
So far, Apple only has one studio
signed on: Walt Disney (DIS ), where Jobs is the largest shareholder
following the entertainment giant's purchase of his Pixar Animation
Studios. News Corp.'s (NWS ) Fox Entertainment Group may join in later,
as might independent Lions Gate Entertainment (LGF ), say Hollywood
sources, but only if other studios come along, too. So far, other large
studios have taken a pass, especially after Wal-Mart earlier this year
threatened not to sell Disney's High School Musical for a time after
Disney released it initially only on iTunes.
What does Wal-Mart want this time to
play nice? Executives who have met with Porter say it wants marketing
help when it launches its own planned download site. And it wants
Hollywood to trim the current $17 wholesale price for DVDs. That would
let Wal-Mart slash its own prices to the same $15 or so that Apple would
charge. (The plan is for Apple to pay a $14 wholesale price for new
releases, say sources, although negotiations continue.) A large
wholesale cut for Wal-Mart, of course, would amount to hundreds of
millions in lost studio revenues each year at a time when DVD sales are
slowing.
LOSING PATIENCE. Wal-Mart isn't the
only issue that's giving some studios pause. Several are concerned about
Apple's rules for using iTunes, which let users watch a film on up to
five different devices. And others worry about letting Jobs set a
download price they can't change, as he has done in music. Still,
studios have embraced the digital concept and accept some "burning" of
movies to DVDs. In addition to Apple, the studios are negotiating
potential download deals with Amazon.com (AMZN ), AT&T (T ), and cable
giant Comcast (CMCSA ).
No doubt Steve Jobs knows how to turn
tiny digital media niches into a mainstream phenomenon. That's what he
did in the music biz. But his patience for all this tiptoeing is wearing
thin. Jobs recently hopped aboard his corporate jet for a little
politicking of his own in Hollywood, and insiders say he called Scott to
express the concern of a vendor who sells tons of iPods and Macs through
Wal-Mart stores.
Jobs would not comment for this story
nor would any studios. Wal-Mart acknowledged that it's talking with
studios about starting its own download service but disputed that it is
"dissuading studios from conducting business with other providers,"
according to Wal-Mart spokeswoman Jolanda Stewart.
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Wal-Mart looks beyond the
aisle
By Jonathan Birchall
Financial Times
Aug 31, 2006
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At Wal-Mart's new supercentre in
Plano, Texas, shoppers can buy upmarket wines and sushi and surf the web
in a Wi-Fi-connected café as part of an experiment by the mass discount
retailer to test its ability to extend its appeal to higher income
customers.
Plano shoppers might notice that the
staff are wearing smart dark blue T-shirts, instead of the usual
Wal-Mart nylon smocks. But they might not be conscious of the fact that
the store's most popular departments – the grocery and health and beauty
sections – have been repositioned next to each other rather than on
opposite sides of the 200,000sq ft store, more than 100 yards apart.
The move, at odds with retail
industry's traditional "get 'em in and keep 'em in" approach, reflects
research done not just by Wal-Mart itself, but by Saatchi & Saatchi X,
its "in-store" marketing agency.
"The core thing we're trying to do is
for the customer to spend less time searching and more time shopping,"
says Andy Murray, chief executive of Saatchi X, based in Springdale,
Arkansas, a few miles from Wal-Mart's Bentonville headquarters.
"In Plano, we really tried to
understand the total store experience, and to look at things such as
adjacencies, how intuitive is the navigation, can it communicate more
quickly, and can it make areas of the store feel different – if you're
in the baby department, and it feels like the laundry detergent section,
that's not good."
Wal-Mart has worked before with
Saatchi X and its predecessor, ThompsonMurray, which the advertising
agency Saatchi & Saatchi bought in 2004 in a move that illustrated the
growing interest of the marketing industry and its clients in in-store,
or "at retail", marketing.
The retailer has now reinforced its
relationship with Saatchi X by declaring it to be its "agency of record"
for "shopper, in-store and associate [employee] communications" – the
first time a retailer has awarded an in-store agency this status, which
gives it involvement in higher-level strategic marketing decisions.
