Wal-Mart Stores, Inc. Partners With the National Association of Hispanic Publications to Serve Hispanic Communities

PR Newswire                          [back to top] 

BENTONVILLE, Ark., March 31 /PRNewswire-FirstCall/ -- Wal-Mart Stores, Inc. and the National Association of Hispanic Publications (NAHP) today launched a membership expansion and professional development initiative to enroll 150 new member publications from across the country and encourage former members to rejoin the Association. This new effort was announced during NAHP's Annual Convention in Las Vegas, NV.

"Hispanic publications play a vital role in keeping their communities connected to local and national events. But they're also a bridge to the Latin American countries that many of their readers still call home," according to Wal-Mart's Director of Hispanic Markets Pepe Estrada. "From civic engagement campaigns, to homeownership information, to health fairs, and just your basic classified ads, Hispanic publications are active members of the communities they serve.

"Last week the Census Bureau announced that the number of Hispanic-owned businesses in the United States grew three times the national average between 1997 and 2002. Hispanic publications are part of that growth. But this growth doesn't come without the challenge to expand and increase their professional expertise," says Estrada. "Joining NAHP will expand their capacity to offer professional and quality information to the Hispanic community. Wal-Mart is proud to support the efforts to serve the Hispanic community through excellence in media."

As part of their $60,000 donation to the program, Wal-Mart will sponsor first year dues for participating publications as an incentive to join NAHP. The funding will also be used by the Association to develop new membership materials, membership management software and interactive membership tools on NAHP's website.

"We are proud to have Wal-Mart's participation in our small business development program. Their support will help NAHP's goals of increasing the Hispanic print professional development and talent," said NAHP President Lupita Colmenero. "With Wal-Mart's support and commitment NAHP will be able to offer, particularly to small Hispanic owned publications, the opportunity to be actively involved in programs aimed at bringing the latest information on the industry, but most important, a glance of all the opportunities available for Hispanic publications."

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Wal-Mart Shows a Similar Side to Sears

By Michael Barbaro
The New York Times
March 31, 2006               [back to top] 

THE year was 1993, and Sears, Roebuck & Company wanted to shake off its image as a testosterone-filled department store focused on tools and lawn mowers. So its advertising agency developed a print and television campaign featuring female shoppers discovering, to their surprise, that the retailer stocked fashionable clothing. The campaign had a catchy jingle: "Come see the softer side of Sears."

Fast forward to 2006. This time, the retailer is Wal-Mart Stores and the goal is to shake off its image as a house of bargains for cheap laundry detergent and toilet paper.

So its agency developed a print and television campaign featuring women discovering, to their surprise, that the retailer stocks fashionable clothing and home furnishings. It, too, came up with a catchy slogan: "Look beyond the basics."

A similar goal is evident in both campaigns: to change consumers' view of the kinds of products the retailers carry. But the similarities do not end there. Wal-Mart's advertising campaign bears a remarkable resemblance to the Sears campaign right down to its execution.

For its print ads, Sears chose a two-page spread. The left page is dominated by white space, with a small image of a household product, like a refrigerator, positioned in the middle. On the right page is the image of a sleek leather coat or a sundress.

A testimonial in one ad stated: "We were looking for a refrigerator. But I found something much cooler."

For its print ads, Wal-Mart also chose a two-page format. The left page is dominated by white space, with a small image of a commodity product, like eye drops, in the center. On the right page is a large image of a sleek dress or flat-screen television.

A testimonial in one ad states: "I went in for eye drops and found something eye opening."

If the adage is correct, perhaps Sears should be flattered by the imitation, a common situation in advertising. (Sears had no comment on the campaign.)

GSD&M, the agency in Austin, Tex., that is behind Wal-Mart's "Look beyond the basics" campaign, says it did not work from, or even review, the Sears campaign, which was developed by Y&R, a division of the Young & Rubicam Brands unit of the WPP Group.

Roy Spence, the president of GSD&M, a division of Omnicom Group, said his staff "had no clue that it was even close."

Mr. Spence said the author of the tagline "Look Beyond the Basics" was a college student when the Sears campaign broke in 1993. "She was more interested in sipping beer than watching Sears ads," he said.

But Mr. Spence concedes that the two campaigns are "scarily similar."

He attributes the resemblance to the goals of the campaigns: to contrast what both Sears and Wal-Mart considered to be an incomplete consumer perception (that they carried dowdy fashions) with a more informed reality (that they had improved their fashion offerings.)

"This campaign is like 100 campaigns that go out every year," Mr. Spence said. "It is classic advertising method. Here is what you thought. Here is what we want you to know."

Asked to review ads from both companies, Adam Hanft, chief executive of Hanft Unlimited, a New York branding and marketing firm, said the similarities were "amazing. " He expressed surprise that Wal-Mart executives approved it.

"It is amazing that nobody in the chain of command remembers" the Sears campaign, he said. "It was all over the place."

Industry experts agreed that even if the Wal-Mart ads did consciously borrow from the Sears campaign, the most likely consequence would probably just be embarrassment over not being more original. Though the advertising looks similar, the problems plaguing Sears in the early 1990's and the ones Wal-Mart faces today are not.

By 1993, Sears had earned a reputation as a hardware store that happened to sell clothing, an image it desperately wanted to overcome.

"Women went in on an errand but did not view it as their store," said Stephanie Kugelman, who helped develop the Softer Side of Sears campaign and is now vice chairman and chief strategic officer at Young & Rubicam Brands.

Wal-Mart, on the other hand, has found that shoppers rely on the store for household staples — food, cleansers and paper products— even though the retailer devotes significant space to clothing and home furnishings.

In fact, to discourage consumers from flirting with J. C. Penney (for a cute skirt), Target (for a trendy coffee maker) or Best Buy (for a sleek television), Wal-Mart has significantly expanded its offerings over the last year.

There is a new line of women's fashion, called Metro 7, and a men's line, called Exsto, is on the way; and there are now $2,000 flat-screen televisions in the store. On average, 100 million Americans walk into a Wal-Mart store every week, a staggering figure that suggests the company has no trouble attracting shoppers. "We think we can have the people already shopping us shop for more trend," Mr. Spence said.

For Wal-Mart's perception vs. reality campaign to work, it will have to do something that Wendy Liebmann, president of WSL Strategic Retail, says Sears failed to do: change the reality of its stores.

"You have to deliver in the store," Ms. Liebmann said. "Otherwise, consumers look at you and say, Great ad, bad store."

Today, Sears is struggling again, not to overcome a male image, but to attract customers of both sexes.

Since its merger with Kmart, sales at individual Sears stores have plunged. A new print and television advertising campaign, announced this week, will feature images of plants sprouting vines that become Sears products — at least a subliminal nod to the company's desire for growth.

The hopeful theme: "Spring changes everything."

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Wal-Mart looks for image managers

By Michael Barbaro
The New York Times
FRIDAY, MARCH 31, 2006                        [back to top] 

NEW YORK Wanted: two people to help defend the largest U.S. retailer against critics. Requirements: plenty of experience managing a crisis.

Wal-Mart Stores has begun circulating two senior-level job postings - both in public relations - and if the language used to describe the positions is any indication, the retailer is on the equivalent of a war footing in its public relations battle.

One job includes "opposition research," presumably into Wal-Mart's major critics, Wal-Mart Watch and Wake Up Wal-Mart.

The other requires the ability to "mobilize resources" during a crisis.

The two jobs reflect how much life has changed at Wal-Mart, which has come under withering criticism for its wages, health benefits and treatment of workers.

The company barely had a public relations department in the early 1990s, but it now has a staff of dozens, including a public relations war room staffed with former political operatives who rebut its opponents.

The job postings, which were written by Crowe-Innes & Associates, an executive search firm, were given to The New York Times by Wal-Mart Watch, a group backed by unions and foundations that is pressing Wal-Mart to improve its wages and benefits.

According to the posting for the first job, director of media relations, the successful applicant will oversee Wal- Mart's "crisis communications program."

Rather than simply handling phone calls from the press, the employee must be able to help "triage" those calls, managing messages "in rapid response mode," the wanted ad said.

Mona Williams, a spokeswoman for Wal-Mart, said the company received hundreds of calls a day from reporters.

And of course, the employee must be on call "24/7" to assist with "emergency response" within the public relations department.

The job requires 10 years' experience in corporate communications and "proven media relationships."

The second job is senior director of campaign management, an executive who will oversee all corporate communications support staff and the war room.

This person, like the media relations director, must have 10 years' experience in communications but also a track record "addressing high-profile political activities," according to the posting.

Candidates, it said, must "operate successfully in a campaign mode."

One responsibility of the job is to do research on opponents - a position usually found in political campaigns.

Another is overseeing Wal-Mart's relations with bloggers, many of whom frequently write about the company.

Crowe-Innes & Associates did not respond to phone and e-mail messages seeking comment.

Both of the posted jobs, which are based at Wal-Mart's headquarters in Bentonville, Arkansas, offer "competitive base salary, bonus opportunity and stock options" as well as an "excellent benefits package," though details are not given.

NEW YORK Wanted: two people to help defend the largest U.S. retailer against critics. Requirements: plenty of experience managing a crisis.

Wal-Mart Stores has begun circulating two senior-level job postings - both in public relations - and if the language used to describe the positions is any indication, the retailer is on the equivalent of a war footing in its public relations battle.

One job includes "opposition research," presumably into Wal-Mart's major critics, Wal-Mart Watch and Wake Up Wal-Mart.

The other requires the ability to "mobilize resources" during a crisis.

The two jobs reflect how much life has changed at Wal-Mart, which has come under withering criticism for its wages, health benefits and treatment of workers.

The company barely had a public relations department in the early 1990s, but it now has a staff of dozens, including a public relations war room staffed with former political operatives who rebut its opponents.

The job postings, which were written by Crowe-Innes & Associates, an executive search firm, were given to The New York Times by Wal-Mart Watch, a group backed by unions and foundations that is pressing Wal-Mart to improve its wages and benefits.

According to the posting for the first job, director of media relations, the successful applicant will oversee Wal- Mart's "crisis communications program."

Rather than simply handling phone calls from the press, the employee must be able to help "triage" those calls, managing messages "in rapid response mode," the wanted ad said.

Mona Williams, a spokeswoman for Wal-Mart, said the company received hundreds of calls a day from reporters.

And of course, the employee must be on call "24/7" to assist with "emergency response" within the public relations department.

The job requires 10 years' experience in corporate communications and "proven media relationships."

The second job is senior director of campaign management, an executive who will oversee all corporate communications support staff and the war room.

This person, like the media relations director, must have 10 years' experience in communications but also a track record "addressing high-profile political activities," according to the posting.

Candidates, it said, must "operate successfully in a campaign mode."

One responsibility of the job is to do research on opponents - a position usually found in political campaigns.

Another is overseeing Wal-Mart's relations with bloggers, many of whom frequently write about the company.

Crowe-Innes & Associates did not respond to phone and e-mail messages seeking comment.

Both of the posted jobs, which are based at Wal-Mart's headquarters in Bentonville, Arkansas, offer "competitive base salary, bonus opportunity and stock options" as well as an "excellent benefits package," though details are not given.

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Wal-Mart to target 'urban" male

By Jonathan Birchall
New York Financial Times
March 31, 2006                              [back to top] 

Wal-Mart, the US discount retailer, said yesterday it will launch a range of "fashion-forward" clothing aimed at young urban males this summer, as it continues it drive to improve its sales performance.

The new Exsto line will be produced for Wal-Mart by G-III Apparel, a New York based clothing company that also produces clothing for Calvin Klein, Guess, Tommy Hilfiger and other fashion brands.

G-III, which had annual sales last year of $330m, saw its shares rise 12 per cent on news of the deal, under which it will participate in design and production of what it called "strong fashion that represents a hip, urban sensibility."

The company's sportswear division, which will handle Exsto, has been headed since December by Jeffrey Tweedy, formerly a senior executive at Sean John Apparel, the urban fashion brand founded by Sean "Diddy" Combs. G-III produces outerwear for Sean John, and has been licensed to produce a new women's wear line for the brand.

The plans for Exsto follow Wal-Mart's launch last September of its Metro 7 fashion line for young women. Like Metro 7, Exsto has been developed following customer research aimed at identifying what Andy Barron, merchandiser of general apparel, called "gaps in our brand geography".

The new brand, he said, "mirrors the design and quality of urban brands offered in department stores," but at the lower prices expected from Wal-Mart".

Wal-Mart backed the launch of Metro 7 with high profile advertising in Vogue and other women's fashion magazines.

The retailer said earlier this week that strong demand for Metro 7 had obliged the retailer to scale back plans to roll the brand out, from 1500 to 1300 stores by September.

Exsto will initially be released in 300 Wal-Mart stores.

Copyright The Financial Times Ltd. All rights reserved.

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Big-name brands in "Hall of Shame"

By Parija Bhatnagar
CnnMoney.com
March 30, 2006                [back to top] 

NEW YORK (CNNMoney.com) - Microsoft, Wal-Mart, Ford and Gap -- four of the top iconic American brands -- have one other attribute in common: They each blew it in 2005 when it came to getting out their message. "There's never been a year where so many market leaders struggled with their marketing message," said Kelly O'Keefe, an independent branding consultant and CEO of O'Keefe Brands.

O'Keefe has published an annual branding "Hall of Shame" for four consecutive years. He has not published an official list for 2005, but these four companies would rank high, he said.

"When you look at who's had branding bloopers recently, it's those companies that have been struggling to grow profits. They're attempting to break into new markets and making mistakes along the way," said Robert Passikoff, branding expert with Brand Keys Consulting.

What were they thinking?

Microsoft Is Microsoft (Research) calling its own customers "dinosaurheads?" The idea behind Microsoft's ads that feature office workers with heads of a dinosaur is to tell the company's business customers that's it's time to upgrade or risk missing out on new features and benefits.

"It's sophomoric and it doesn't work," said O'Keefe. "Microsoft is demeaning its own customers who are already using its products by implying they're dinosaurheads if they don't upgrade quickly."

Wal-Mart The giant retailer has been on O'Keefe's bloopers list a few times. Wal-Mart's attempt to tweak its merchandise and marketing mix to appeal to an more upscale consumer is a mistake, he said, adding that Wal-Mart's Christmas ads this past holiday featuring singer Beyonce at home with her family opening gifts were a bad idea.

"Beyonce doesn't speak to Wal-Mart's core customers," he said. "Wal-Mart's always been about low prices. Instead of trying to be someone who they're not, Wal-Mart should refocus on who they once were to the customer, which was a no-frills provider of products at great prices and friendly service."

O'Keefe's other gripe is about the disappearance of "Mr. Smiley" from Wal-Mart's ads. "The smiley face wasn't only about low prices but it became a symbol of Wal-Mart (Research)."

Ford The automaker made a tremendous marketing blunder last year when the company pulled ads of some luxury brands from Advocate magazine, a publication that caters to the gay community, because of pressure from a conservative Christian group.

Said O'Keefe, "This in itself would have a big negative impact on the gay community. But what's worse is Ford (Research) flip-flopped and decided to put the ads back. So Ford essentially risked alienating potential customers on both sides of the issue."

Ford's recent marketing message focuses on emphasizing innovation at the company while earlier it said it stood for quality. "Consumers are confused. Is it innovation or is it quality?" O'Keefe said.

Passikoff said Ford's rival General Motors (Research) should be in the "Hall of Shame," too. "The most important aspect of branding is to stand for something unique in consumers' minds. GM isn't branding anymore but commoditizing," Passikoff said. "This is antithetical to branding. GM's brands don't stand for anything so the last resort is to commoditize the product and sell on price."

The Gap O'Keefe said Gap (Research)'s decision not to advertise the Gap brand on television over the holidays was a blooper. "Even though TV is eroding in terms of customer value, it's still a part of the overall advertising mix."

Who's getting it right

Motorola (Research) has successfully revived its once struggling brand image, O'Keefe said. "The Razr phone is at the head of its effort. The company is doing a great job in changing the look and feel of the brand."

He applauds American Express (Research)' "My Life. My Card" campaign which features well-known celebrities such as Robert de Niro and Ellen DeGeneres talking about the role of the brand in their lives.

"One thing we look for in great brands is how they maintain long-term consistency of the image, said O'Keefe. "With the new campaign, American Express is once again promoting the concept that the brand isn't a commodity but rather that those who use it belong to an exclusive club."

Office supplies chain Staples (Research) also gets a thumbs-up. "When they came out with their "That was easy" tagline, we didn't know if it was simply cute or if they really meant it. But I think they've proved to customers that they do mean it and they're serious about making the shopping experience easier by being innovative. They offer an online rebate program and the company's using customer suggestions to create new products," O'Keefe said.

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Wal-Mart Begins Quest for Generals in P.R. War

By MICHAEL BARBARO
March 30, 2006                        [back to top] 

Wanted: two people to help defend the nation's largest retailer against critics. Requirements: plenty of experience managing a crisis.

Wal-Mart Stores has begun circulating two senior-level job postings — both in public relations — and if the language used to describe the positions is any indication, the giant discount retailer is on the P.R. equivalent of war footing.

One job includes "opposition research," presumably into Wal-Mart's major critics: Wal-Mart Watch and Wake Up Wal-Mart. The other requires the ability to "mobilize resources" during a "crisis situation."

The two jobs reflect how much life has changed at Wal-Mart, which has come under withering criticism over its wages, health benefits and treatment of workers. The company barely had a public relations department in the early 1990's, but now has a staff of dozens, including a public relations war room full of former political operatives who dispute the assertions of its opponents.

The job postings, which were circulated by Crowe-Innes & Associates, an executive search firm, were given to The New York Times by Wal-Mart Watch, a group backed by unions and foundations that is pressing Wal-Mart to enhance its wages and benefits.

According to the posting for the first job, director of media relations, the successful applicant will oversee Wal-Mart's "crisis communications program."

Rather than simply handling phone calls from the press, the employee must be able to help "triage" those calls, managing messages "in rapid response mode." Mona Williams, a Wal-Mart spokeswoman, said the company received hundreds of calls a day from reporters.

And, of course, the employee must be on call "24/7" to assist with "emergency response" within the public relations department.

The job requires 10 years' experience in corporate communications and "proven media relationships."

The second job is senior director of campaign management, an executive who will oversee all corporate communications support staff and the war room.

This person, like the media relations director, must have 10 years experience in communications, but also a track record "addressing high- profile political activities," according to the posting. Candidates must "operate successfully in a campaign mode."

One responsibility of the job is to research opponents — a position usually found in presidential political campaigns.

Another is overseeing Wal-Mart's relations with bloggers, many of whom frequently write about the company.

The executive search firm, Crowe-Innes & Associates, did not respond to phone and e-mail messages.

Both of the posted jobs, which would be based at Wal-Mart's headquarters in Bentonville, Ark., offer "competitive base salary, bonus opportunity and stock options" plus an "excellent benefits package," which are not specified.

Copyright 2006The New York Times Company 

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Rezoning request hearing will continue

By David S. Owen
Suburban News Publications 
March 29, 2006                                 [back to top] 

More than 400 people packed into the Pickerington Ridgeview Junior High School cafeteria Thursday evening for a public hearing about a rezoning request in Violet Township. After several hours of presentations by people both in favor of and opposed to the request, the standing room only crowd was informed by zoning commission members they need more time before making a recommendation to the township board of trustees, so another hearing has been scheduled for April 18.

Most of those attending the public hearing were there to oppose a re-zoning application filed by TLG Development Co. of Dublin. Initial plans indicate the developer would like to have a "big-box" retailer anchor the development.

The crowd exploded with applause and vocal approval when opposition to the re-zoning was voiced by those who spoke.

At times, the crowd was quieted by Violet Township Zoning Commission Chairman John Biancamano.

The hearing was called to discuss a request to rezone 106 acres of land -- located on the north and south sides of Refugee Road, east of Pickerington Road, including a portion adjacent to Pickerington High School North -- from a single-family residential district to a limited commercial district.

In the opening presentation, attorney David Fisher, representing TLG, said, "It is our standpoint that this zoning is not just about our client, it's just about most people here tonight that we assume are here in opposition.

"It is also about the current land owners of these properties and all the residents of Violet Township.

"We think there are policy considerations that cannot be ignored here," Fisher said.

"There is no user for this site identified, in contract or being negotiated with, with respect to any building being built on this property," he said.

"There are also no tax abatements or other economic abatements of any sort being proposed, sought or requested in any way by the developer," Fisher said.

"All dollars to which the school system would otherwise be entitled -- plus there will be some additional entitlement dollars if this project goes forward -- will be made available to the school district, and our very, very preliminary calculations of that are in excess of $500,000 per year at full build out," he said.

"We are approaching the current traffic and economic issues as if they were and are in fact the utmost importance," Fisher said.

"We understand that in order to move forward, we need to be a part of the solution and not cause more problems," he said.

"I think it's important from the commission's standpoint to review the history of this land before the current zoning application was filed."

Previous plans

Two years ago a piece of the land in question was being considered for residential development, Fisher said.

He said after a series of hearings with the zoning commission the plan was ultimately withdrawn by his client for a variety of reasons before it went to final decision.

"What we heard during that entire rezoning was no one wanted more house tops in that part of the township, and especially on that property, that it was not well-suited for the kind of residential development that was being proposed," Fisher said.

"We asked the people what they wanted, and they all said we want commercial development there and more importantly, what we want is some significant changes made in the traffic plan in this area to deal with the traffic problems we currently have," he said

"The current request is to address these issues, and we looked at thoroughfare planning before any application for the development of the land was submitted," Fisher said.

He described the area as being used for a "mixed use" development for business with strip centers and out lots.

Issues to address

Fisher said six issues need to be addressed by the commission before they move forward with the rezoning request.

The list is: Policies within the township regarding commercial development in this corridor. Thoroughfare planning Economic planning and impacts within the township as a consequence and other zonings. Impact on the school district from this and other developments. Size, scale, massing and the quality of this property and other properties in the township. Economic development agreements with adjoining jurisdictions to deal with economic and infrastructure issues that will impact the township and its residents long term. Public comments

There were several people from the audience signed up to speak about the issue. Fifteen were able to speak within the allotted time given by the commission

Among those was Kelly Sanders, a Violet Township resident who owns a portion of the 106 acres.

"We are self-employed hard working people who have a sizable investment in our land to ensure our retirement," Sanders said.

"I am disappointed that many of the residents of the community have developed their opinions based on rumor and inaccurate information," she said.

"This land will eventually be developed and there will be increased traffic and change whether its commercial or residential," Sanders said.

"Pickerington is no longer a small town and not one person here tonight has had the ability to stop the progress or stop the growth, it has already happened, and it will continue to happen," she said.

Carol Comanita, a resident of Pickerington, and president of the Chevington Woods Civic Association, said, "I am a firm believer in less is more ... if we have a commission that is going to vote 'yes' or 'no' on such a huge issue, I have a concern as to the expertise of those sitting on the commission to make a decision for us who are homeowners in Violet Township.

"It's not that I challenge it, but in order for me to make a good knowledgeable decision, because knowledge is power, as a resident, I need to know the people on this commission have expertise and history as to what it takes to 'yea' or 'nay' such an important decision of this community," Comanita said.

"Tax money from large-box developments, and businesses that employ minimum wage jobs, aren't really going to help us as far as good tax base for our community," she said.

Comanita said, "in some communities a store such as a Wal-Mart where there is urban plight or where there is such a regression in the community, might be well needed, but in Pickerington we work hard to sustain what we have that I believe minimum wage jobs is not the way we want to go."

Pickerington resident Chris Logsdon said, "We need the roads in place first before anything else is done."

"We should allow this property to sell as residential or commercial and under the current zoning they have the right to do whatever they want, but when they want to change the zoning then it becomes a community issue," Logsdon said.

"By having these meetings we are not infringing on the rights of the property owners, we are simply expressing our rights as a community under zoning to grow the way we want it to grow," he said.

Another meeting

Biancamano said the zoning commission will need more time to study the issue before making any recommendations to the trustees.

Fisher asked the commission give his developer time to to conduct economic impact and traffic studies before moving forward.

Biancamano said the commission had already reserved the Ridgeview cafeteria for April 18.

He said unless a larger venue can be secured before then, the next hearing will be held at 7:30 p.m. April 18 in the Ridgeview cafeteria.

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U.S. cautions China on trade

By Tim Johnson
Knight Ridder
March 29, 2006                         [back to top] 

BEIJING - The Bush administration toughened its stance toward trade with China on Wednesday, with U.S. Secretary of Commerce Carlos Gutierrez warning that China risks a "devastating" blow to its economy if it doesn't take action to help head off rising protectionism in the U.S. Congress. Hours later, Treasury Undersecretary Timothy Adams told a congressional committee in Washington that China had failed to move quickly enough to revalue its currency. "China's progress has been way too cautious," he said.

Trade tensions are soaring in the run-up to President Hu Jintao's visit to Washington on April 20 amid U.S. unhappiness over what it says is an overvalued Chinese currency and its $202 billion trade deficit with China last year.

Gutierrez's remarks signaled a notable shift in U.S. trade posture toward China. For the first time, he linked U.S.-Sino trade relations with China's internal stability, saying that China may "put at risk the social harmony" within its own borders if it doesn't work harder to meet U.S. demands.

"There is a real protectionist and isolationist sentiment creeping up, evolving, emerging in our country," Gutierrez said in a speech to U.S. business executives.

Noting that the United States has become China's No. 1 foreign market, Gutierrez said Beijing might put that market at risk unless it can "deliver results quite quickly" by opening areas such as telecommunications, services, direct sales and information technology to U.S. companies.

"Think what that would do to China's economy if China's No. 1 customer all of a sudden decided to be protectionist ... and frankly not buy as much as it does today," Gutierrez said. "It would be devastating to China's economy."

Gutierrez said China must relax "a wide array of barriers" confronting U.S. companies to "help us drive back those protectionist sentiments" on Capitol Hill, where several proposals targeting China await action.

Two U.S. senators, Charles Grassley, R-Iowa, and Max Baucus, D-Mont., on Tuesday proposed fresh legislation intended to force the Bush administration to take measures against China if it doesn't make trade concessions.

"There is a very real sense among Americans that our trading partners - China, in particular - do not play by the rules," Baucus said in a statement.

Two other critics of China's policy to fix its currency at artificially low levels against the dollar, Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., postponed until September a vote that would have slapped 27.5 percent tariffs on Chinese goods unless China moved to float the yuan.

Boosted by soaring trade, China said this week that its foreign exchange reserves have climbed to $853.7 billion, surpassing Japan's to become the largest in the world.

China's top trade negotiator, Vice Premier Wu Yi, told Gutierrez that the United States should get its economic house in order instead of pressuring China to revalue the yuan, state media said Wednesday.

The trade issue has divided U.S. business. China's delay in granting market access has angered big U.S. software and telecommunications service providers, while retailers and other U.S. companies benefit under current trade conditions.

Wal-Mart, the world's largest retailer, is on track to buy $24 billion to $25 billion in goods from China this year, up from $18 billion in 2005, said Stephen Green, a senior economist with Standard Chartered Bank's branch in Shanghai.

Green warned that imposing sanctions on Chinese goods would affect businesses not just in China, but throughout Asia and the United States.

"About 90 percent of Wal-Mart's supplies out of China come from foreign-invested firms," Green said, referring to plants built with foreign money and know-how.

If protectionist moves against China succeed, Green said, "there would be huge dislocation for American firms." Green said Washington should focus on China's slow progress on intellectual property rights protection rather than exchange rate reform.

Gutierrez concurred that fighting piracy is critical to healthy Sino-U.S. relations and noted that an increase in legal software sales would also benefit China.

"If China simply cuts software piracy rate from 90 percent down to 80 percent, it would generate $6.5 billion in tax revenue and create 2.6 million jobs in China," he said.

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Illegal workers found at Wal-Mart renovation site

Newsday Inc.
March 29, 2006            [back to top] 

TICONDEROGA, N.Y. (AP) _ Authorities took 10 illegal aliens into custody after finding them working for a subcontractor that was renovating a Wal-Mart.

Ticonderoga Police Chief Jeffrey Cooke said officers responded to a call about reckless driving in the store's parking lot Tuesday around 7:30 p.m. That drew attention to a group working on the renovations.

Ross DeLacy, a U.S. Border Patrol spokesman, said those taken into custody included eight Mexicans and two Guatemalans. Three men fled on foot and were not captured.

Because two of the Mexicans previously were deported, they were being held in Clinton County Jail pending a deportation hearing, DeLacy said. The others were released to await a court hearing.

Even though the men weren't Wal-Mart employees, spokesman Kevin Thornton said the remodeling work was suspended "until we're satisfied it's in full compliance with the law." The name of the subcontractor wasn't available.

In 2003, four Wal-Mart employees from Lithuania were deported as part of a national roundup after being found at the store in Ticonderoga, 84 miles north of Albany.

Copyright 2006 Newsday Inc.

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Wal-Mart offers FDIC changes to bank application

Reuters                     [back to top] 

WASHINGTON - Wal-Mart, the world's largest retailer, has offered to modify its application to start limited banking operations, a move that comes as opposition heats up ahead of public hearings on the bid.

Wal-Mart, in a letter obtained by Reuters to the federal regulatory agency considering the retailer's application, set the bank's initial capital level at $125 million and said it would boost the senior management team by adding a chief risk officer with extensive background in payment processing.

The company discussed seven points in its application that will be changed including its decision, reported last week, to withdraw its proposed exemption to a U.S. law that places requirements on banks to help meet the credit needs of low- and moderate-income neighborhoods.

The letter offered no statement indicating Wal-Mart's motivation in changing its application, but some of the changes relate to issues raised by groups that have opposed any effort by the retailer to enter even limited financial operations.

The modified application will be given to the FDIC no later than March 31, according to the letter.

Wal-Mart has applied to open a type of bank known as an industrial loan company in Utah to process its electronic payments. The bank would not offer processing services to other retailers, offer services to the public or open bank branches, according to its application.

Still, the bid has generated intense and growing opposition both to Wal-Mart's bank and to industrial banks overall.

Some in Congress, for example, have said Wal-Mart's scope is so vast that a financial problem within the company could bleed into its bank and hurt the U.S. payments system.

Others on Capitol Hill have used Wal-Mart's application as a chance to criticize industrial banks in general, saying the institutions operate thanks to a "loophole" in federal law that allows commercial companies to buy banks but escape a level of federal bank supervision.

EYES ON HEARINGS

The company's letter to regulators, dated March 1, comes as Washington readies for public hearings on the application -- the first ever formal public hearings by the FDIC on a bank application.

Already, groups and individuals set to appear have submitted their testimony, highlighting concerns that range from the impact of Wal-Mart's bank on community banks to the historic division in the United States between banking and commerce.

According to testimony submitted by Sen. Tim Johnson, the South Dakota Democrat will tell the FDIC he is concerned that Wal-Mart could change its plans and open its own bank branches, driving community banks out of business.

Rep. Stephanie Tubbs Jones, an Ohio Democrat, will urge the FDIC to reject the application. But if the regulator approves it, Wal-Mart should be held to its original plan, Tubbs Jones states in her prepared testimony.

"If the FDIC does approve Wal-Mart's application for deposit insurance, it should condition its approval on Wal-Mart's adherence to its stated business plan and stipulate that if the Wal-Mart Bank seeks to expand its activities outside the scope of that plan, it will lose its deposit insurance," she states.

The public hearings are set for April.

Wal-Mart has repeatedly said it welcomes the hearings, and looks forward to explaining the functions its bank would perform.

Copyright 2006 Reuters News Service. All rights reserved.

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The Man Who Said No to Wal-Mart

Posted by Hemos
Wednesday March 29                    [back to top] 

Charles Fishman, senior writer for Fast Company magazine has recently published a book entitled The Man Who Said No To Wal-mart. It's an excellent book (Yes, I've read it) that talks about the intersection of making good stuff, the commodization of products, and the changing world that we work in; not exactly high tech, but tech nonetheless.

Every year, thousands of executives venture to Bentonville, Arkansas, hoping to get their products onto the shelves of the world's biggest retailer. But Jim Wier wanted Wal-Mart to stop selling his Snapper mowers. What struck Jim Wier first, as he entered the Wal-Mart vice president's office, was the seating area for visitors. "It was just some lawn chairs that some other peddler had left behind as samples." The vice president's office was furnished with a folding lawn chair and a chaise lounge.

And so Wier, the CEO of lawn-equipment maker Simplicity, dressed in a suit, took a seat on the chaise lounge. "I sat forward, of course, with my legs off to the side. If you've ever sat in a lawn chair, well, they are lower than regular chairs. And I was on the chaise. It was a bit intimidating. It was uncomfortable, and it was going to be an uncomfortable meeting."

It was a Wal-Mart moment that couldn't be scripted, or perhaps even imagined. A vice president responsible for billions of dollars' worth of business in the largest company in history has his visitors sit in mismatched, cast-off lawn chairs that Wal-Mart quite likely never had to pay for.

The vice president had a bigger surprise for Wier, though. Wal-Mart not only wanted to keep selling his lawn mowers, it wanted to sell lots more of them. Wal-Mart wanted to sell mowers nose-to-nose against Home Depot and Lowe's.

"Usually," says Wier, "I don't perspire easily." But perched on the edge of his chaise, "I felt my arms getting drippy."

Wier took a breath and said, "Let me tell you why it doesn't work."

Tens of thousands of executives make the pilgrimage to northwest Arkansas every year to woo Wal-Mart, marshaling whatever arguments, data, samples, and pure persuasive power they have in the hope of an order for their products, or an increase in their current order. Almost no matter what you're selling, the gravitational force of Wal-Mart's 3,811 U.S. "doorways" is irresistible. Very few people fly into Northwest Arkansas Regional Airport thinking about telling Wal-Mart no, or no more.

In 2002, Jim Wier's company, Simplicity, was buying Snapper, a complementary company with a 50-year heritage of making high-quality residential and commercial lawn equipment. Wier had studied his new acquisition enough to conclude that continuing to sell Snapper mowers through Wal-Mart stores was, as he put it, "incompatible with our strategy. And I felt I owed them a visit to tell them why we weren't going to continue to sell to them."

Selling Snapper lawn mowers at Wal-Mart wasn't just incompatible with Snapper's future -- Wier thought it was hazardous to Snapper's health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn't in the price, it's in the performance and the longevity.

You can buy a lawn mower at Wal-Mart for $99.96, and depending on the size and location of the store, there are slightly better models for every additional $20 bill you're willing to put down -- priced at $122, $138, $154, $163, and $188. That's six models of lawn mowers below $200. Mind you, in some Wal-Marts you literally cannot see what you are buying; there are no display models, just lawn mowers in huge cardboard boxes.

The least expensive Snapper lawn mower -- a 19-inch push mower with a 5.5-horsepower engine -- sells for $349.99 at full list price. Even finding it discounted to $299, you can buy two or three lawn mowers at Wal-Mart for the cost of a single Snapper.