Saatchi X focuses on everything from
store layout to product packaging, shelving and the creation of in-store
promotions – an area of increasing importance for consumer goods
marketing as the traditional mass media channels of television and
newspapers decline.
"It's a recognition from Wal-Mart's
point of view that the store is a focal point for the shopping
experience," says Mr Murray. "Most other retailers don't have the
in-store shopping environment brought together at a strategic level. So
it's a recognition for Wal-Mart that this space is important."
Under John Fleming, who took over as
marketing officer last year, the retailer has stepped up its efforts to
improve the look and feel of its stores.
"The new paradigm for retail is that
the store is a brand," Stephen Quinn, Wal-Mart's senior vice-president
of marketing told investors this year, laying out the focus on reducing
store clutter and making shopping at the retailer easier.
Laura Davis-Taylor, founder and
principal of Atlanta-based Retail Media Consulting, says the elevation
of Saatchi X reflects one of the biggest challenges facing retailers as
they strive to manage the proliferating opportunities created by the
expansion of interest in in-store media.
"The biggest challenge is that no one
owns the store; someone in marketing owns the internet, and someone else
owns the external marketing. But no one owns the store, so it's very
difficult to act upon this whole idea of customer-centricity."
But Ms Davis-Taylor also points out
the challenges facing Wal-Mart as it seeks to co-ordinate the competing
demands of its store department managers, who have traditionally
arranged in-store promotions directly with the brand suppliers – often
without input from the marketing department.
Mr Murray argues that being nominated
as agency of record gives the Saatchi X more influence in the
decision-making process – the appointment of his agency also reflects
the influence of Mr Fleming's marketing team.
The rise of Saatchi X is also
emblematic of the impact of in-store marketing on the relationship
between the two giants of the consumer universe – Wal-Mart and Procter &
Gamble.
Mr Murray himself worked for nine
years at P&G, including three years at its Wal-Mart liaison office in
Springdale, Arkansas, before he went off on his own and eventually set
up ThompsonMurray.
Saatchi & Saatchi itself numbers
several P&G brands among its most important clients, including its
Pampers childcare line. Mr Murray's team has worked with other
companies, too – including Novartis, the pharmaceutical company, and
American Express.
The agency's stress on the importance
of winning the attention of a customer in the store, and creating an
overall store experience that helps shape customer decisions,
synchronises with P&G's focus on what it calls the "first moment of
truth" – winning a consumer's attention in store within an estimated
three to seven seconds.
Saatchi X argues that there might be
even less time than that. Using proprietary eye-tracking technology, it
estimates that shoppers only notice 50 per cent of what they look at,
even standing in front of a shelf, and that the retailer has a mere
two-and-a-half seconds to make an impact.
P&G's current focus on the in-store
experience also reflects its collaborative relationship with Wal-Mart.
The two companies have been sharing shopping data since the late 1980s,
and Dina Howell, the head of P&G's global "first moment of truth" team,
headed the company's Wal-Mart research and marketing office in
Springdale from 1996 to 2004. She was also one of Mr Murray's first
major clients after he set up on his own in 1997.
Much of the agency's work at Wal-Mart,
however, has concentrated on trying to make shopping more convenient –
helping the retailer to pursue its goal of focusing on offering
"solutions" and "value", in place of its previous focus on selling the
cheapest items.
"A shopper might spend 21 minutes in a
store on average, but of that only six minutes involves shopping, and
the rest of the time she's trying to find stuff, and that is really not
driving the value of the shopping basket," he says. "Most in-store
experiences have ignored the factor of time."
That has led to in-store "multibrand"
efforts co-ordinated by Saatchi X, in which the objective is to provide
single-location groupings of disparate products – such as a promotion
last year presenting a range of products linked to the annual ritual of
the US high school senior year prom dance.
"Typical retailers concentrate on
product placement – such as putting the bananas near the cereal, rather
than trying to inspire, through multibrand campaigns that are really
connected to consumers," says Mr Murray.