If you know nothing about maintaining a mower, Wal-Mart has helped make that ignorance irrelevant: At even $138, the lawn mowers at Wal-Mart are cheap enough to be disposable. Use one for a season, and if you can't start it the next spring (Wal-Mart won't help you out with that), put it at the curb and buy another one. That kind of pricing changes not just the economics at the low end of the lawn-mower market, it changes expectations of customers throughout the market. Why would you buy a walk-behind mower from Snapper that costs $519? What could it possibly have to justify spending $300 or $400 more?

That's the question that motivated Jim Wier to stop doing business with Wal-Mart. Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.

Wier had two things going for him: First, he had another way to get his lawn mowers to customers -- a well-established network of independent lawn-equipment dealers that accounted for 80% of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading -- not in year 3, or year 4, but year 10.

Wier traveled to Bentonville with a firm grasp of the values of Snapper, the dynamics of the lawn-mower business, the needs of the dealers, the needs of the Snapper customer, and the needs of the Wal-Mart customer. He was not dazzled by the tens of millions of dollars' worth of lawn mowers Wal-Mart was already selling for Snapper; he was not deluded about his ability to beat Wal-Mart at its own game, to somehow resist the price pressure. He was not imagining that he could take the sales now and figure out the profits later.

Jim Wier believed that Snapper's health -- indeed, its very long-term survival -- required that it not do business with Wal-Mart.

Every Snapper lawn mower sold anywhere in the world comes from a factory in McDonough, Georgia, a small town 30 minutes southeast of Atlanta. Coils of raw steel arrive on flatbed trucks every day at the old, nondescript building; brand-new fire-engine-red lawn mowers leave every day, loaded in 18-wheelers. The facility looks undistinguished, but it is energetically trying to defy the conventional wisdom about manufacturing in the global economy.

The Snapper factory has had an invigorating decade. Ten years ago, it produced about 40 models of mowers, leaf blowers, and snow blowers; now it makes 145. Today, robots do the welding, lasers cut parts, and computers control the steel-stamping presses. Productivity is three times what it was 10 years ago, and the number of people working here, 650, is half what it was.

Indeed, the productivity of every factory worker is measured "every hour, every day, every month, every year," says Snapper president Shane Sumners, who walks the 10.5-acre factory floor with comfort and familiarity. "And everybody's performance is posted, publicly, every day for everyone to see." It's a lot like Wal-Mart -- which measures the number of items every checkout clerk scans every hour. Some of Snapper's dramatic productivity improvements, in fact, seem to come almost directly from the Wal-Mart playbook. These days, the Snapper factory operates in Wal-Mart time. It must, because it operates in Wal-Mart's ecosystem.

Ten years ago, at about the time Sumners came on board, Snapper had 52 regional distributors. It uses no distributors now -- the company runs four regional warehouses of its own and sells directly to 10,000 independent dealerships. Ten years ago, in part because of the complexity of the middleman distribution system, Snapper carried a huge quantity of inventory. It paid to manufacture and ship thousands of lawn mowers -- worth tens of millions of dollars -- without quite knowing when they would be sold. Now planners come up with an ideal level of inventory for every model, for every region of the country, based on things like historic demand and the weather. The goal is to make sure every customer can get the mower he wants -- while making absolutely the smallest number of lawn mowers.

Production at the Snapper factory is rescheduled every week, according to the pace at which mowers sell. A computer juggles work assignments and balances the various parts of the assembly line. The main manufacturing line for Snapper's entry-level walk-behind mowers -- with 28 people -- was recently charged with producing 265 lawn mowers in an eight-hour shift. The group hit the mark exactly. That's a new lawn mower, from loose parts to sealed box, every 109 seconds. "It's all a matter of seconds," says Sumners.

It's not hard to make a cheap lawn mower. A cheap lawn mower feels flimsy, sounds louder than it has to, and even when new, requires a mysterious, frustrating combination of choke, priming, and pulling to start. The cutting deck of a cheap mower is stamped from thin sheet metal. Making a high-quality lawn mower -- even in 109 seconds -- requires attention to detail and constant improvement, which seems surprising for a machine that doesn't evolve that much.

All Snapper machines, from the simplest walk-behind to the most elaborate riding mower, are painted one color: what Shane Sumners calls "Snapper red." In the factory, the finished chassis of riding mowers coast along slowly, dangling from an overhead conveyor as they approach a 20-foot-long pool of red paint. The conveyor track dips low, and the mowers glide down into the pool and completely disappear beneath the surface, then rise back up, gleaming red, before heading for a pass through a curing oven.

It's not quite as simple as dip and bake, however. Each mower is electrically grounded as it hangs from the overhead conveyor, and a slight positive electrical charge runs through the 16,000-gallon trench of paint. "So the paint is attracted to the metal and builds up on the parts and sticks very effectively and evenly," says Sumners. The process is monitored every hour -- from the speed of the conveyor and the temperature of the ovens to the pH of the paint -- along 115 parameters. "If you control the process," says Sumners, "you will get a good paint job."

Snapper technicians start every riding mower before it leaves the McDonough plant. At the "hot start" station, a man wearing ear protectors squirts gas into the fuel tank and oil into the crankcase, pulls the starter cord, and brings the machine to life. He runs through all the gears, checks speed, engine performance, the mounting of the seat. The engine is given just enough fuel for the "run in." If the mower passes all the tests, the man sucks the oil back out and sends the mower on to be boxed.

As Sumners watches, one of the riding mowers takes two pulls to start, then comes to life with a rough growl. In the blink of an eye, the technician shuts it down. "Did you hear how that sounded?" asks Sumners. "It's not right. That's a bad one." The mower is shunted off to be inspected and properly tuned if possible. "If we didn't," says Sumners, "that mower would have gone to a customer."

The Snapper factory started making riding mowers in 1951. It is unadorned and old, but it is old in the sense of solidity and use. There is nothing tired about it. More significant, there is nothing sentimental about it. This factory isn't here out of some misplaced sense of economic loyalty to U.S. manufacturing. It's here because it makes Snapper-quality lawn mowers at a competitive price.

Snapper's factory hums with discipline and focus and urgency. Even with no products at Wal-Mart, a company like Snapper has to compete psychologically, has to keep the price gap between the big-box lawn mowers and its lawn mowers rational. If it did not, its potential slice of the market would get smaller and smaller.

Sumners has to spur his factory on with the same tirelessness as if it were supplying Wal-Mart -- the efficiency of every factory worker measured every hour of every day -- because Wal-Mart sets the pace, even if you're not working for them.

Jim Wier is 62 years old, with a youthful twinkle, despite a thatch of white hair. He is a solidly built man who dresses casually. He is comfortable with himself. Wier, who until the summer of 2005 ran a group of lawn-equipment businesses that approach half a billion dollars a year in sales, is confident, direct, and unprepossessing. He mows his own lawn. "I don't want to hire a service," he says. "I still love to cut my grass."

Wier is much like Snapper's customers. "When we do surveys of our customers, they like to cut their grass. And they want a good piece of equipment to do it. We're designed to give you the best quality of cut. We have full rollers on the riding mowers, to give that nice striped look on your grass, like on the baseball fields. It makes you feel proud of the home you own. Proud of your lawn. The neighbors walk by, they say, 'Look how good the yard looks.' "

Wier doesn't really think that a $99 lawn mower from Wal-Mart and Snapper's lawn mowers are the same product any more than a cup of 50-cent vending-machine coffee is the same as a Starbucks nonfat venti latte. "We're not obsessed with volume," says Wier. "We're obsessed with having differentiated, high-end, quality products." Wier wants them sold -- he thinks they must be sold -- at a store where the staff is eager to explain the virtues of various models, where they understand the equipment, can teach customers how to use a mower, can service it when something goes wrong. Wier wants customers who want that kind of help -- customers who are unlikely to be happy buying a lawn mower at Wal-Mart, and who might connect a bum experience doing so not with Wal-Mart but with Snapper.

And so in October 2002, with a colleague, Wier kept an appointment with a merchandise vice president for Wal-Mart's outdoor-product category.

"The whole visit to Wal-Mart headquarters is a great experience," says Wier. It really is a pilgrimage to the center of the retail universe. "It's so crowded, you have to drive around, waiting for a parking space, you have to follow someone who is leaving, walking back to their car, and get their spot. Then you go inside this building, you register for your appointment, they give you a badge, and then you wait in the pews with the rest of the peddlers, the guy with the bras draped over his shoulder."

Normally, meetings between Wal-Mart buyers and people from supplier companies take place in the legendary meeting rooms just off the vendor lobby. These cubicles are simple to the point of barren -- a table and four chairs, and 30 minutes to make your case. "It's a little like going to see the principal, really," says Wier.

In this case, Wier says, both he and the Wal-Mart managers "had a feeling that this would be an important meeting." So Wier and his colleague were scheduled to visit the vice president in his office. Sitting on lawn chairs.

"The meeting started with the vice president of the category saying how it was clear that Lowe's was going to build their outdoor power-equipment business with the Cub Cadet brand, and how Home Depot was going to build theirs with John Deere," says Wier. "Wal-Mart wanted to build their outdoor power-equipment business around the Snapper brand. Were we prepared to go large?"

Talk about coming to the table with different agendas. Wier was in Bentonville to pull his mowers from Wal-Mart's stores. The vice president was offering a greater temptation: Let's join hands and go head-to-head against the home-improvement superstores.

Which is when Wier said no.

"As I look at the three years Snapper has been with you," he told the vice president, "every year the price has come down. Every year the content of the product has gone up. We're at a position where, first, it's still priced where it doesn't meet the needs of your clientele. For Wal-Mart, it's still too high-priced. I think you'd agree with that.

"Now, at the price I'm selling to you today, I'm not making any money on it. And if we do what you want next year, I'll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can't put them at a competitive disadvantage. If I do that, I lose everything. So this just isn't a compatible fit."

The Wal-Mart vice president responded with strategy and argument. Snapper is the sort of high-quality nameplate, like Levi Strauss, that Wal-Mart hopes can ultimately make it more Target-like. He suggested that Snapper find a lower-cost contract manufacturer. He suggested producing a separate, lesser-quality line with the Snapper nameplate just for Wal-Mart. Just like Levi did.

"My response was, we would take a look at that," says Wier. "The reason I gave that response was, it was a legitimate question. In my own mind, I knew where I'd go with that" -- no thanks -- "but at that kind of meeting you at least have to be willing to say, I'll investigate." And that was it. "The tone at the end was, We're not going forward as a supplier."

No lightning bolt struck. Except that Snapper instantly gave up almost 20% of its business. "But when we told the dealers that they would no longer find Snapper in Wal-Mart, they were very pleased with that decision. And I think we got most of that business back by winning the hearts of the dealers."

Snapper was successfully integrated into Simplicity, which in 2004 was itself bought by Briggs & Stratton, the company that makes many of the engines in Snapper and Simplicity mowers. Simplicity and Snapper operate as independent divisions, and Wier remained CEO of both until last summer, when he resigned to join the private equity firm Kohlberg & Co. In McDonough, business is strong. Shane Sumners plans to add a second assembly line for both walk-behind and riding mowers.

One serious hazard to Wier's strategy is that independent lawn-equipment dealers face all the same pressures that have killed, for instance, many independent hardware stores and toy stores. "That is a legitimate question and a legitimate concern," says Wier. "I think we have a part in that outcome. Can Snapper, as a major supplier, continue to supply [the independents] with great product, and a product different than you can buy at Wal-Mart?"

Wier says, "I'm probably pro-Wal-Mart. I'm certainly not anti-Wal-Mart. I believe Wal-Mart has done a great service to the country in many ways. They offer reasonably good product at very good prices, and they've streamlined the entire distribution system. And it may be that along the way, they've driven some people out of business who shouldn't have been driven out of business." Wier wasn't going to let that happen to Snapper.

Wier had determined to lead Snapper to focus on quality, and through quality, on cachet. Not every car is a Honda Accord or a Toyota Camry; there is more than enough business to support Audi and BMW and Lexus. And so it is with lawn mowers, Wier hoped. Still, perhaps the most remarkable thing is that the Wal-Mart effect is so pervasive that it sets the metabolism even of companies that purposefully do no business with Wal-Mart.

And the power and allure of Wal-Mart is such that even Jim Wier, the man who said no to Wal-Mart, a man who knows all the reasons why that was the right decision, has slivers of doubt.

"I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.'"

Charles Fishman is a Fast Company senior writer and the author of, "The Wal-Mart Effect: How the World's Most Powerful Company Really Works -- And How It's Transforming the American Economy." See www.walmarteffectbook.com for more information.

From THE WAL-MART EFFECT by Charles Fishman.

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Wal-Mart's Organic Offensive

Pallavi Gogoi
MARCH 29, 2006                    [back to top] 

Not everyone is pleased by the giant retailer's push into natural foods, starting with some very anxious U.S. farmers Richard DeWilde has a long history with organic farming. His grandfather, Nick Hoogshagen, adopted the organic approach five decades ago on his farm in South Dakota, well before it became popular with consumers and fueled the popularity of retailers like Whole Foods Market (WFMI ).

Now, DeWilde, 57, is a working farmer himself, carrying on the family tradition of avoiding pesticides and other chemicals that can contaminate food in favor of a more natural approach. He's co-owner of Harmony Valley Farm, which grows Swiss chard, parsnips, turnips, and kale on 100 acres in the southwestern corner of Wisconsin.

So you might think that DeWilde would be overjoyed at the news that Wal-Mart (WMT ) has finally come around to his grandfather's philosophy. The juggernaut retailer said recently that it plans to double its offerings of organic products, including produce, dairy, and dry goods.

But DeWilde isn't thrilled. Instead, he's dismayed at the prospect of Wal-Mart becoming a player in the organic market. He fears that the company will use its market strength to drive down prices and hurt U.S. farmers. "Wal-Mart has the reputation of beating up on its suppliers," says DeWilde. "I certainly don't see 'selling at a lower price' as an opportunity."

CHINESE FOOD. He's hardly the only one. Many farmers who have benefited from the strong demand and healthy margins for organic goods are fretting that the market's newfound success also brings with it newfound risks. As large companies enter the market, from Kraft (KFT ) and Dean Foods (DF ) to Wal-Mart, farmers worry that the corporatization of organic foods could have negative consequences.

Large corporations have taken sizeable steps into the organic market, even if it isn't always obvious from the brands on store shelves. Silk, the best-selling branded soy milk, is a product from Dean Foods, the $10 billion behemoth that sells the most milk in the country. Cascadian Farms, which makes organic cereal, frozen fruits, and other products, is a brand of cereal giant General Mills (GIS ). And Kraft owns Boca Burgers.

The farmers' concerns go beyond simply pushing down prices. DeWilde and others fear that companies like Wal-Mart could try to lower the standards for what is classified as organic food and begin to import more supplies from China and other overseas markets. "Wal-Mart already sources a majority of its products from China, because it's so cheap to produce anything there. Why not foods?" asks Ronnie Cummins, director of the Organic Consumers Assn., a nonprofit organization that promotes natural and organic food.

SHIFTING STANDARDS. The worries that the corporatization of organics could lead to more imports aren't unfounded. Cummins estimates that already 10% of organic foods like meat and citrus are imported into the U.S. Silk soy milk, for instance, is made from organic soybeans that are bought in China and Brazil, where prices tend to be substantially lower than in the U. S. Cascadian Farms buys its organic fruits and vegetables from China and Mexico, among other countries (see BW Online, 3/27/06, "Imports From China Aren't Pricier -- Yet").

And large companies have tried to use their muscle in Washington to their advantage. Last fall, the Organic Trade Assn., which represents corporations like Kraft, Dole, and Dean Foods, lobbied to attach a rider to the 2006 Agricultural Appropriations Bill that would weaken the nation's organic food standards by allowing certain synthetic food substances in the preparation, processing, and packaging of organic foods. That sparked outrage from organic activists. Nevertheless, the bill passed into law in November, and the new standards will go into effect later this year.

Organic farmers are straining to meet rising demand, one of the reasons that legislators have been willing to drop certain requirements for organic foods. In the past year, the demand for organic milk outstripped the supply by 10% and created acute shortages. That even prompted organic dairy company Stonyfield Farms to stop producing its fat-free 32-ounce cups of yogurt. Now Stonyfield has resumed its production, but organic milk consumption nationwide is growing 30% annually.

Wal-Mart is making its aggressive move into organics at the same time it's trying to improve its environmental image. Last year, it embarked on a new green policy and has several initiatives to demonstrate how serious it is. The company recently said that it will require that all its wild-caught fresh and frozen fish meet the Marine Stewardship Council's standard for sustainable and well-managed fisheries. Fish accounts for a third of all the chain's seafood sales.

AFFORDABLE ORGANICS. While Wal-Mart didn't return phone calls seeking comment, CEO Lee Scott has been clear about his company's goals. "We know that customers at all ends of the income spectrum want organic and natural foods," he said at the company's last annual general meeting.

"But, frankly, most of them just can't afford the high prices the specialty stores charge.Well, we don't think you should have to have a lot of money to feed your family organic foods" (see BW Online, 11/29/05, "Selling Luxury to the Masses").

CEO Scott recently bragged about stocking organic cotton yoga outfits at its Sam's Club division. "We sold out in just 10 weeks...by using organic cotton instead of regular cotton, we saved the equivalent of two jumbo jets of pesticides," says Scott.

Scott is also determined to get affluent customers to spend more when they come in to buy basics like detergent at Wal-Mart. And what better way to lure them than with a range of organic produce. After all, organic foods purveyor Whole Foods typically attracts shoppers who have incomes over $50,000, while Wal-Mart's customers typically earn around $35,000 (see BW, 10/24/05, "Eating Too Fast at Whole Foods").

"CREATING MARKETS." While some farmers are concerned that Wal-Mart may try to squeeze them financially, there could be a more benign impact. Farmers who now use pesticides and other chemicals could turn to organic farming, as they see increased demand. Consider what's happening in California.

Last year, the state showed an increase of 40,000 acres, or 27%, in organic livestock production. The number of acres dedicated to organic vegetable production increased by 5,000 acres, or 12%, according to the California Certified Organic Farmers, an organics trade association. "Strong demand is creating markets here," says Jake Lewin, director of marketing at the organization.

Meanwhile, back in Wisconsin, DeWilde is preparing for warmer weather and the spring planting season. He is worried about how the increasing attention from Wal-Mart and other large companies may change the business of organic foods. Yet he's more convinced than ever of the benefits of the approach his grandfather helped champion. "It's the future of farming," he says.

Gogoi is a reporter for BusinessWeek Online in New York

Copyright 2000- 2006 by The McGraw-Hill Companies Inc. All rights reserved.

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Wal-Mart Supercenter Denied in Bend, OR

By Jobs with Justice
3-28-06                                  [back to top] 

In the fall of 2004, just after Central Oregon Jobs with Justice formed, members wanted to do something about Wal-Mart. They distributed educational leaflets at two Wal-Marts in Bend and Redmond to inform shoppers about Wal-Mart's low-wage policies and anti-union and predatory business practices. Next they planned a showing on February 15 of the PBS movie "Is Wal-Mart Good for America" On February 1, Wal-Mart announced their plan to build a new Supercenter in Bend, and coincidentally, also planned a neighborhood meeting for the day after the movie showing. Surprisingly, 150 people attended the movie, many whom left their names as interested in joining the fight against Wal-Mart. An even more surprising 200+ attended the Wal-Mart informational meeting, which had been advertised as an informational Q&A session. Wal-Mart representatives declined to answer any of the submitted written questions. Many of those attending, including affected neighbors, wore frowny face buttons, did not support Wal-Mart and left when they found out their questions would not be answered.

The "Our Community First" task force was formed after those meetings. The group has a broad based membership, including union members, business owners affected by Wal-Mart, land use and traffic activists, neighborhood associations, and members of the general public concerned about the impact of a third Wal-Mart in Central Oregon. What brought this group together, and keeps it together, is the common belief that Wal-Mart is a predatory company that cares more about increasing corporate profits than it does about the health and well-being of the community.

Our Community First hired a land use attorney who has helped successfully defeat Wal-Mart in several Oregon communities and had a traffic specialist on board who has completed Wal-Mart traffic studies throughout Oregon and Washington. Coalition members wrote letters to the editor and op-ed articles, appeared on TV and radio, put bumper stickers on their cars and yard signs on their lawns, held rallies, picketed in front of Wal-Mart, and held a petition drive which to date has collected almost 6,000 signatures from community residents against Wal-Mart -- that's more than 10% of Bend's population!

In September, the coalition testified at the National Workers' Rights Board Hearing on Wal-Mart during JwJ's National Conference. In November, they hosted two screenings of Robert Greenwald's movie "Wal-Mart: The High Cost of Low Price" with more than 550 people in attendance and followed up with a creative action of more than 75 people at the nearby proposed site for the Supercenter, getting positive press coverage in the local media.

Along with neighborhood associations and business owners, members of the coalition testified before the Oregon Transportation Commission, who, partially based on the testimony, decided to withhold funds for a highway interchange construction that Wal-Mart was counting on to help with the increased traffic generated by their store.

Finally, after months of organizing, the land use hearing officer denied Wal-Mart's application to build a Supercenter. While the impact on traffic and the surrounding neighborhoods was the basis for denying the application, the massive community opposition to Wal-Mart stems from broader corporate policies – predatory business practices that kill local businesses, low wages, unaffordable health insurance, and an arrogant response to community concerns. The community has said – loud and clear – that a Wal-Mart supercenter is not welcome. At present, Wal-Mart has appealed the ruling, and the coalition is continuing to build support for their campaign to keep another Wal-Mart out of the community.

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Newcastle Overwhelmingly Passes Size Cap

WCSH6.com
March 28, 2006                [back to top] 

Almost everyone who attended Newcastle's town meeting Monday agreed to cap all new retail buildings at 35,000 square feet. The size cap was designed to keep big businesses, like Wal-Mart out of town. Wal-Mart had proposed building a 186,000 square foot store in nearby Damariscotta, but last week, voters there blocked the development with the same size cap Newcastle voted on.

The turnout for Newcastle's town meeting was well into the hundreds, much higher than normal. Only a handful of people voted against the cap.

The town of Nobleboro also voted recently to place a 6-month moratorium on all new retail buildings that are bigger than 35,000 square feet.

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China lesson to help Wal-Mart in India plan

Tuesday, March 28, 2006                       [back to top] 

Shenzen, March 27 (Reuters): When Wal-Mart Stores Inc opened its first store in Shenzhen a decade ago, the local newspaper headline proclaimed, ‘The Wolf is Coming’.

The world’s biggest retailer has not exactly devoured China’s retail sector since then, opening just 56 stores, but it has learned a few lessons that may prove useful for its next major project — India.

“China and India really represent the future of Wal-Mart,” Joe Hatfield, chief executive officer for Wal-Mart Asia, said in Shenzhen, the retailer’s China headquarters.

Foreign retailers are not permitted to directly invest in India’s retail sector, but they have been lobbying hard for a change to those rules.

Wal-Mart’s opponents in India fear the ‘wolf’ would demolish competitors and drive up unemployment in a country already struggling to feed and house its more than one billion citizens.

But Wal-Mart believes India, like China before it, will embrace Western retailers. The key is to show an understanding of local tastes, whether that means stocking popular spices, the right baked goods, or just the top-selling brand of soap.

Easier said than done.

In China, Wal-Mart tried to sell paint, something that works well in the United States. But customers weren’t used to buying paint and food from the same place, and Wal-Mart eventually stopped carrying it.

Analysts and economists in India say the retail sector and its supply chain are in dire need of modernisation. India’s farm goods typically pass through six or seven intermediaries before reaching consumers, and some 40 per cent of produce spoils along the way.

Wall Street is eager for signs Wal-Mart is making progress in China and India at a time when growth at home is sluggish.

The United States accounts for about 80 per cent of Wal-Mart’s annual sales, which topped $312 billion in the latest fiscal, but rival Target Corporation has posted faster sales growth in recent quarters.

Investors have noticed. Target’s shares are up more than 6 per cent over the past year, and trade at 17.2 times the profit forecasts for the current year. Wal-Mart’s stock has fallen about 5 per cent during that time, and is valued at 16.5 times its earnings per share.

Wal-Mart has already started preparing for India. The retailer has applied to open a liaison office in Bangalore to study the market, and recently hired a head to formulate its strategy in Asia, who will also oversee Wal-Mart’s expansion in India.

Wal-Mart vice-chairman Mike Duke met Indian officials early this month, marking the retailer’s second round of high-level talks in less than a year.

Hatfield himself may be one of the best resources. He opened Wal-Mart’s China operations in 1994, so he is well aware of the potential pitfalls in a developing economy.

His best advice? “Steal shamelessly,” Hatfield said, quoting from Wal-Mart founder Sam Walton, who routinely visited competitors’ stores to get new ideas.

He spent months in China walking around and talking to shopkeepers about which items sold well.

In China, Wal-Mart got off to a slow start, and trails rivals such as France’s Carrefour, which did a better job of adapting stores to meet local tastes.

Hatfield says it is unlikely he will be in charge of Wal-Mart’s India business, because the retailer’s expansion in China will keep him busy.

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Wal-Mart’s Foray into Banking Meets Resistance

by Michelle Chen
The NewStandard                       [back to top] 

When Wal-Mart made public its plans to venture into the finance industry last summer, critics came out of the woodwork and a diverse resistance movement formed – and for reasons we may have only begun to comprehend.

With thousands of superstores dotting the country, Wal-Mart has become the dominant name in American consumerism. Now, the retail giant is working to pump up its unrivaled commercial fortitude by setting up shop on the flipside of consumption: the banking sector.

But the plans have run up against outcry from consumer advocates, community banking institutions and other groups that have long railed against the company's business practices. They worry that Wal-Mart's proposed banking venture will go the way of its retail regime: wiping out the competition with the same relentlessness that fuels its credo of "low prices."

Wal-Mart has proposed to establish a type of bank known as an industrial loan corporation (ILC) in Salt Lake City, Utah. Conceived around the turn of the last century to enable companies to help consumers finance purchases, ILC's are free of many regulations binding conventional banks.

Though bank-charter applications seldom generate much political noise, Wal-Mart's proposal has drawn a groundswell of criticism from an array of constituencies. In the public comment process that the Federal Deposit Insurance Corporation (FDIC) has convened, public interest groups, unions, legislators and managers of small banks have aligned in opposition. They argue that if the FDIC approves Wal-Mart's proposal, there will be little stopping the retail giant from establishing the banking equivalent of a "big-box" superstore throughout American communities.

"The nightmare scenario here is that Wal-Mart controls every aspect of a community's economic life, both in the retail sector and the banking sector," said Chris Kofinis, spokesperson for the union-led campaign Wake-up Wal-Mart.

Last week, Wal-Mart announced one small forfeiture amid the fiercely negative public reaction. On Thursday, as community groups rallied in Washington, DC to protest the corporation's plans, Wal-Mart revealed that it was dropping its request for an exemption from regulations that would restrict its ability to manipulate community financial resources for corporate gain.

Under the federal Community Reinvestment Act of 1977, banks must target some services to facilitate low-income people's access to credit and to help meet local investment needs, rather than trying to maximize profits by limiting credit access and focusing on more profitable areas.

Wal-Mart's announcement that it would comply with the Act followed a slew of recent public statements from lawmakers warning of potentially drastic economic consequences if Wal-Mart's proposal is approved.

Wal-Mart had argued that while it would strive to serve local needs, the Act's oversight and reporting obligations would pose an unnecessary burden. But Marty Heiers, a spokesperson for the company, told The NewStandard that the company quietly dropped the request earlier this month. "We want to demonstrate to everyone that we're going to support the community," he said.

The concession on the Community Reinvestment Act, however, has so far done little to persuade critics that Wal-Mart has their best interests at heart. Dozens of organizations are planning to testify at upcoming FDIC hearings in April. The opposition ranges from grassroots labor groups like Jobs with Justice, which view Wal-Mart as an aggressively exploitative employer, to groups like the Minnesota Bankers Association, which fear that a Wal-Mart bank would have free reign to squelch their businesses and undermine the integrity of community financial systems.

Wal-Mart's effort to break into banking – the latest of several attempts since the 1990s – may also face a congressional hurdle: House Banking Committee Chairman James Leach (R-Iowa) has proposed legislation that would effectively bar corporations like Wal-Mart from obtaining ILC charters.

Nonetheless, Wal-Mart insists in its three-year business plan submitted to the FDIC last year, that the bank's main purpose will be to help the company process shoppers' payments by electronic check, debit or credit cards. At present, Wal-Mart says its plans do not include lending services or competition with local banks. According to the company, Wal-Mart processes over 140 million credit, debit and checking transactions per month, and handling these in-house would cut costs and help customers save at the register.

Heiers said that the company's main strategy in the financial sector is to partner with outside firms. In more than 1,100 of its retail locations, Wal-Mart offers in-store financial services through third-party outlets such as bank branches and money-wiring services – often underpricing similar "money center" operations in surrounding communities. "For the very narrow purpose of this bank," he said, "we feel that there is really no risk to anyone."

But opponents fear Wal-Mart's "narrow" operation would have wide-ranging impacts on community financial health.

The Independent Community Bankers of America (ICBA), which represents small-scale financial institutions, argues that after the initial three-year plan runs its course, Wal-Mart could easily expand its banking operations beyond electronic transactions. Under statutes governing bank branching, a Utah-chartered Wal-Mart ILC would be able to extend to over twenty states. With minimal regulatory oversight, say critics, a Wal-Mart bank could broaden its service array to compete with and ultimately displace small-scale local banking and credit institutions across the country.

"With all of their outlets and locations, they could overwhelm [competitors] and control all of the money," said Dan Ford, president of Pine River Valley Bank, which runs on a staff of about 30 people in Bayfield, Colorado.

Advocates for community banks predict that the sheer volume of Wal-Mart's electronic financial transactions would give it overpowering influence in the flow of money through the nation's banking system.

"Wal-Mart wants to cut out the banks and become the middle man, so that they profit from the cash that flows in and out of Wal-Mart... and then go build more Wal-Marts," said John Taylor, president of the National Community Reinvestment Coalition, which advocates for fair banking in low-income communities.

Tom Wilbur, founder and chairman of Bank VI, which serves two small towns in Kansas with a staff of 18, argued that a lender run by a big-box retailer could mushroom into a channel for promoting consumption, and thus be much less likely than a community-based, independent bank to focus on clients' long-term financial goals and interests.

"At the end of the day," he said, "I think the ultimate driver for an organization like Wal-Mart is going to be to sell them something first, and then figure out a way to get it financed, whether [or not] it makes the right sense for the customer."

Warning of potential conflicts of interest that regulators have historically sought to prevent, Ron Ence, ICBA's vice president of congressional relations, told TNS, "If you allow banking and commerce to be mixed... you would have a tremendous concentration of economic power that would pose a systemic risk to our entire economy."

Under current law, ILCs are controlled by their parent companies, not government-certified bank-holding companies. As such, they are shielded from major regulatory controls levied by the Federal Reserve, such as capital requirements to ensure financial stability and penalties for unsound business practices.

ILC's, which have been set up by numerous companies like General Electric and General Motors, have come under scrutiny from Congress following a GAO report released last September showing their extraordinary profits. Between 1987 and 2004, the assets of industrial loan corporations ballooned by about 3,500 percent, from $3.8 billion to over $140 billion, with a handful of massive corporations soaking up most of the wealth.

Ence predicted that if permitted to enter the financial sector, Wal-Mart's banking arm could easily grow into the world's largest financial institution, "and this could pose catastrophic implications for the economy if Wal-Mart ever really got into trouble."

Opponents fear that the company's extensive international-trade networks would leave its bank vulnerable to fluctuations in the global economy, and a sudden downturn could endanger the federal banking-insurance fund, which backs up commercial banks against financial crises.

While Wal-Mart pushes its application through the federal review process on the promise that its proposed bank will benefit consumers, opponents say that whether it is processing checks or selling groceries, Wal-Mart's economic expansion has had deep social costs.

A University of California–Berkeley study released last October showed that Wal-Mart's presence in an area tends to displace local businesses, while driving down wages and promoting jobs with substandard benefits. Since the 1990s, Wal-Mart has faced government citations and legal battles over numerous labor-law violations involving child and undocumented immigrant workers.

"If you look at Wal-Mart's general business strategy," Kofinis of Wakeup Wal-Mart said, "they enter a market, they decimate the competition because they're able to gain an advantage through exploiting their workers and the taxpayer, and then the American people end up paying the price for it. No one should be foolish enough to think it would be any different if it enters into banking."

© 2006 The NewStandard. All rights reserved. 

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Wal-Mart Mexico to continue big-city drive

By Lorraine Orlandi and Gabriela Lopez
Mon Mar 27, 2006                                               [back to top] 

MEXICO CITY (Reuters) - Wal-Mart de Mexico will push ahead with its aggressive big-city expansion even as it moves into more than 30 smaller cities this year, Chief Executive Eduardo Solorzano said in an interview on Monday.

Mexico City and other major cities have been a stronghold of Wal-Mart Mexico, or Walmex <WALMEXV.MX>, as it grabs a growing share of the national retail market with more than 790 stores and restaurants today.

Since last year, Walmex has increasingly targeted cities and towns as small as 15,000 to 20,000 inhabitants, but growth in urban centers remains a key part of its expansion strategy, Solorzano said at the Reuters Latin America Investment Summit.

"Internally we don't see it as so critical," Solorzano said of the move into smaller cities and towns. "I know that outside it's causing a lot of excitement. For us it's not so 'wow.'

"We still think our growth will continue in big cities," he said.

Solorzano, 48, who took the helm at Walmex in 2005, said Mexico's top cities -- Mexico City, Guadalajara, Monterrey and Puebla -- are still wide open for expansion.

"There are enormous growth opportunities," he said. "We don't believe it's over."

Walmex, a unit of Wal-Mart Stores Inc. <WMT.N>, has used aggressive expansion and low prices to become Mexico's dominant retailer in the past decade, plowing profits into growth.

Solorzano, an economist educated at Mexico's Tecnologico de Monterrey, said that would continue during the next five years.

"I see no difficulty to continue growing in a profitable way," he said, referring to the company's 2007-2012 business plan that is now being mapped out.

Stable inflation, rising salaries and a boom in credit are boosting Mexican retailers and Solorzano was optimistic.

"Mexico's economy is going to become more solid," Solorzano said, noting that a population bubble of young Mexicans is entering the economy.

While some business leaders fear a leftist presidential candidate could win July elections or market uncertainty around the vote could hurt investment, Solorzano said he is confident about Mexico's long-term stability and consumer spending.

LOW PRICES

Walmex has helped transform Mexican retailing with its everyday low prices strategy. Solorzano said it is working to reduce costs further by improving distribution, eliminating supplier middlemen and making stores more energy efficient.

"There is more room to cut," he said.

Walmex also is seeking ways to increase efficiency by joining forces with Wal-Mart operations in Central America, Brazil and Argentina, a strategy being mapped out in regular meetings among regional presidents.

Besides keeping prices low, Walmex and other retailers are investing more on remodeling stores to streamline layouts and improve service as consumers become more sophisticated.

"Besides organic expansion, profit growth at Walmex should derive from a mix of new products, increased emphasis on private label products, improvements in the apparel supply chain, additional efficiencies from the cold chain distribution facility, new store layouts, customized product offerings and the development of solution centers," Santander Investment said in a recent report.