He also argues that retailers need to
change their approach to in-store marketing – away from the traditional
focus on design, point-of-sale promotions or navigating around the
store, towards a more holistic approach that looks at the store from the
point of view of the customer.
"Our centre of gravity is the shopper,
and not the retail space. We need to understand the shopping cycle that
starts at home and then goes on through to the store."
Intimacy, mystery and sensuality
Andy Murray, head of Saatchi & Saatchi
X, believes successful retailers should try to address three aspects of
customers' experience in stores. In The Lovemarks Effect , a book to be
published in November, he describes three "attention zones": one
associated with the need to create an air of "mystery", another
"intimacy" and a third "sensuality".
The first attention zone operates at a
distance of 30ft from the shopper, and requires the retailer to use "a
combination of sound, colour, scent and motion" to attract potential
buyers – ideally by creating a sense of mystery and delight.
At 10ft the retailer's task changes,
as "placement on the shelf and the ability of the brand to stand out
from its competitors is at stake".
At 3ft the consumer is either holding
their potential choice or reaching out for it. "It is the look, feel,
and design of the object that will turn her from shopper to buyer."
The agency also identifies three
layers of shopping communication within a store – navigation,
inspiration and education – and notes that most retailers spend most of
their time on navigation, guiding customers around their stores.
In spite of the current enthusiasm for
in-store television and digital signage, Mr Murray argues that the
biggest technological revolution in stores will come through mobile
phones: customers will use mobiles to compare prices or download
recipes, film clips or product ingredients.
"The screens are going to be on the
shoppers as much as on the shelves . . . that's the place where things
are going to move really fast," he says.
© 2006 MSNBC.com
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Marubeni eyeing
linkup with Aeon or Wal-Mart
By Business Desk
The Daily Yomiuri
31-08-2006
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Marubeni Corp, the largest shareholder
in Daiei Inc, will soon enter into separate negotiations with Aeon Co
and Wal-Mart Stores Inc, the U.S. retail chain operator that has Seiyu
Co under its umbrella, to choose a partner to assist in the
rehabilitation of Daiei, industry sources said on Wednesday (August 30).
Marubeni plans to make a final
decision following negotiations with other major retail chain operators,
but Aeon is seen as a prime candidate because of its expertise in
developing goods and outlets, the sources said.
If Daiei and Aeon join hands it would
create the nation's largest retail business alliance, with more than 6
trillion yen (US$51.1 billion) in sales.
Marubeni, currently holding a 44.6 per
cent stake in Daiei, will sell up to 20 percentage points of its
ownership to the rehabilitation partner, forming a partnership in
October.
The partner will become Daiei's
third-largest shareholder after Marubeni and Advantage Partners LLP, an
investment fund holding a 23.5 percent stake.
Aeon President Motoya Okada told
reporters: "We're interested in Daiei. We'll talk with them after
collecting information for two or three days."
On August 4, Marubeni gained an
additional 33.6 per cent stake in Daiei for 69.8 billion yen (US$595
billion) from the Industrial Revitalisation Corporation of Japan, and
thus became the largest shareholder in Daiei.
Copyright @ 2002 ASIA NEWS NETWORK All
rights reserved.
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Tell Wal-Mart to Stick to Low Prices, Not Homosexual Activism
Family Research Council
August 30, 2006
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It is certainly not news that Wal-Mart
has a history of providing American consumers with good products for
reasonable prices. But what you may not know is that for some time
Wal-Mart has come under assault from the far left questioning how they
provide such an affordable service to the American public. Even Hillary
Clinton - former Wal-Mart board member and 2008 presidential hopeful -
has turned against the company by returning $5,000 in political
contributions.