Walmex also has set its sights on small-town Mexico as the retailer's expansion juggernaut rolls on.

Its record $1 billion expansion plan for 2006 calls for 120 new stores and targets more than 30 smaller cities where it now has no presence, including some that have no major grocery store outlets.

In a retail market driven largely by the informal economy, Walmex is eyeing more than 370 cities for future expansion.

"We feel there is a great opportunity because often no formal option exists," he said.

Solorzano also ruled out a stock delisting of the Mexico operations by majority stockholder Wal-Mart Stores Inc. <WMT.N>, a possibility that has been a concern for analysts.

"If there was a plan to delist the company why the hell would you offer to pay a dividend in shares," he said. "Absolutely not, the company has no such plan." As in previous years, Walmex this year offered to pay a dividend in cash or shares.

Walmex shares fell 1.89 percent to close at 29.09 pesos on Monday. After surging more than 50 percent in 2005, the shares are down slightly so far this year even as the broader market has gained around 8 percent.

(Additional reporting by Chris Aspin and Kieran Murray)

© Reuters 2006. All rights reserved.

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Far from home, Wal-Mart finds friends in China

By Emily Kaiser
Reuters
Mon Mar 27, 2006                   [back to top] 

SHENZHEN, China (Reuters) - Wearing brightly colored T-shirts, blowing whistles, waving flags and pounding drums, Wal-Mart China employees cheered and sang the praises of their stores at the annual staff meeting here.

The mood was much the same as the pep rally atmosphere at Wal-Mart Stores Inc.'s <WMT.N> shareholder meetings, held in Arkansas each June, where thousands of Wal-Mart workers gather to hear from top executives and plan for the next year.

Unlike Arkansas, however, there were no protesters in Shenzhen. No one was accusing the world's biggest retailer of paying poverty-level wages, damaging the environment or forcing suppliers to move manufacturing offshore.

Halfway around the world from its Bentonville, Arkansas, headquarters, Wal-Mart has found a place where it is welcomed with open arms.

Wal-Mart invited Reuters to observe parts of the "Year Beginning Meeting" in Shenzhen this month, where the company rewards top-performing workers and sets goals for the coming year.

It was the first time that the retailer had permitted a journalist to attend. A few minutes into the meeting, a public relations staff member escorted the reporter outside while sensitive sales data were discussed, but Reuters was allowed to return for the awards ceremony.

Employee-of-the-year Wendy Yuan fought back tears as she thanked the retailer for giving her a chance to manage a Sam's Club store that recorded $100 million in sales last year. She praised her boss -- another woman who started as a Wal-Mart cashier and now runs the Sam's Club business in China.

Meanwhile, back home, Wal-Mart is defending the largest ever class-action lawsuit, accusing it of discriminating against women in pay and promotions. Analysts are bracing for a multibillion-dollar settlement, which could come as early as this year.

Wal-Mart is growing quickly in China, with plans to hire 150,000 employees in the next 5 years -- five times its current work force of 30,000.

It exported an estimated $22 billion in goods from China last year, a boon to the developing economy, but more fodder for critics who blame Wal-Mart for a widening U.S. trade gap.

New hires in China say their college classmates admire Wal-Mart, and consider it among the top foreign employers. Annual staff turnover is in the high teens -- far lower than in the United States, where it typically hovers near 50 percent.

In the United States, Wal-Mart's popularity is fading. The retailer dropped to No. 10 in the latest Fortune Magazine ranking of the most admired companies. Wal-Mart ranked No. 1 in 2003, something it regularly touted in press releases.

With so much pain at home, it is little wonder that Wal-Mart Asia Chief Executive Joe Hatfield wants to end his Wal-Mart career in China. In a recent Reuters interview, he said China reminds him of his early days with Wal-Mart, in the 1970s, when the retailer was beginning its explosive growth.

He predicts a similar trajectory for Wal-Mart in China. The retailer has just 56 stores here now, compared with more than 3,700 in the United States, but Hatfield believes that Wal-Mart China could be as big as the U.S. business in 20 years, barring any major economic upheaval.

In the United States, Wal-Mart's size makes it an easy target for critics who say that a company earning more than $11 billion in annual profit can afford to provide better health care for its employees.

But in China, Wal-Mart is seen as a great example of entrepreneurial success. Hatfield said customers sometimes ask him to autograph copies of Wal-Mart founder Sam Walton's autobiography.

Walton died in 1992, soon after the book was published, but his rags-to-riches story still resonates here and his smiling picture greets shoppers at the Sam's Club in Shenzhen -- where employee-of-the-year Yuan works.

© Reuters 2006. All rights reserved.

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Scott's Wal-Mart Stirs Up Retail With Organic Boost

Parmy Olson
03.27.06                                    [back to top] 

London - Natural selection: We may hate admitting that part of our rationale for buying into the organic food trend is just as much to keep up with the Joneses as it was to avoid pesticides, or make tastier ratatouille. One reason Wal-Mart Stores is now buying into it is because it makes good business sense.

With ever-so-slightly more upscale rival Target posting faster sales growth in recent quarters, Wal-Mart has undertaken a spot of spring inventory cleaning so that it can reinvest in popular offerings like organic food. The move is part of Wal-Mart's broader green policy launched last year to boost recycling and cut down fuel consumption.

Wal-Mart has already dabbled in posh nosh with last week's opening of an upscale Supercenter in Dallas, Texas featuring wooden floors, khaki-clad employees and a sushi bar. Now as the Bentonville, Ark.–based retailer puts some 400 organic grocery offerings "at the Wal-Mart price" in other stores in the next month, experts predict that both Wal-Mart's rivals and its huge supply chain of manufacturers could be forced to adopt more sustainable business practices and larger organic offerings.

Wal-Mart's Chief Executive H. LeeScott Jr.H. Lee Scott Jr. isn't the only tree-hugging CEO these days. General Electric has also launched its own green technologies program "Ecomagination," while JohnBrowneJohn Browne frequently touts the fact that his oil giant BP goes "beyond petroleum."

Corporations like Wal-Mart may not be on the same page as environmentalists but sustainable policies might at least get them in their good books, as well as those of investors. "Striving for sustainability not only increases our leadership, creativity, and learning potential but also enhances the pride and dignity of our stakeholders," Scott said statement on Wal-Mart's Web site. The added bonus for the CEO is that he may soon be the Jones that everyone is else is trying to keep up with.

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Wal-Mart takes its China lessons to India

By Emily Kaiser
Mon Mar 27, 2006              [back to top] 

SHENZHEN, China (Reuters) - When Wal-Mart Stores Inc. opened its first store in Shenzhen a decade ago, the local newspaper headline proclaimed, "The Wolf is Coming."

The world's biggest retailer has not exactly devoured China's retail sector since then, opening just 56 stores, but it has learned a few lessons that may prove useful for its next major project -- India.

"China and India really represent the future of Wal-Mart," Joe Hatfield, chief executive officer for Wal-Mart Asia, told Reuters in Shenzhen, the retailer's China headquarters. Foreign retailers are not permitted to directly invest in India's retail sector, but they have been lobbying hard for a change to those rules.

Analysts say that will likely happen within a year or two.

Wal-Mart's opponents in India fear the "wolf" would demolish competitors and drive up unemployment in a country already struggling to feed and house its one billion citizens.

But Wal-Mart believes India, like China before it, will embrace Western retailers. The key is to show an understanding of local tastes, whether that means stocking popular spices, the right baked goods, or just the top-selling brand of soap.

Easier said than done.

In China, Wal-Mart tried to sell paint, something that works well in the United States. But customers weren't used to buying paint and food from the same place, and Wal-Mart eventually stopped carrying it.

Analysts and economists in India say the retail sector and its supply chain are in dire need of modernization. India's farm goods typically pass through six or seven intermediaries before reaching consumers, and some 40 percent of produce spoils along the way.

'STEAL SHAMELESSLY'

Wall Street is eager for signs Wal-Mart is making progress in China and India at a time when growth at home is sluggish.

The United States accounts for about 80 percent of Wal-Mart's annual sales, which topped $312 billion in the latest fiscal year, but rival Target Corp. has posted faster sales growth in recent quarters.

Investors have noticed. Target's shares are up more than 6 percent over the past year, and trade at 17.2 times analysts' profit forecasts for the current year, according to Reuters Estimates. Wal-Mart's stock has fallen about 5 percent in that time, and is valued at 16.5 times earnings.

Wal-Mart has already taken steps to prepare for India. The retailer has applied to open a liaison office in Bangalore to study the market, and recently hired a head of Asian strategy who will oversee expansion in India, among other things.

Wal-Mart Vice Chairman Mike Duke met Indian officials earlier in March, marking the retailer's second round of high-level talks in less than a year.

Hatfield himself may be one of the best resources. He opened Wal-Mart's China operations in 1994, so he is well aware of the potential pitfalls in a developing economy.

His best advice? "Steal shamelessly," Hatfield said, quoting from Wal-Mart founder Sam Walton, who routinely visited competitors' stores to get new ideas.

He spent his first months in China walking around and talking to shopkeepers about which items sold well.

In China, Wal-Mart got off to a slow start, and trails rivals such as France's Carrefour, which did a better job of adapting stores to meet local tastes.

Hatfield says it is unlikely he will be in charge of Wal-Mart's India business, because a major China expansion will keep him busy. But he has some ideas about how a Wal-Mart store in India should look.

For starters, it should have an expansive spice section, where employees can custom grind orders while shoppers wait. It would also boast a large bakery section.

In India, as in China, few households have ovens, so baked goods must be purchased.

Stores would probably be smaller than they are in China -- no more than 140,000 square feet, instead of the 200,000 square-foot supercenters in China and the United States.

WHERE TO GO?

Figuring out what to put on the shelves is one thing -- the bigger task will be figuring out where to put the stores.

Analysts in India say it will be tough for Wal-Mart to get into the mega-cities such as New Delhi or Mumbai, where real estate is pricey and large parcels of land are hard to come by.

Severe traffic congestion will also be a problem. How many shoppers will be willing to brave hours in a car just to visit a Wal-Mart store, particularly when a multitude of small, corner shops offer convenience and service?

Millions of those small stores currently account for some 97 percent of India's retail market. Most of them accept telephone orders and will deliver to homes.

Raman Mangalorkar, a principal with consulting firm A.T. Kearney in Mumbai, said small, corner shops will survive because of the convenience factor, but some will need to change their merchandise offerings to compete.

"They'll have to evolve, just like they've done in China," he said. "They will cater to needs that are not being served by the Wal-Marts and Carrefours."

Mangalorkar, whose firm ranks India number one on its annual list of the top markets for international retail expansion, said he would advise foreign retailers to focus on the second-tier cities such as Lucknow.

Hatfield said Wal-Mart was interested in cities both large and small. He said his strategy would be to make a big splash early on, opening 12 to 18 stores in the first 18 months, to show consumers that Wal-Mart was committed to India.

© Reuters 2006. All rights reserved.

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India’s retailers change fast as Wal-Mart waits

Daily Times
Sunday, March 26, 2006                       [back to top] 

NEW DELHI: In the New Delhi suburb Gurgaon, shiny new shopping malls line the main street, housing Western brands ranging from apparel retailer Benetton Group to restaurant chain Ruby Tuesday

In India’s largest city, Mumbai, an electronics store draws crowds of customers by listing discounted prices on flat-panel televisions and refrigerators a major shift for shoppers accustomed to haggling with small, independent shopkeepers.

India’s fast-growing, young, urban middle class is driving a retailing revolution, bringing Western-style formats including hypermarkets, department stores, specialty chains and even dollar stores. As many as 250 malls are expected to open in India over the next two years, up from around 60 now.

But the next phase is still to come as global giants such as Wal-Mart Stores Inc wait anxiously for India’s government to ease restrictions on foreign investment.

“India is becoming a consumer economy,” Mike Duke, Wal-Mart’s vice chairman and head of international operations, told Reuters in a recent interview in New Delhi.

Duke was the second high-level Wal-Mart executive to meet government officials here in the past year, as the world’s biggest retailer tries to convince India to open up its retail market to outsiders.

Wal-Mart and other retailers see huge opportunity in the country of one billion people, with a middle class estimated at nearly 60 million people, and another 220 million who have significant buying power.

“The average (Indian) consumer today is richer, younger and more aspirational in his/her needs than ever before,” consultants KPMG wrote in a report for the Federation of Indian Chambers of Commerce and Industry, which is actively pushing for India to relax rules on foreign direct investment.

Analysts say it is only a matter of time, perhaps a year or two, before retail sector investment rules are eased. India recently allowed retailers that sell a single brand Nokia, for example to own a majority stake in stores. Nokia, Benetton and others are already here through franchise deals.

Opponents say big foreign players will drive local firms out of business and destroy jobs, replacing quaint corner shops with characterless superstores. But many analysts argue that modernising retailing will add good jobs with opportunity for advancement, particularly for Indians who don’t have the education to find high-paying work in hot sectors such as information technology.

Corner shops to hypermarkets: Small, corner shops dominate the retail sector, accounting for some 97 percent of trade, but chain stores are popping up as retailers scramble to expand before Wal-Mart and others arrive. Analysts say most consumers aren’t worried about foreign investment, and appear more than ready to embrace Western-style retailing.

A recent clearance sale at India’s biggest retailer, Pantaloon Retail (India) Ltd drew such large crowds that police were called in to control traffic jams and the store was forced to close early. At Pantaloon’s Big Bazaar chain, which sells food and general merchandise, similar to a Wal-Mart, shoppers sometimes wait for over an hour to get through checkout lines. “Indian consumers are a smart lot and they will choose between good versus bad, not necessarily foreign versus domestic,” said Asitava Sen, principal consultant with PricewaterhouseCoopers in New Delhi. A study by his firm found modern trade in India would create jobs, increase efficiency in agriculture and boost exports.

Mall boom or bust? There are signs that trouble is brewing, however. In Gurgaon’s malls, retail analysts say foot traffic has declined, suggesting the novelty is wearing off. A KPMG survey found most retailers think India is heading toward mall overcapacity.

Part of the problem is planning. In Gurgaon, analysts say some malls will likely fail because too many are too close together, selling too much of the same merchandise. Newer malls are being built near public transportation a key issue in India’s major cities where trucks, buses, taxis, cars, pedestrians, pushcarts and cows vie for space. Developers are also paying more attention to demographics, choosing tenants that fit local income levels and tastes.

All this brings a smile to the face of Wal-Mart’s Duke, who sees the rapid changes as a sign that Indian consumers are ready for more retailing options including Wal-Mart stores. “It’s already happening in India,” he said. “That’s what is encouraging. It’s not waiting for Wal-Mart.” reuters

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Wal-Mart's Organics Could Shake Up Retail

By MARCUS KABEL
Associated PresS
Sat Mar 25                  [back to top] 

Wal-Mart Stores Inc. is throwing its weight behind organic products, a move that experts say could have the same lasting effect on environmental practices that Wal-Mart has had on prices by forcing suppliers and competitors to keep up. Putting new items on the shelf this year, from organic cotton baby clothes to ocean fish caught in ways that don't harm the environment, is part of a broader green policy launched last year to meet consumer demand, cut costs for things like energy and packaging and burnish a battered reputation. Organic products are one lure for the more affluent shoppers Wal-Mart is trying to woo away from rivals like Target Corp., said Alice Peterson, president of Chicago-based consultancy Syrus Global. A new Supercenter that opened this week in the Dallas suburb of Plano features over 400 organic foods as part of an experiment to see what kinds of products and interior decor can grab the interest of upscale shoppers. "Like many big companies, they have figured out it is just good marketing and good reputation building to be in favor of things that Americans are increasingly interested in," Peterson said. Wal-Mart's Lee Scott is not the first chief executive to advocate sustainability, a term for the corporate ethos of doing business in a way that benefits the environment. Industrial giant General Electric Co., for example, last year launched a program called "Ecomagination" to bring green technologies like wind power to market. What makes Wal-Mart's efforts unique, sustainability experts say, is the retailer's sheer size and the power that gives it in relations with suppliers. Wal-Mart works closely with suppliers to shape their goods, if they want them on the shelves of Wal-Mart's nearly 4,000 U.S. stores and over 2,200 internationally. "They have huge potential because it's not just Wal-Mart we're talking about, it's their entire supply chain," said Jeff Erikson, U.S. director of London-based consultancy and research group SustainAbility. The group says it does not do any consulting work for Wal-Mart. Erikson said Wal-Mart could bring the same pressure it has exerted over the years on prices and apply that to pushing manufacturers and competitors to adopt more sustainable business practices and larger organic offerings. "We love to see companies like Wal-Mart taking a big step and making pronouncements as they have, because their tentacles are so large," Erikson said. Wal-Mart plans to double its organic grocery offerings in the next month and continue looking for more products to offer in areas such as grocery, apparel, paper and electronics. Stephen Quinn, vice president of marketing, told an analysts' conference this month that Wal-Mart would have 400 organic food items in stores this summer "at the Wal-Mart price." Some Wal-Mart critics call the effort just a public relations job. But others say Wal-Mart could make a real difference if the retailer brings a critical mass of organic products to market and pushes enough suppliers to adopt green practices. Sierra Club executive director Carl Pope, who is a board member of the union-backed group Wal-Mart Watch that criticizes the retailer, said it is too soon to tell if Wal-Mart will deliver but that the impact could be good for the environment. "I think the direction they've said is a positive direction. The question is, `Are they are going to go there strongly enough?'" Pope said. Some of the new items will be seafood caught in the wild. Wal-Mart last month announced a plan to have all its wild-caught fish, which accounts for about a third of seafood sales, certified by the Marine Stewardship Council as caught in a sustainable way. The London-based MSC, founded in 1997 as a venture of the conservation group World Wildlife Fund and global consumer products company Unilever, issues the certificates to let consumers know which fisheries avoid overfishing and use methods that don't damage the ocean environment. Sustainability experts say what makes this program interesting is that Wal-Mart will work with its suppliers to get more fisheries around the globe certified by MSC, instead of just buying up the existing stock of certified fish. Wal-Mart says this means there will be more sustainable fish that will also be available to Wal-Mart's competitors, such as Whole Foods Market, which already sells about 18 MSC certified items, according to the MSC Web site. Wal-Mart plans to offer between 200 and 250 items. The way Wal-Mart hatched the fish plan is typical of how it operates. Peter Redmond, vice president and divisional merchandise manager in charge of deli and seafood, said he conceived the idea after meeting MSC board chairman Will Martin last fall. Wal-Mart and MSC worked out details and then Wal-Mart called in its 25 to 30 fish wholesalers in January to tell them it was switching to MSC certified seafood. Wal-Mart developed a plan to work with its suppliers to encourage fisheries to adopt MSC practices. The plan includes barring its suppliers from switching fisheries in the first year to 18 months, giving the suppliers more reason to promote the changes. "We don't want to walk away from a fishery just because it is in fairly poor shape or poor shape," Redmond said. "We want to try and recover that (non-certified) fishery to where it becomes a sustainable fishery. Our point being that if we just go for sustainable fisheries, it won't be enough at the end of the day unless we recover a lot of these that are in trouble now," he added. The term fishery refers to a particular species of fish and the fleet that harvests them. Redmond said about 60 percent of the fisheries that Wal-Mart buys from now can be brought up to MSC standards within a year or two, and the remainder may need three to five years to change. Redmond says the decision to go with sustainable fish came after Lee Scott launched the environmental policy last fall and fits Scott's maxim of "doing well by doing good". "The environmental piece is a company (policy) plank. Secondly and probably the main reason is, when I look at seafood now and how many dollars it does now and how many dollars it's going to do in four years, I'm extremely concerned that that product is simply not going to be there." "So we have to take the position that if I want to have hake five or six years from now, we as a company have to get involved and do something because I don't think it'll be there for us otherwise," Redmond said.