In an apparent concession to the heat
from the radical left, Wal-Mart has entered into a new partnership with
the National Gay and Lesbian Chamber of Commerce (NGLCC). While the
NGLCC professes to promote the "interests of the LGBT business
community," this is not all they have done. Recently, they described
efforts to defend traditional marriage as an attempt to "write
discrimination into the Constitution..." The NGLCC also advocated
attaching a pro-homosexual "hate crimes" amendment to legislation
intended to protect children from violent sex offenders. Their advocacy
delayed the legislation for several months.
It is unfortunate that Wal-Mart has
joined forces with an organization whose mission opposes many of the
values shared by rural and small-town America. It is precisely the
interests of average Americans that Wal-Mart has prided itself in
promoting. Now, by surrendering to the radical homosexual lobby,
Wal-Mart has entered the political arena with no economic benefit to
their company or their customers.
While it appears to be a done deal,
it's never too late to express your disappointment with this recent
decision by Wal-Mart executives. Please download the flier and deliver
it to your local Wal-Mart Customer Service Desk. Doing so will allow
you, a patron of their stores, to convey your desire that Wal-Mart stick
to business, not politics.
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Wal-Mart's 'Gay' Partnership Risks Conservative 'Rollback'
By Randy Hall
CNSNews.com
August 29, 2006
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(CNSNews.com) - After months of
criticism from union-backed groups over its employee pay and health care
practices, Wal-Mart now faces a potential "rollback" of support from
conservatives because of the retail giant's partnership with a
homosexual business coalition.
"I don't think this is something that
will sell on Main Street America, where most Wal-Mart stores are
located," said Tony Perkins, president of the conservative Family
Research Council (FRC). "I don't think cheap prices on goods from China
will be enough to stop a rollback in their customer base if they choose
to go down this aisle."
Joining the FRC in criticizing
Wal-Mart's new alliance with the National Gay and Lesbian Chamber of
Commerce (NGLCC) is Americans for Truth, which describes itself as "the
only national organization devoted exclusively to exposing and
countering the homosexual activist agenda."
"Wal-Mart has always been a favorite
of God-fearing Middle American customers who hold traditional family
values," said Peter LaBarbera, the group's founder and president. "I'm
very surprised that Wal-Mart would now bite the hand that feeds it and
thumb its nose at those very customers.
"It seems to me that Wal-Mart should
reconsider its unsavory alliance with these extremist homosexual
activists in today's heated and polarizing culture war," LaBarbera
added.
However, Bob McAdam, vice president of
corporate affairs with Wal-Mart, told Cybercast News Service that the
world's largest retail company joined the NGLCC "just like we have
joined a number of other groups representing all parts of the spectrum
of our customers" - including women's organizations and minority groups.
The conflict began on Aug. 21, when
the NGLCC issued a news release announcing "a partnership with Wal-Mart
Stores, Inc., as part of the company's ongoing commitment to advancing
diversity among all of its associate, supplier and customer bases."
As part of that agreement, Wal-Mart
will pay $25,000 to NGLCC - "the largest LGBT [Lesbian, Gay, Bisexual
and Transgender] business development and economic advocacy organization
in the world" - and has agreed to sponsor two of NGLCC's annual
conferences.
"We are honored to have Wal-Mart's
support of the NGLCC," said the group's co-founder and president, Justin
Nelson. "Our partnership will not only provide more opportunities for
the Chamber, but the business community as a whole."
When asked by reporters why Wal-Mart
had not issued a statement on the new partnership, Nelson said that it's
"normal procedure" for the NGLCC to handle such announcements.
Since then, conservative organizations
have become increasingly vocal in their criticism of the new
partnership.
Robert Knight, director of the Culture
and Family Institute at Concerned Women for America, said that by
joining forces with the NGLCC, Wal-Mart is "validating the idea that
homosexual activists have the right to shake down corporations out of
fear of being called bigots."
Perkins called the alliance "an odd
new domestic partnership." He's asking FRC's supporters to download a
flyer from the group's website that asks why the retail chain is
supporting homosexual activism and place a copy of it at the customer
service desk of the nearest Wal-Mart.
As Cybercast News Service previously
reported, the retail giant has been no stranger to controversy over the
past year when union-sponsored groups such as WakeUpWal-Mart.com and
Wal-Mart Watch have charged the corporation with needing to meet "higher
expectations" and being unsafe for shoppers.
McAdam said he expects the popularity
of the company - which has about 3,900 outlets in the United States
alone - will trump any criticism from either side of the political
aisle, just as when Wal-Mart added homosexuals to its non-discrimination
policy two years ago.
"I think our attraction to Americans
in general speaks for itself, and that's why comments from either side
of the political spectrum or whatever philosophical debate are less
important than the daily approval we see from our customers," McAdam
said.
"Wal-Mart continues to serve the vast
majority of Americans regardless of their political persuasion or their
personal beliefs," McAdam noted. "Last year, about 85 percent of
Americans bought something at Wal-Mart. We have more than 138 million
customers a week at Wal-Mart.
"With numbers of that size, we're
dealing with just about everybody, and to that extent, we want to be as
welcoming as we can to every part of the spectrum, and we will continue
to be broad in our outreach," he added. "We welcome people of all
persuasions and all philosophies."
Not all homosexual activists are
pleased with the new arrangement, though.
"Our community is a smart community,
and we can see a shameless marketing opportunity when it comes," Jeremy
Bishop, program director of the "Pride at Work" subsidiary of the
AFL-CIO, told Cox Newspapers.
"For us, it's a matter of social and
economic justice," Bishop added, "and Wal-Mart has a long record of not
treating its employees - gay or straight - with equity and dignity."
[back to top]
New
Wal-Mart TV Ads Promote Company Transformation
30 and 60 Second
Spots Highlight Values, Health Care, Savings, and Philanthropy
PRNewswire-FirstCall
[back to top]
BENTONVILLE, Ark., Aug. 29 --
Wal-Mart today announced that it is airing two television advertisements
as part of a continued effort to inform the public about the
transformation underway at the company.
The spots highlight the company's
positive impact on communities, including its core values, affordable
health care, customer savings, and charitable contributions. The ads
will initially be launched in two markets - - Tucson, Ariz. and Omaha,
Neb.
"This is part of Wal-Mart's ongoing
effort to talk about our commitment to the men and women who work for
us, to the customers who shop at our stores, and to the communities we
serve," said Bob McAdam, vice president of Corporate Affairs. "The more
people learn about who we are and how we strive to do better every day,
the more they know that we are good for America's working families."
Wal-Mart associates featured in the
advertisements speak to the company's values and facts about its
transformation:
* Wal-Mart's low prices save the
average working family more than $2,300 a year; * Wal-Mart creates tens
of thousands of jobs per year; * Wal-Mart offers eligible associates
health insurance for less than a dollar a day ($23 per month); *
Wal-Mart moved more than 150,000 uninsured Americans into a company-
sponsored insurance plan; * Wal-Mart is one of the largest corporate
contributors to local charities in America.
At the June shareholder's meeting,
Wal-Mart CEO Lee Scott called the company's transformation, "Wal-Mart
Out In Front." It is an effort to remain true to the values that built
Wal-Mart over the last 44 years, while also changing to be an even
stronger business and an even better company.
The new ads can be viewed online at
http://www.walmartfacts.com .
About Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. operates
Wal-Mart discount stores, Supercenters, Neighborhood Markets and SAM'S
CLUB locations in the United States. The company has operations in
Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany,
Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea
and the United Kingdom. The company's securities are listed on the New
York Stock Exchange and NYSE Arca, formerly the Pacific Stock Exchange,
under the symbol WMT.
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Judge dismisses racketeering counts in Wal-Mart lawsuit
By JEFFREY GOLD
AP Business
August 29, 2006
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NEWARK, N.J. -- A federal judge has
dismissed two racketeering charges in a lawsuit brought by illegal
immigrants who worked as Wal-Mart janitors, finding that they failed to
explain how any violations of U.S. immigration law by the retailer
caused them economic harm.
The lawsuit's other charges, including
failure to pay overtime and minimum wages, still stand, but no trial has
been scheduled.