Copyright © 2006 The Associated Press. All rights reserved.

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Wal-Mart bags grocery market

Rival chains regroup as big-box giant jumps ahead in checkout line

by Allison Wollam
Houston Business Journal
March 24, 2006                                 [back to top] 

The Wal-Mart Stores Inc. shopping cart has become a wall-to-wall force in grocery aisles throughout the Houston area.

Wal-Mart Supercenters now control about 24 percent of the local market, almost double the amount claimed by the big-box retail behemoth just three years ago (see chart).

The company now occupies second place in the grocery section behind The Kroger Co., and could soon overtake the long-reigning market share leader at the current pace of growth.

Wal-Mart's surge has come mostly at the expense of chains such as Randalls Food Markets Inc. and Fiesta Mart Inc.

Competitors are responding to the spreading presence of Wal-Mart with various forms of strategy. Some are putting the brakes on expansion plans. H-E-B Grocery Co. has only one new store on the drawing board for 2006.

Others are redesigning existing stores with extra features such as drive-thru pharmacies and sushi counters. Kroger upgraded 14 local stores without opening any new locations last year.

Ed Wulfe, president of Wulfe & Co. and owner of multiple major Houston shopping centers, says traditional grocers are moving forward more cautiously than usual.

He projects that Kroger, like H-E-B, will open only one store this year.

"It seems that the grocers are taking real time to decide how they're going to compete with the Supercenters," says Wulfe.

Saturation strategy While rivals rein in, reconfigure and regroup, Wal-Mart continues to pursue an aggressive expansion plan.

The number of area Supercenters has increased from 22 to 43 since 2003, according to the latest figures from Trade Dimensions International, which tracks market share data in the grocery industry.

Two Supercenters opened last year and four more are slated to launch this year, says Wal-Mart spokeswoman Melissa O'Brien.

Meanwhile, much of Houston remains ripe for the grocery pickings compared to the rest of Texas, where the Shelby Report already ranks Wal-Mart as the No. 1 grocer statewide.

Lorrie Griffith, editor of the grocery trade publication, says the retailer has truly saturated the Dallas market and expects that Houston is next on the list.

Officials of Cincinnati-based Kroger, with 104 Houston-area stores, don't appear overly concerned that the chain might lose the top spot in market share for the first time in years.

Russell Richard, manager of consumer affairs, declines to discuss the subject of planned store openings because he doesn't want his competitors "to know what we're doing or where we're doing it."

The remodeling binge over the past year has given many Kroger stores some Wal-Mart trappings. One addition consists of a "kitchen place" stocked with kitchenware, appliances, glasses and seasonal dishes -- an assortment much like shoppers would find at a Supercenter store.

Richard won't say whether the renovations relate to growing competition from Wal-Mart, noting that Kroger monitors store operations on a continuing basis and plans are in the works to enhance additional existing locations this year.

Says Richard: "I think the Houston market is one of the most competitive grocer markets in the country because all of the big players are here and are continually improving."

H-E-B has fewer local stores compared to last year -- down to 49 from 51 -- but the San Antonio-based chain's market share edged higher, from 12.6 percent to 13.8 percent.

David Kayle, director of real estate for H-E-B's Houston division, says the grocer has spent the past year implementing a new store format designed to create a more diverse shopping experience.

H-E-B has only one store opening slated for this year -- at Fry Road and Highway 99 -- but the chain has been busy laying the groundwork for future expansion.

Says Kayle: "While we have secured many Houston store locations for future development, this format work has required us to delay a few projects in the pipeline."

Editor Griffith of the Shelby Report notes that H-E-B has rolled out a concept in regions other than Houston that reflects a few Wal-Mart touches.

The H-E-B Plus store format includes more general merchandise and departments such as baby furniture, power tools and clothes, along with food products.

Says Griffith: "I don't think H-E-B has made any secret of the fact that the new stores it is opening are larger stores with more departments to help them compete with the Supercenter operators."

Much of Wal-Mart's growth has come at the expense of Randalls, which dropped from second to fourth in local market share.

The hometown chain that experienced remarkable success as a market innovator has pursued a strategy to revitalize the popular brand name since being acquired by Safeway Inc.

Last October, the California-based parent company decided to close 16 underperforming Randalls stores in the Houston market, reducing the eventual total to 36 area outlets.

Randalls, credited with creating the revolutionary Flagship concept, has converted two stores into new "lifestyle" locations with larger selections of organic foods, sushi bars, floral design centers and meat counters.

While rivals tweak designs and tinker with product assortments to counter the growing clout of Supercenters, Wal-Mart's ability to offer all things -- including groceries -- to all shoppers at low prices under one roof poses a formidable hurdle.

Says Wal-Mart's O'Brien: "The ability to purchase groceries, music and clothing in one trip and have your oil changed in the process is a very attractive option for working families today."

Shopping center owner Wulfe notes that one chain, at least, is taking a direct approach to meeting the Wal-Mart challenge.

Says Wulfe: "H-E-B appears to be willing to go head-to-head by opening some bigger stores across the street from the Supercenters."

© American City Business Journals Inc. All rights reserved.

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Wal-Mart Behemoth bags a flagship store in Bay Area

by Steve Ginsberg
San Francisco Business Times
March 24, 2006                                         [back to top] 

The world's largest chain store needed a Bay Area flagship. Oakland needed new retail. The result is a 140,000-square-foot store now open at 8400 Edgewater Drive near Oakland International Airport.

Still, this was a difficult deal that included a major change in Wal-Mart's store configuration and the controversy that often accompanies the retailer's arrival.

Wal-Mart has opened 149 regular stores in California, but just four of its supercenters, which carry groceries. None of the supercenters are in the Bay Area. Wal-Mart was negotiating a lease for 250,000 square feet with landlord Simeon Properties for a supercenter in Oakland when the city council passed an ordinance to prohibit 100,000-square-foot stores from carrying groceries.

Although Wal-Mart's land was technically not subject to the ordinance, a lawsuit was likely if Wal-Mart proceeded. To keep the peace, Wal-Mart downsized its store to 148,000 square feet and didn't include groceries. Still, the deal was sweet for Wal-Mart: a 20-year lease for $1.25 million annual rent or $23 per square foot. Comparable space goes for over $30 a square foot. Within two years it's estimated Wal-Mart's revenue could approach $70 million.

Wal-Mart's unused 100,000 square feet was leased to a dozen national, regional and local retailers, including Starbucks, Payless Shoes and Jamba Juice, to create Oakland's largest new shopping center in decades.

Wal-Mart opened on Aug. 24 but its impact had already been felt. About 11,000 stood in line for a shot at one of 400 full time jobs. The Bentonville, Ark.- based company also gave city agencies and nonprofits $29,000.

The generosity is partially to appease the growing chorus of Wal-Mart bashers who fear it will destroy smaller retailers and hurt the local economy because of its low wages. Wal-Mart boosters argue Oaklanders needed Wal-Mart's rock-bottom prices. By showing confidence in the city, Wal-Mart could attract other retailers to new projects along the Interstate 880 corridor, the crime-ridden Coliseum neighborhood and even downtown.

The deal also brings to a successful end Simeon's sometimes rough ride with the site, known as Metroport. Conceived as offices and a hotel, the dot-com bust prompted Simeon to reconfigure it as a retail development.

Steve Ginsberg is a frequent contributor to the San Francisco Business Times.

© American City Business Journals Inc. All rights reserved

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A Show of Hands on Wal-Mart

By Michael Barbaro
The New York Times
March 24, 2006                                  [back to top] 

Wal-Mart, says the National Center for Missing and Exploited Children, is a "generous and thoughtful" partner that has helped recover 140 missing children. Maybe so, but the liberal group Americans for Democratic Action argues that Wal-Mart is "socially irresponsible" for skimping on employee wages. A dispute over a new store? Not exactly. Instead, these two groups — and an eclectic collection of 69 more — have signed up to testify before federal regulators deciding, of all things, whether Wal-Mart can open a bank.

But like almost anything involving Wal-Mart these days, the dispute has less to do with specific legal or regulatory questions than it does with the deep rift the company has opened across the American landscape.

As a result, highly unusual hearings next month are expected to highlight the degree to which Wal-Mart "the company" has become Wal-Mart "the issue" — a topic, much like affirmative action or abortion that divides legislators, trade groups and advocacy organizations into predictably opposing camps.

To be sure, Wal-Mart's application to open a bank has aroused the interest of groups that have a direct stake in the issue like the North Dakota Bankers Association and the Community Bankers Association of Kansas. But it is considerably harder to explain the interest of the Salvation Army (for), the Utah Farmers Union (leaning against) and Jobs With Justice (against).

They are either anti-Wal-Mart because of its business practices, or pro-Wal-Mart because they like its rock-bottom pricing strategy or benefit from the retailer's charity.

The Federal Deposit Insurance Corporation, which is reviewing Wal-Mart's application, has never before held a hearing on a bank application because none have ever provoked much of a response.

The question facing regulators is whether Wal-Mart, by far the nation's largest retailer and its biggest private employer, can open a bank in Utah that would process credit and debit card transactions for its 3,500 American stores. Dozens of companies, including Target, Toyota and BMW, operate similar banks.

Wal-Mart argues that a bank would save money for itself and its shoppers by avoiding the charges imposed on credit card purchases by other financial institutions, which amount to at least $5 million a year. Opponents argue that the bank, even with its narrow focus, would allow Wal-Mart eventually to open retail banking branches that could wipe out competitors, an ambition Wal-Mart denies harboring.

In a concession to opponents, Wal-Mart said yesterday that it would no longer seek an exemption from a law requiring its proposed bank to invest in low-income communities, which could relieve some criticism.

So far, the F.D.I.C. has received a record 1,900 letters from the public on Wal-Mart's application. The first hearing, spread across two days to accommodate all the speakers, is scheduled for April 10 and 11 in Arlington, Va., just outside Washington; the second will occur April 25 in Overland Park, Kan.

Sarita Gupta, national field director for Jobs With Justice, says that Wal-Mart — with what she considers a poor record of low wages, meager benefits and the elimination of thousands of small retailers unable to compete with Wal-Mart's low prices — should not be rewarded with a bank. "Until they address these bad corporate practices," she said, "why would we allow them to expand into a new industry?"

The Salvation Army, by contrast, plans to speak in support of Wal-Mart, trumpeting the company's steady financial support for the charity's Red Kettle Christmas Campaign and Wal-Mart's rapid response to aid victims of Hurricane Katrina.

"We are not bankers and we don't pretend to be," said Maj. George Hood, in charge of national community relations at the Salvation Army. "Our focus is to be a character witness for Wal-Mart and their support for communities."

Both sides are marshaling their forces for the fight. The Salvation Army and the National Center for Missing and Exploited Children, each recipients of Wal-Mart funds, signed up to testify after they were contacted by Wal-Mart officials. Jobs for Justice and Americans for Democratic Action are working with Wakeupwalmart.com, a union-backed group also scheduled to testify.

In such a charged political atmosphere, perhaps it is no surprise that Senator Hillary Clinton, Democrat of New York, who once served on Wal-Mart's board, now says in a letter that she has "serious reservations" about the bank application. Her position is shared by several large New York financial institutions, which view banks like the one proposed by Wal-Mart — technically an industrial loan corporation — as a potential source of competition that receives relatively little scrutiny from regulators.

Plenty of regular people, unaffiliated with trade or community groups, have also weighed in, reflecting the powerful emotions Wal-Mart evokes, both pro and con. Robert J. Pansegrau of Palm Springs, Calif., endorsed the company's banking ambitions, arguing Wal-Mart "has saved Americans billions and billions, bringing much-needed price relief to my family and friends."

"Banks that protest," he added, "are just afraid of losing their monopoly on huge fees."

But James Domenico of San Francisco wrote that he was "unequivocally opposed" to the application, describing Wal-Mart as a "rapacious and unrelenting competitor that routinely, as company policy, drives smaller competitors out of business."

A Wal-Mart spokesman, John Kelly, said the company was unfazed by all the attention or the prospect that the government hearings might become a referendum on the company, rather than its efforts to open a bank.

"I think you are going to hear attacks on the character of Wal-Mart," Mr. Kelly conceded. "We look forward to getting our position out."

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Activist Under Fire for Wal-Mart Position

By ERRIN HAINES
Associated Press 
Thursday, March 23, 2006                      [back to top] 

At the grand opening of a Wal-Mart in a black suburb of Atlanta, civil rights leader Andrew Young danced with store clerks, bouncing to the song "We Are Family."

He also posed with a $1 million check from the company — a donation for a memorial to the Rev. Martin Luther King Jr. to be built on the National Mall in Washington.

Young took part in the pep rally in his new position as a paid corporate cheerleader for Wal-Mart — a role that has perplexed some of his longtime civil rights colleagues, who have all but accused him of going over to the enemy.

Activists for the poor have long complained that Wal-Mart skimps on wages and health benefits, forces employees to work off the clock, and kills off mom-and-pop businesses.

The Rev. Joseph Lowery, known as the dean of the civil rights movement, said Young — the 74-year-old former Atlanta mayor and U.N. ambassador — is acting as a "lone wolf" in working for Wal-Mart.

"Maybe he knows something that other advocates for economic justice don't," Lowery said in a statement. "Maybe we will see the corporate giant be born again and become a good corporate citizen."

Young, who as one of King's top lieutenants was a business liaison during the civil rights era, said that by working for the world's largest retailer, he hopes to increase jobs and open other doors for poor people. He defended his role as entirely consistent with the ideals of the civil rights movement.

"Civil rights leaders are involved in helping poor people," he said. "That's what I've been doing all my life."

Young long ago left behind his protest days in favor of stumping for economic opportunity. As a two-term mayor in the 1980s, Young said he attracted more than a million jobs and $70 billion in private investment to the city.

Since 1997, he has headed GoodWorks International, which works with corporations and governments to foster economic development in Africa and the Caribbean.

He and his company were hired last month to promote Wal-Mart at public appearances, in interviews and in op-ed pieces, said Kevin Sheridan, spokesman for Working Families for Wal-Mart, a group organized with backing from the company. The group defends Wal-Mart Stores Inc. against attacks from critics.

Sheridan would not disclose how much Young and his company are being paid; Young said he is not sure how much his company is getting.

"He obviously is a highly credible public face that brings very high degree of respect to any debate that he involves himself with," Sheridan said. "We take very seriously his advice and his counsel. The career that he has had fighting for poor and working folks for his entire career has been the focus of almost everything he's been involved with this group to date, and we continue to look for new avenues for him to speak out."

Last fall, in another effort to change it ways, Wal-Mart announced steps to make health insurance more affordable for its employees.

"This is a case where Wal-Mart is hiring someone to make them look good, but this is someone who will try, through friendly persuasion, to get them to review some of what they're doing," said Margaret Simms, an economist for the Washington-based Joint Center for Political and Economic Studies.

She said that while the civil rights movement long concentrated on winning political power for blacks, "many people in the civil rights movement view economic development as the next frontier."

This not Young's first corporate job. He served for 10 years on the board of Atlanta-based Delta Air Lines and still makes public appearances on the company's behalf. He also has Nike as client through GoodWorks, and in 1997 he came under fire from activists for issuing a report exonerating the shoe manufacturer of unfair labor practices in Vietnam.

Akinyele Umoja, a professor of black studies at Georgia State University, complained: "What he's doing is providing credibility and legitimacy for some of these corporations that have policies that just reinforce inequality."