"Obviously, the plaintiffs are
disappointed in the ruling. We feel it's at odds with the law in the
area and we are exploring options," a lawyer for the janitors, James L.
Linsey, said Tuesday.
John Simley, a spokesman for Wal-Mart
Stores Inc. at its headquarters in Bentonville, Ark., said the company
was pleased with the decision.
The lawsuit, filed in Newark nearly
three years ago, seeks class-action status for the janitors. It claimed
that Wal-Mart conspired with contractors to violate the Racketeering
Influenced Corrupt Organizations Act, known as RICO, by systematically
depriving the workers of legal protections.
U.S. District Judge Joseph A.
Greenaway Jr., however, found that the janitors failed to link any
immigration violations by the company to their claimed injuries.
"As to the RICO claims for immigration
violations and money laundering, the path from wrongdoing to injury is
too indirect to meet the proximate cause requirement," Greenaway wrote
in a 17-page opinion issued Monday.
As part of the litigation, the
janitors obtained a 2003 affidavit by U.S. Immigration and Customs
Enforcement. In the affidavit, investigators said testimony and taped
conversations from 2003 showed two executives at Wal-Mart headquarters
knew that contractors and subcontractors cleaning its stores in several
states employed illegal immigrants from Eastern Europe and elsewhere.
The lawsuit charged that Wal-Mart
executives conspired with several contractors to hire the illegal
immigrants, who were paid $1,500 a month or less to clean stores seven
days a week, with no overtime or benefits.
Wal-Mart agreed last year to pay $11
million to end a federal probe into the use of illegal immigrants at
stores in 21 states, including New Jersey.
Shares in Wal-Mart rose 6 cents to
close at $44.49 in trading Tuesday on the New York Stock Exchange. It
has traded from $42.31 to $50.87 over the past year.
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New Wal-Mart opens Wednesday
By JOHN MORGAN
Star-Tribune
Tuesday, August 29, 2006
[back to top]
The new, west-side Wal-Mart store
opens Wednesday morning, after a year and a half of planning,
construction and debate.
"In every community, there are people
who are anti-Wal-Mart," Mayor Renee Burgess said Monday. "I think it
will balance Casper's growth and help to remind people that life is
about choices. People can choose not to shop there.
"Not everybody has to support
Wal-Mart," she said. "We don't all go to every new bar or every new
restaurant in any community. This is the same thing, just on a much
larger magnitude. For the most part, all the controversy has been
greatly blown out of proportion."
Last fall, a citizens group tried to
block the new store, but failed to get enough signatures in time to
submit a referendum petition. Wal-Mart currently has a store on Casper's
east side. The east side also has the mall and a bustling business
community, while the west side has seen little growth until recently.
"Wal-Mart will provide a tremendous
anchor on the west side and revitalize the business area," Burgess said.
"It's been a real painful growth experience, but I think the community
as a whole will support it."
The new store will open at 8 a.m.
Wednesday. There will be a special ceremony at 7:30 a.m. to give $36,000
in donations to several area organizations.
The store is Wal-Mart's latest design,
a supercenter that includes clothing, household products, lawn and
garden supplies, jewelry, crafts, and expanded electronics and toy
departments. The store will also feature a Tire & Lube Express station,
a Subway restaurant, a family fun center, one-hour photo lab, a vision
center, pharmacy, SmartStyle hair salon, Regal Nails salon, wireless
phone center and a full-service liquor store.
The supercenter will include a grocery
area with a bakery, deli, dry and frozen goods, and an organic food
section.
"Our associates are very excited and
looking forward to getting down to the day-to-day business," said store
manager Ken Braun. "Having a new supercenter in this still
underdeveloped area of town will help Casper to really flourish. I think
the public is excited and will take advantage of not having to drive
across town."
Despite having to halt construction
briefly in March and again in May due to undocumented workers and
struggling to find enough workers in Casper's tight job market, Braun
said the store has been able to overcome difficulties and open on
schedule.