On Wednesday, Young hugged customers, signed autographs and posed for pictures with local dignitaries while singing Wal-Mart's praises. He cut the ribbon at a store that replaces an abandoned Kmart that closed two decades ago in the mostly black neighborhood.

The new store has received more than 8,000 applicants for 500 jobs. Young said he expects new housing and more business to follow Wal-Mart's lead and come to the suburban area that is home to some of the country's most affluent blacks but has stagnated in attracting jobs.

Charles Steele, president of the Southern Christian Leadership Conference, the organization King helped found, stopped short of criticizing Young.

"The perception is that Wal-Mart is really not a fair competitor in terms of the economy," Steele said. "What I am hoping and anticipating is that he would open up the avenues of communication to civil rights organizations, to begin dialogue and bring about meaningful solutions to a very negative situation in terms of perception."

The Rev. Jesse Jackson, who also worked alongside King, reserved his negative comments for the company, not his former comrade.

"It's his private choice. That's not a public policy issue," Jackson said, adding that the shift to a "Wal-Mart economy" of part-time work without health insurance is bad for the country.

©2006 Associated Press

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Wal-Mart's dilemma in India

The No. 1 retailer is eager to set up shop in the subcontinent, but local regulations still pose a challenge to its entry strategy.

By Parija Bhatnagar
CNNMoney.com
March 23, 2006                       [back to top] 

NEW YORK (CNNMoney.com) - Wal-Mart's itching to get into India, but it won't be easy.

India is already Wal-Mart's fastest growing sourcing market. More significantly, the world's largest retailer has identified India, the second most-populous nation and fourth largest retail market, as a huge organic growth opportunity for Wal-Mart (Research) in the future as its home market becomes increasingly saturated.

So what's the hold up?

The dilemma for Wal-Mart is India's complex foreign direct investment, or FDI, regulations, which currently bar international retailers from directly entering the Indian market. In other words, international retailers who have set up shop in India have opted for franchising deals with local partners or entered into joint-venture partnerships with Indian companies.

The Indian government did somewhat relax its FDI rules earlier this year, allowing "single-brand" retailers such as Nike or Gucci to own 51 percent of their business operations in India. However, this still precludes Wal-Mart, since the retailer sells a variety of brands in its stores.

At least one retail industry analyst suggests there could be another option -- and perhaps a more desirable one -- for Wal-Mart if it is determined to speed up its India entry despite the FDI obstacles.

Anil Rajpal, associate director of retail with global consulting firm KSA-Technopak, the Indian subsidiary of Kurt Salmon Associates, said Wal-Mart might want to consider a joint-venture-wholesale model in India.

"For example, one way to circumvent the existing FDI provisions if it considers opening Sam's Club wholesale stores in India with a joint venture and sell only to business clientele and not individual consumers," Rajpal said. "This way, Wal-Mart is not operating in the consumer retail market but at least it has got its foot in through the door."

According to Rajpal, German retailer Metro AG, which operates wholesale stores, supermarkets and department stores, entered India two years ago and set up two "cash-and-carry" stores in India that sell strictly to business customers.

Metro spokesman Albrecht Von Truchsess confirmed to CNNMoney.com that the company did set up two "cash-and-carry" stores in India in 2004.

"We prefer to enter new countries with this format because it's an easier format to operate in the early stages of our entry. Secondly, with the cash-and-carry stores, we also not competing directly with other retailers," Von Truchsess said.

"One other problem we faced in India is that the regional governments are very strong politically," said Von Truchsess. "So even if your company has national license to operate anywhere in the country, you'll still need to get approved for a regional license on top of the national license."

Would Wal-Mart consider coming to India first with Sam's Clubs that cater only to a business clientele?

"We could enter the market in that manner but we haven't made any decisions just yet," said Bill Wertz, director with Wal-Mart's international corporate affairs.

Wertz said Wal-Mart executives were in India earlier this month. "We are keen on India and we already have two offices there to help us better understand the opportunity," he said. "We are talking to a lot of people and potential partners. We will go in one way or another but right now we're in the research and evaluation stage."

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Wal-Mart unveils 'laboratory' store

By Jonathan Birchall
New York Financial Times
March 23, 2006                               [back to top] 

Wal-Mart, the US discount retailer, on Wednesday unveiled the latest weapon in its drive to improve its low-price image, opening a new 'laboratory' store that includes a fresh sushi bar, a wi-fi connected coffee shop and $400 bottles of wine.

Eduardo Castro-Wright, chief executive of Wal-Mart USA, said the store in Plano, Texas would test new products and services as the retailer pursues "selective" shoppers - who currently only buy low-margin groceries and basic items at Wal-Mart.

The 217,000 sq ft Superstore has an expanded range of organic products, as well as gourmet cheeses and more than 1,200 wines. It is also testing new store signs and a different layout, based upon research that focused on women shoppers.

Staff will also wear a uniform of khaki trousers and navy blue polo shirts, in place of the usual blue smock with "How May I Help You? " emblazened on the back in large yellow letters.

Mr Castro-Wright stressed that the store was one of a number of initiatives aimed at understanding the retailer's customers, saying it was "not directionally where we are going".

"Are we moving upscale? No. Are we being more relevent to a broader customer base? Yes. And if that means doing something special... in the process of learning about it, we will do that."

Plano, in the Dallas-Fort Worth area, has an average household income of $140,000, three times that of the retailer's typical market.

The new Wal-Mart stands opposite the town's most upmarket retail development, which includes a branch of Neiman Marcus, the luxury US department store.

Mr Castro-Wright also announced a fundamental shift in the way that its US product buyers operate, saying they would now focus exclusively on setting merchandising strategy, backed by Wal-Mart's recently expanded market research department.

Wal-Mart's buyers currently have product development, sourcing and delivery specialists.

The move, he said, would start with clothing buyers in June, and reflected the way that both its UK Asda and its Wal-Mart de Mexico units already operate.

"We've grown so much that we are now attracting very different [customer] segments, and we need a merchant who specialises in what's the right merchandise for that particlular customer segment."

Mr Castro-Wright said demand for Metro 7 - the retailer's first merchandising initiative based on its own market research - had been so strong that the retailer had been forced to scale back its plans to expand the line in its stores, from 1700 to 1500 stores by September.

Copyright The Financial Times Ltd. All rights reserved.

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Wal-Mart says U.S. plans focused around customers

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CHICAGO, March 22 (Reuters) - Wal-Mart Stores Inc. <WMT.N> is continuing to tweak its strategy to attract more shoppers by selling higher-end items while keeping a focus on value for its loyal shoppers, Eduardo Castro-Wright, president and chief executive of Wal-Mart Stores USA, said on Wednesday.

"Everything we're trying to do is focused around the customer," Castro-Wright said at a Merrill Lynch conference in New York. His comments were also broadcast over the Internet.

Castro-Wright said Wal-Mart, the world's largest retailer, is taking a closer look at what customers in specific markets want and at each market's competitive environment, rather than using a single strategy across the country.

Wal-Mart does a good job at keeping its loyal shoppers happy with low prices, but needs to do more to get selective shoppers, who only go to Wal-Mart for items like toiletries or food, to buy more, Castro-Wright said.

Selective shoppers are key to Wal-Mart's growth in the United States, where smaller rival Target Corp. <TGT.N> has offered such shoppers trendy clothing and home accessories for years.

A new Wal-Mart that opened on Wednesday in Plano, Texas, for example, has high-end wines and cheeses, as well as a sushi bar, things that most shoppers wouldn't expect from the company, Castro-Wright said. Still, he noted that the Plano store is targeted toward shoppers with higher-than-average household incomes, so many of the things there would not work in the company's usual format.

Another change, which will take some time for remodeling work, is to bring pharmacists out from behind glass panels so that customers have better access to ask questions, he said.

Wal-Mart is also expanding a test of a redesigned baby department to about 200 stores by the end of the year. In the new setup, staples such as formula and diapers are sold closer to higher-priced, more profitable items such as clothing and furniture.

Castro-Wright said Wal-Mart is also working with vendors to reduce the amount of inventory in stores. He said that Wal-Mart can do a better job of stocking only what is necessary in each store, rather than overstocking items which then have to be sold at a discount or shipped back to vendors.

© Reuters 2006. All rights reserved.

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Wal-Mart recalls thousands of love seats, chairs

Furniture can tip-over during use and may pose falling hazard to consumers

The Associated Press
March 22, 2006                              [back to top] 

WASHINGTON - Wal-Mart Stores Inc. is recalling about 643,000 Mainstays love seat and porch rocking chairs because poor construction and over-curvature of the chairs’ runners can cause instability, imbalance, fracturing of the wood and tip-over during use, posing a falling hazard to consumers.

The Bentonville, Ark., company has received 45 reports of injuries, including a cut in the leg requiring 16 stitches, a shoulder joint tear and one incident in which a pregnant woman began having contractions after the chair in which she was sitting flipped over backward.

The recall involves three models of rocking chairs, the Mainstays Love Seat Rocker (model IT-13380) and the Mainstays Porch Rockers (models IT-13379 and IT-13270). The love seats are wooden and white and seat two people. The wooden porch rocker is sold in white and light brown and seats one person. The model number is printed on the rocker’s packaging.

The rockers were sold at Wal-Mart stores nationwide and on Wal-Mart’s Web site. The love seats were sold from May 2004 through September 2005 for about $100. The porch rockers were sold from April 2004 through March 2006 for about $50.

Consumers should immediately stop using these rocking chairs and return them to Wal-Mart for a full refund. For additional information, contact Wal-Mart at 800-925-6278.

© 2006 The Associated Press. All rights reserved.

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Some Facts About Wal-Mart Stores Inc., Which Is Opening a New Upscale Store

By The Associated Press                       [back to top] 

Some facts about Wal-Mart Stores Inc., which is opening a new upscale store Wednesday in Plano, Texas:

Revenue in year ended Jan. 31: $312.43 billion, making it the world's largest retailer.

Profit: $11.23 billion.

More than 5,700 stores, including Wal-Mart and Sam's Club warehouses.

About 1.7 million employees, whom the company calls "associates."

Headquarters: Bentonville, Ark.

History: The first Wal-Mart Discount City opened in 1962, although founder Sam M. Walton had operated variety stores going back to 1945 in Arkansas. The first Sam's Club opened in 1984, and the first Supercenter, combining groceries and merchandise, opened in 1988. Since 1992, the company has ventured overseas, including Mexico, Canada, Argentina, Brazil, Germany and the United Kingdom.

Source: Wal-Mart Stores Inc.

Copyright 2006 The Associated Press. All rights reserved.

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The New Wal-Mart: Sushi Bar, $500 Bottles Of Wine Store Tries To Go Upscale

KTVU.com
March 22, 2006               [back to top] 

PLANO, Texas -- Wal-Mart Stores Inc. has overcome its rural roots and downscale image to attract affluent shoppers, but executives admit that many of those well-heeled consumers come only for cheap groceries and steer clear of the other merchandise.

In its boldest effort yet to target upscale shoppers, the nation's largest retailer is opening a new store this week with an expanded selection of high-end electronics, more fine jewelry, hundreds of types of wine ranging up to $500 a bottle, and even a sushi bar.

Wal-Mart says it won't duplicate this format anywhere else. But if plasma TVs, microbrewery beer and fancy balsamic vinegar sell in Plano, those items could be added to stores in other affluent communities.

Retail experts say nearly half of American families shop at Wal-Mart at least once a week. They say the retail giant has nearly tapped out its middle-class base and must attract consumers who love Target and Costco but not Wal-Mart.

With about 3,700 U.S. stores, Wal-Mart has nearly saturated the market, and analysts say future growth depends on boosting sales by offering a better shopping experience. The company is renovating 1,800 stores as many of its older outlets have started looking a little tired.

Wal-Mart profits keep rising, but not as fast as Wall Street expects, and same-store sales, those at locations open at least a year, rose faster in 2005 at smaller but trendier Target Corp. Wal-Mart stock has slipped about 20 percent in the past two years while Target shares gained about the same percentage. Wal-Mart shares rose 35 cents Tuesday, to $48.11, in a 52-week range of $42.31 to $51.46.

Analysts say that despite low prices, Wal-Mart suffers from a perception that its merchandise is lower quality, which turns off consumers who can afford better.

"The challenge they face is value, and upper-end consumers define value differently than a moderate-income shopper," said Patricia Edwards, who helps manage retail funds for Wentworth, Hauser and Violich investment counselors. "If it was just price, they would drink the office coffee instead of going to Starbucks."

In recent months, some Wal-Marts began selling upscale bed-and-bath items and its new Metro 7 and no boundaries clothing lines -- all of which are highlighted in the new store.

Wal-Mart listened to focus groups of "selective shoppers" -- the company's term for affluent customers -- in designing the store, said regional general manager John Murphy.

"The upscale customer is shopping our store," Murphy said. "Are they interested in everything we have to offer? No. This is a test store. Can we make that leap to where they are interested in other parts of the store?"

Murphy said Wal-Mart hopes to prove it can reach affluent consumers, which should help persuade vendors who are reluctant to sell their goods there. Target has succeeded in selling designer lines.

Don Gher, an analyst with Coldstream Capital Management, said it took Target years to shift upscale and it won't happen quickly at Wal-Mart either. In the meantime, he said the stores must guard against changing too much, which could alienate its core customers.

Gher predicted that Wal-Mart will succeed at selling high-end electronics to upscale consumers, but selling them apparel will be more difficult. "Fashion can be fickle," he said.

The new store, which opens Wednesday, is 217,000 square feet, about 20,000 square feet bigger than the average Supercenter. It sits across the street from a SuperTarget, and you can see Costco from the parking lot. The blue and gray Wal-Mart exterior gave way to two-tone brick. Inside, wood floors and wide aisles abound. Shelves are lower to reduce clutter. Even employees look different in khaki pants and navy polo shirts instead of blue smocks.

The new store is just as notable for what's missing. The store won't sell guns. It has far less space devoted to lawn and garden, fishing, camping and automotive products.

"This customer is telling us they're not doing it themselves," said Ryan Lincks, the store's project manager. "They don't change their own oil."

But the store has rows of high-definition televisions, several of them over $2,000, plus pricier bikes and even an expanded yoga section. It features an expanded baby clothes area, a cards and books section with cherry-finish wood racks and arching halogen gallery lights, and baggers at the checkout lines - a first for Wal-Mart.

Hungry shoppers will search in vain for McDonald's. It has been replaced by an espresso bar with a sandwich menu and free wireless Internet service.

Cosmetics and pharmacy aren't relegated to the far end of the store; they're next to the food and wine because female customers in focus groups said they want it that way for convenience and speed. Apparel areas have their own cash registers and more discrete fitting rooms.

But no layaways.

Copyright 2006 by The Associated Press. All rights reserved.

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Damariscotta Voters Approve Size Cap

WCSH6.com
March 21, 2006                     [back to top] 

Residents of Damariscotta sent a strong message to Wal-Mart Tuesday: "Stay out of our town". Residents voted by a large margin to block the world's largest retailer from building a store in the town. The actual vote was on a size cap to limit new retail buildings to no more than 35,000 square feet. The store proposed by Wal-Mart would have been 186,000 square feet.

After an intense, four-month campaign, both sides had predicted the vote would be very close. It was not. The final tally was 747 to 456, with the size cap winning about 62 percent of the vote. And the town clerk says it may have been the largest voter turnout ever for a municipal election, and one of the largest in general. About 70 percent of the town's voters cast ballots.

Cap supporters were overjoyed. At a party they toasted with champagne, and praised the volunteer effort that brought out the voters.

Cap opponents, meanwhile, said they were glad that people who opposed the measure had a chance to be heard in the debate.

Both sides said during the campaign that it was a struggle over the future of the small town. Size Cap supporters said Wal-Mart would ruin the character of the village, and would hurt many local businesses, particularly in the downtown. They argued the proposed SuperCenter was simply too big.

Cap opponents , however, said the cap itself was too small, that it would restrict economic growth in Damariscotta, and hurt the chances to develop new jobs. A variety of other issues also made their way into the debate, from the need for lower prices in town to the level of pay and benefits Wal-Mart provides.

And the Lincoln County area isn't finished arguing or voting about Wal-Mart, however. The neighboring town of Newcastle votes next week on a similar size cap to block "big box" stores from locating in the town. The community of Nobleboro passed a moratorium on development last Saturday, also in response to the Wal-Mart issue. Size Cap supporters say they are also planning to fight efforts by Wal-Mart to locate in other area towns. Wal-Mart hasn't announced any such plans at this point. In February, a Wal-Mart spokesman told NEWS CENTER the company wouldn't challenge the cap if it passed, but would look for another community to locate its store.

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FDIC Wal-Mart Hearings to Include Bankers, Realtors, Unions

Lance Turner
Arkansasbusiness.com
March 21, 2006                                 [back to top] 

The Federal Deposit Insurance Corp. on Tuesday released a tentative schedule of speakers for its April hearings on Wal-Mart Store Inc.'s industrial bank application. The long list, available here, includes an executive for the Bentonville-based retailer, members of Wal-Mart watchdog groups, unions, bankers associations and realtors.

The hearings will take place from 9 a.m.-5:30 p.m. April 10-11 in Washington, D.C., and from 9 a.m.-5:30 p.m. April 25-26 in Kansas City, Mo. It is the first time the regulator has scheduled public hearings on a bank application.

Wal-Mart has applied to open an industrial loan company to handle electronic payment processing. The bank would be headquartered in Salt Lake City.

Critics of Wal-Mart's application have said Wal-Mart could use the bank to offer other financial services. They also say the Wal-Mart bank would cross the line between banks and other businesses that primarily offer financial services.