"We have a large enough staff to make
the store open," he said, adding that while not yet fully staffed, the
store currently has more than 260 workers ready to start Wednesday. "We
are still looking for good employees and are still interviewing people."
The Wyoming Department of
Transportation will activate the new traffic signal on the highway in
front of the store this afternoon, according to WyDOT public involvement
specialist Jim Nations.
The 206,640-square-foot supercenter is
located at 4255 CY Avenue and will be open 24 hours a day, seven days a
week.
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After
German Failure, Wal-Mart Is All Smiles In China
homeworldbusiness.com
Monday, August 28, 2006
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NEW YORK— If you were surprised by
Wal-Mart throwing in the towel and selling off its German stores,
stranger still was its more recent decision to cooperate with China’s
state-sanctioned labor group to create unions at its 60 stores in that
country.
Actually, none of it is strange if you
look inside these developments.
American pundits from the outside are
performing flips trying to figure it out. I’ve read so many analyses of
Wal-Mart’s German failure— some cite the company’s alleged human
resources policies disallowing employee fraternization; others argue
that German consumers didn’t like Wal-Mart clerks packaging their
groceries.
But the most uninformed one yet was
from a know-it-all who compared Wal-Mart’s failure to “invaders” in WWII
and Germany proving to be a bridge too far.
Where do I start with that one? For
starters, this analysis had the wrong country (operation Market Garden
was in 1944 in Holland, not Germany). It compared a retailer’s
multi-national expansion to invaders, when it was the Allies trying to
liberate an occupied country from the Nazis. And, finally, I took this
editor’s comparison as an insult to the brave allied soldiers in this
daring raid who gave their lives for freedom.
Wal-Mart failed in Germany for a host
of reasons, but insiders say a key element was out-of-stocks. This
company’s strength always has been its efficient distribution system.
Wal-Mart’s German competitor, Aldi, does a much better job of being in
stock for advertised and off-the-shelf items.
Several insiders told me that the
intolerance of German consumers to out-of-stocks was an important issue.
If Wal-Mart advertised a product and it wasn’t on the shelf, German
consumers were turned off. Some didn’t come back.
One anecdote I heard was that German
logic and American retailing simply didn’t dovetail. For example, if one
multi-pack of a product being promoted was out of stock, Germans simply
couldn’t understand why they were not allowed to buy two lower-count
packs instead as a substitute? Logically, two smaller count packs that
added up to the larger one not available should be offered instead,
right? Not according to a rigid Wal-Mart. And Germans couldn’t
understand it.
Issues like this one seem small, but
took their toll. How ironic that Wal-Mart strengths— distribution and
in-stock positioning— were part of its
Achilles heel in Germany.
And, most intriguing, several vendors
now report that just weeks after the announcement of the sell-off of the
German stores, Wal-Mart in the U.S. notified suppliers that it was
invoking sharp new penalties for companies that do not maintain 99% in
stock positions of their goods at store level.
The vendors complained that
maintaining this almost-perfect in-stock position level was difficult,
considering the complexities of getting goods through the distribution
network to the sales floor. And most shipments are precision-timed to
distribution centers, not allowed too early or late.
What happens to these goods once they
reach that far is really out of the vendor’s hands. But, evidently, 99%
at store level it is. A lesson learned by Wal-Mart from failures in
Germany? Or a closely timed coincidence?
In China, where Wal-Mart is betting
much of its international expansion, it seems there is nothing this
retailer wouldn’t do to keep it friendly and growing. Joe Hatfield,
who’s been heading Wal-Mart’s operations there since the retailer landed
there (invaded?) in 1996, said Wal-Mart is hoping its relationship with
the All-China Federation of Trade Unions is “prosperous for our
associates and for the growth of our business.” The ACFTU is seeking to
organize some 28,000 Chinese employees of Wal-Mart.
Can you imagine what Sam Walton
himself would have thought of all this? He was adamant in his stand
against unionization of Wal-Mart stores. And his organization has
carried that standard to this day, battling to break into New York City
and Chicago, but against activists who seek unionization of stores in
these urban centers.
So, while Wal-Mart resists union
activity at home, it’s all smiles in Shenzhen and Beijing, where
Wal-Mart says it now will be helpful with the ACFTU in helping to create
worker unions at its already-open 60 stores and, presumably, for
Wal-Mart stores to be opened in the future in China.
Wal-Mart really doesn’t have a choice
in China. Either it cooperates, or China could become unfriendly very
quickly to its expansion plans.
I once met with Hatfield in China in
the company’s Shenzhen store, one of its first in China, and he took
pains to explain to me floor-by-floor in this multilevel unit how
Wal-Mart had adapted its product assortment to the Chinese culture.
A reason for its success in China was
its elasticity in merchandising, its willingness to be a fast learner—
and also to cooperate with local community groups.
Many of you have walked Wal-Mart
stores in China and have seen firsthand just how unique they are in
product selection and presentation. Now, if unions are going to be
required, Wal-Mart is in no position to act like this is Chicago or New
York City.
In China, Wal-Mart has to cooperate.
With 60 units open and the promise of hundreds more to come in the
future, Wal-Mart is in a preferred position in China retailing. It can’t
close its doors or say no to growth.
But watch to see how far Wal-Mart will
go in cooperating with union formations of its workers. I say, you’ll be
surprised at how much more cooperative they’ll be in Shanghai than in a
large American city.
Chinese officials know that Wal-Mart
is in no position to be difficult or close stores when workers prefer
the protection of organizations such as the ACFTU.
The upside for Wal-Mart in China is
exciting. But as time progresses, and it opens more stores and generates
a larger portion of its revenues from China, Wal-Mart will find itself
in a weaker and not stronger bargaining position with Chinese
authorities and labor groups.
In a flash moment, China could put up
hurdles to Wal-Mart’s growth there or impose new fees to its profits
there. So, Wal-Mart has every reason to keep it friendly in China.
Watch and see.
[back to top]
Wal-Mart's next battlefield
MARINA STRAUSS
The Globe and Mail
Monday, August 28, 2006 [back to top]
For more than a year, Wal-Mart has
been trying to get into Port Elgin, a burgeoning Ontario town on the
shores of Lake Huron.
The world's biggest retailer likes the
spot and the wider community of Saugeen Shores, with its population of
about 12,500 -- 7,000 in Port Elgin alone and up to 40,000 in summer
when cottagers settle in. The local market is well-heeled, and its
numbers are forecast to jump by about 55 per cent over the next two
decades. The nearby Bruce Power nuclear station is being revived,
attracting hundreds of workers and boosting demand for housing and
retailing in the area.
Best of all, fast-growing Port Elgin
is home to only one supermarket, a Your Independent Grocer owned by
Loblaw Cos. Ltd.
But for Wal-Mart and its Canadian real
estate partner, SmartCentres, that's just where the challenge begins:
Loblaw is opposing SmartCentres' rezoning application, joining a number
of local groups to run its rival out of town.
The company may not be able to keep
Wal-Mart out of Port Elgin forever, but it seems to know that in the
competitive retail market, a battle delayed is a battle not lost.
"The longer the delay, the more the
benefits," says Dennis Wood, a lawyer for SmartCentres. Welcome to the
front lines of Canada's testiest retail war, where Wal-Mart, Loblaw and
Zellers are duking it out over small communities and growing suburbs.
But instead of using price cuts and two-for-one coupons, they're
attacking each other with phalanxes of lawyers, planners and
consultants.
In a handful of towns across Canada,
Wal-Mart's latest ambitious expansion plans -- especially to add grocery
aisles -- have met opposition from the entrenched players who say there
isn't room for more.
"Everyone is trying to protect their
turf, which is a natural thing to do," says John Gray, Mayor of Oshawa,
Ont. where a proposed Wal-Mart expansion is under attack. "If you're in
a good competitive position, why undermine it by letting somebody else
come in?"
For Lo |