This month, a group of about 30 U.S. lawmakers voiced concerns to the FDIC about the "Wal-Mart bank" in Utah, saying the bank, if chartered, "could threaten the stability of the nation's payments system." They asked the FDIC to reject Wal-Mart Stores Inc.'s application to open a bank in Utah.

But regulators in Utah have said that the state’s laws make it unlikely that an industrial bank charter obtained by Wal-Mart could be used to further the company’s hopes of owning a retail bank.

On Monday, the Wall Street Journal reported that some of the nation's biggest companies is supporting the retailer's quest for a bank. It cites support for the bank from the American Financial Services Association, a trade group that represents General Motors Corp., General Electric Co., Toyota Motor Corp. That article is available to Wall Street Journal subscribers here.

Utah is one of the few states in which nonbank holding companies are allowed to set up banking operations; California changed its law three years ago specifically to keep Wal-Mart from establishing an industrial bank there. Wal-Mart competitor Target Corp. of Minneapolis already operates an industrial bank in Utah, as do GE Capital, Merrill Lynch and Pitney Bowes.

Copies of the public portion of Wal-Mart's bank application and more than 1,900 comment letters received about the application are available at the FDIC's Web site here.

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Wal-Mart Opposition To Lay Out Its Side

By Phillip Hermann
Greater Milwaukee Today (WI)
March 21, 2006                                        [back to top] 

The group of residents who have serious questions about the potentially negative impact of a new Wal-Mart Supercenter will host a town hall meeting Thursday at 7 p.m. at VFW Memorial Hall in Hartford. On March 28, the Hartford Common Council will meet to take action on the annexation application, rezoning, developer’s agreement and landscaping conceptual site plan that relates to the construction of a 183,198-square-foot store on about 22 acres across from Pleasant Hill Cemetery on Highway 60 West.

At the March 13 meeting of the Hartford Planning Commission, the board voted to give favorable recommendations to the council on four regulatory items. The council has the final say on each item and there will be a public hearing at the meeting, which begins at 7 p.m.

At the March 13 meeting, one of the organizers of the upcoming town hall meeting, Scott Lopas, owner of WTKM radio station in Hartford, raised concerns about Wal-Mart’s impact on traffic congestion and the environment. He also questioned what the "big box" retailer’s effect would be on other small retail businesses and their ability to find employees.

He asked the commissioners to carefully consider all aspects of the Wal-Mart plan and its potential impact on local traffic, the environment and other small retail businesses in the community.

Two persons spoke at the meeting in support of Wal-Mart.

Lopas said the town hall meeting is in response to questions by residents about Wal-Mart’s potential impact.

"We’ve had a number of calls from people who feel that the city has not been totally up front about information about Wal-Mart and its impacts. That’s going to be the main focus of this forum, giving people the chance to learn more about this issue," Lopas said.

He noted that a representative from Midwest Environmental Advocates of Madison will be on hand to answer questions about traffic, the environment and the potential economic impact on local businesses.

"We also will have someone from a local union to discuss the labor-related issues that pertain to Wal-Mart," Lopas said.

Residents also will have the opportunity to sign petitions that oppose approval of the Wal-Mart. Those petitions are being circulated in the community and will be presented to the Common Council at the March 28 meeting.

Another organizer of the town hall meeting, Marilyn Raschka, said it’s important that people be informed about all aspects of the Wal-Mart plan.

"This is an important meeting for our community," Raschka noted.

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Neighbors Say No To Proposed Wal-Mart

By Catherine Trevison
The Oregonian
March 21, 2006                        [back to top] 

Gresham - Even at half the size initially proposed, residents say such a store would cause traffic jams The store that Wal-Mart wants to build in Gresham is about half the size of one it wasn't allowed to build in the city last year.

But neighbors of the Wal-Mart proposed for 182nd Avenue and Powell Boulevard say their opposition hasn't shrunk.

Members of the Centennial, Hollybrook and Southwest neighborhood associations voted overwhelmingly against the new Wal-Mart proposal Monday night.

Only two of about 250 people at the meeting raised their hands in favor of a store.

Last summer, Gresham officials said the retailer couldn't build a 212,000-square-foot supercenter that would have generated more than 1,000 new car trips on nearby roads during the peak weekend hour. The amount of traffic generated by the store would jam nearby intersections, the city ruled.

Last fall, Wal-Mart bought the land and planned a new store of just 122,000 square feet. Wal-Mart's traffic consultants say this store will generate only about 600 new car trips during the peak weekend hour, and with improvements that Wal-Mart plans for nearby roads and intersections, it will meet city codes.

Gresham officials are reviewing the application to see whether it is complete. Once it is, they will accept public comments for about two weeks.

The city's decision will again boil down to traffic, said Rick Dwyer, president of the Centennial Neighborhood Association.

Wal-Mart's consultants "say, 'Maybe half the traffic, because the store is half the size.' Don't believe it," Dwyer advised neighbors Monday.

A group opposing Wal-Mart, GreshamFirst, said the traffic engineer it hired last year will identify similar-size Wal-Marts around the country and figure out how many cars they attract.

GreshamFirst will again circulate a petition against a Wal-Mart at that site resubmitting the names of more than 6,000 people who signed the petition last year, said spokeswoman Javon Gilmore. The group will also continue raising money to pay for a traffic engineer and a land-use lawyer by selling bumper stickers and yard signs opposing the store.

Monday's meeting was smaller than a similar three-neighborhood meeting in early 2005, when Wal-Mart hoped to build the larger store. Gresham required Wal-Mart representatives to attend that meeting, and they were faced with hundreds of emotional people, some waving signs and shouting opposition. The city did not require Wal-Mart to attend Monday's meeting because it has already heard neighbors' concerns.

A Wal-Mart spokeswoman said the retailer was unable to send a representative this time but that it would welcome a follow-up with neighborhood leaders.

Theresa Carey-Brill, a member of the Southwest Neighborhood Association and GreshamFirst, said Monday's meeting was smaller because the groups had done such a good job informing the neighbors last year.

"They know the process" for public comment on the proposal, Carey-Brill said. "They know what they need to do."

Neighbor Bryan Scott and his wife moved to Gresham about eight months ago seeking "a small community environment." He left the meeting convinced that Wal-Mart would not fit that site.

"I'm not opposed to big boxes by any means," said Scott, who worked for Home Depot for several years. "It's just the idea of the traffic."

One neighbor who favored the store, Billie DeCandido, said she has lived in Gresham for 31 years and would like a store closer and less crowded than the Wood Village Wal-Mart she goes to now.

"We need jobs and convenient shopping," she said.

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Wal-Mart bank draws more congressional fire

By Kristin Roberts
Mon Mar 20, 2006                  [back to top] 

WASHINGTON (Reuters) - A bipartisan group of U.S. congressmen will this week ask regulators to deny Wal-Mart's bank application, the latest push from some on Capitol Hill to oppose the bid as public hearings near.

The House members, in a letter to the U.S. Federal Deposit Insurance Corp. obtained by Reuters say that due to Wal-Mart's <WMT.N> scope and international dealings, financial problems within the company might damage the bank and disrupt the U.S. payments system.

The letter strikes similar chords as previous congressional correspondence on the retail giant's application, raising concerns about the lack of full bank regulatory oversight and the risk of loss to the federal deposit insurance fund.

"Without proper regulatory oversight, an industrial bank owner may put the solvency of both the bank and parent at risk," writes the group of more than 20 congressmen, including Ohio Republican Reps. Paul Gillmor and Steven LaTourette and Democratic Rep. Luis Gutierrez of Illinois.

Gillmor, LaTourette and Gutierrez were not immediately available to comment.

Wal-Mart, the world's largest retailer, has applied to open an industrial bank, known as an industrial loan company, to handle its electronic payment processing.

According to the application filings, the Wal-Mart Bank would not offer processing services to other retailers, offer services to the public or establish bank branches.

Still, it has generated intense opposition from some in Congress and banks that fear competing with the retail powerhouse, as well as groups that regularly criticize Wal-Mart, such as labor and environmental groups.

Recent criticism has focused not so much on Wal-Mart as on industrial loan companies overall.

Industrial banks are state-chartered and state-regulated, and fall under the supervision of the Federal Deposit Insurance Corp. (FDIC). Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify industrial banks as banks.

But after the Federal Reserve raised concerns that commercial owners of industrial banks escape a level of federal bank supervision, those opposing Wal-Mart's bid began questioning whether that lack of full oversight could allow troubles within the company to bleed into the bank's business and disrupt the payments system.

Other opposition has focused on the historic separation of banking and commerce in the United States. Some say Wal-Mart could drive community banks out of business.

Wal-Mart, however, is not the only commercial firm or retailer to seek to set up an industrial loan company. Rival Target Corp. <TGT.N> succeeded in its industrial bank application, and General Electric <GE.N> and General Motors <GM.N> also have industrial banks.

Wal-Mart has looked ahead to public hearings set for April, saying it wants to explain the functions its proposed bank would perform.

The FDIC on Monday is set to release a list of people scheduled to testify at the hearings -- the agency's first formal public hearings ever on a bank application.

While lobbying has intensified against the bid, some analysts say that if the FDIC follows statute, there is little reason Wal-Mart's application should be denied if Target's succeeded.

So far, dozens of lawmakers have signed letters to the FDIC asking the agency either to reject the application or exercise caution in its review. Those members have included Democratic Sen. Hillary Clinton of New York, a former Wal-Mart board member, and Rep. Barney Frank of Massachusetts, the top Democrat on the House Financial Services Committee.

© Reuters 2006. All rights reserved.

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Scott's Wal-Mart Ramps It Up In China

Parmy Olson
03.20.06                        [back to top] 

London - If you thought the only connection between China and Wal-Mart Stores was one of product supplier and buyer, think again. The world's biggest retailer already has 56 stores in the world's most populous country, and it's looking to further boost it's presence with 20 new outlets this year and some 150,000 staff over the next four years.

For a bit of perspective on that figure, 150,000 is the approximate number of people employed by Hewlett-Packard worldwide. With 1.4 million employees across the globe, Chief Executive H. Lee ScottJr.'sH. Lee Scott Jr.'s workforce is bigger than that of General Motors, Ford Motor, General Electric, and IBM combined. And yet there always seems to be room to grow.

While Wal-Martis by no means the number one foreign retailer in China (France's Carrefour has claim to that title with 78 outlets) it is eager to keep muscling its way in. "We are going to be growing in all directions," Joe Hatfield, the head of Wal-Mart's Asian operations, was quoted as saying in media reports. "We are really going to ramp this up."

Not surprisingly, Hatfield's sentiments are also echoed by rivals Tesco and Carrefour. All three retailing giants are currently facing off in a bidding war over Trust-Mart, a Taiwan-based supermarket chain that has more than 100 retail outlets across 20 mainland provinces. Trust-Mart is reported to have received buyout offers of more than $1 billion from each of the three western suitors, as well as from Shanghai-based Lianhua.

Research shows China will in four years be the fifth-largest retailing market in the world. A rather enticing for prospect for someone like Scott, though he still has a ways to go in terms of replicating the dominance Wal-Mart enjoys in the U.S. In Chinese retailing overall, the firm still ranks at 19. Still, perhaps all that Wal-Mart needs from the country is a little… Trust-Mart?

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Wal-Mart poised for major China expansion

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SHENZHEN, China (Reuters) -- Wal-Mart Stores plans to hire 150,000 people in China over the next five years, five times the number it currently employs here, as it prepares for a major store expansion.

Joe Hatfield, chief executive of Wal-Mart Asia, who has worked at the world's biggest retailer for more than 30 years and was its first employee in China in 1994, said on Sunday the company plans to open 20 stores in the country this year and is racing to train more staff so that it can speed up growth.

"We're really going to ramp this up," Hatfield told Reuters in an interview while touring stores in Shenzhen, Wal-Mart's China headquarters.

The Bentonville, Arkansas-based retailer currently has 56 stores in China, putting it behind other global chains such as France's Carrefour, which had 78 at the end of 2005.

Wal-Mart did not even register enough sales to crack the top 30 on the Ministry of Commerce list of the biggest retailers in China, released last month.

That looks set to change.

"We're going to be growing in all directions," Hatfield said, adding that new stores were planned for both the major metropolises and the smaller cities.

Barring any major economic upheaval, Wal-Mart's China operations could be as big as its U.S. business in 20 years, Hatfield said -- something that Wall Street analysts have long predicted. Wal-Mart now has about 3,700 U.S. stores.

The United States generated 80 percent of Wal-Mart's $312 billion in sales for the latest fiscal year, but slowing growth and rising opposition at home have made international expansion all the more appealing.

America's love-hate relationship with Wal-Mart is well-documented. The retailer boasts that 100 million people shop at its U.S. stores each week, and yet its critics have grown increasingly vocal in the past year.

Two union-funded groups have set up Web sites and launched grassroots campaigns aimed at drawing attention to what they consider stingy wages and benefits for Wal-Mart workers.

Communities across the country have campaigned against new Wal-Mart stores, saying they devour green space, increase traffic congestion and drive competitors out of business. Activists have succeeded in blocking or delaying dozens.

Wal-Mart University? In China, however, consumers can't seem to get enough. Stores here can draw 1.2 million people per month, and the retailer is constantly on the lookout for new locations.

The biggest challenge is finding staff.

Hatfield said he has asked Wal-Mart to set up a university degree program here to train future employees to work in jobs ranging from master baker to accountant.

The retailer employs about 30,000 people in China, and Hatfield said he will need to hire 150,000 more as the expansion picks up steam. Wal-Mart has already started putting extra staff in stores so that they can learn on the job and be ready to manage newly opened locations.

Wal-Mart got off to a slow start here. Hatfield arrived in 1994, but it was nearly two years before the retailer opened its first stores. Growth has been modest since then, but China relaxed rules for foreign retailers at the end of 2004, making it easier to expand.

Hatfield spent his first months in China visiting other retailers to get a feel for shopping habits and tastes. As a result, outlets here may look like American megastores from the outside, but they carry a wide array of local delicacies such as sliced pig's ear, live fish and even crocodile.

Hatfield, 61, said he has no desire to leave, and hopes to stick around long enough to see the day when Wal-Mart China rivals the retailer's U.S. operations. He tells co-workers he plans to work until he is 80.

And after that, he wants to be a Wal-Mart greeter, standing at the entrance to welcome shoppers.

Copyright 2006 Reuters. All rights reserved.

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Wal-Mart to hire 150,000 Chinese

BBC NEWS
2006/03/20                          [back to top] 

Wal-Mart plans to hire an extra 150,000 staff in China over the next five years as it boosts its presence in the fast-growing retail market. The US firm - the world's largest retailer - currently has 56 stores in China and plans to open a further 20 over the next year.

It plans to establish a university degree to help new staff acquire skills in food preparation and finance.

The world's largest retailers are all looking to expand in China.

Making inroads

Of the foreign retailers operating in China, French firm Carrefour currently leads the way with 78 stores.

However, British firm Tesco and Germany's Metro are among a number of other companies intent on making further inroads into China.

We are going to be growing in all directions Joe Hatfield, Wal-Mart

Domestic business currently accounts for 80% of Wal-Mart's sales but the firm is looking to grow its international operations.

"We are going to be growing in all directions," Joe Hatfield, the head of Wal-Mart's Asian operations, told the Reuters news agency.

"We are really going to ramp this up."

Since it opened its first Chinese store in 1996, Wal-Mart has taken a relatively cautious approach to the market.

Regulations introduced in 2004 have made it easier for foreign retailers to open new stores, but China's size and regional diversity pose particular problems for foreign operators.

© BBC MMVI

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Mayor: Wal-Mart Isn't Welcome

By George P. Hassett
The Somerville News
March 20, 2006                   [back to top] 

Mayor Joseph A. Curtatone has joined the growing ranks of elected officials to speak out against Wal-Mart’s employment practices, and to recognize its destructive effect on healthy local businesses, said a local union this week. In a recent City Hall meeting with the Greater Boston Labor Council, Curtatone made clear that he would vigorously oppose any effort to put a Wal-Mart in Somerville.

“I want you to know that I will resist Wal-Mart here in Somerville, not only because of the company’s labor practices, but because of what they do to local merchants,” said Curtatone. “I’m not about to let Wal-Mart come in to wreak havoc on our local workforce and business community.”

Curtatone’s position was good news to local labor leaders.

“We are thrilled that Mayor Curtatone has joined our fight against Wal-Mart. With the Mayor’s support and a strong union presence in Somerville, we are confident Wal-Mart won’t be looking to locate in Somerville anytime soon,’ said Rich Rogers, Executive Secretary-Treasurer of the Greater Boston Labor Council.

Mark Govoni from United Food and Commercial Workers Local 1445, applauded Curtatone’s stance.

“Wal-Mart has done more to depress wages and contribute to the health care crisis than any other corporation. Mayor Curtatone’s support shows he is willing to side with workers and small businesses against corporate greed,” he said.

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Minnesota Senate panel approves ‘Wal-Mart’ health care bill

By Mark Brunswick
NWAnews.com
March 19, 2006                         [back to top] 

MINNEAPOLIS, Minn. — A bill that would require the state’s largest employers to pay health care insurance costs for their workers — commonly known as "the Wal-Mart bill" — passed a Senate committee on Monday, amid concerns from groups, such as the Chamber of Commerce, that it would stifle job growth and do nothing to address skyrocketing health care costs. The bill would cover only the handful of Minnesota firms with 10,000 or more employees. It would require those companies to spend, on health benefits, an amount equal to 8 percent of the wages it pays its lowest paid workers or pay the difference to a state fund.

The measure’s sponsor, Sen. Becky Lourey, DFL-Kerrick, said large corporations that fail to provide adequate health care to their employees, force taxpayers and other "responsible" companies to pick up the tab. "What I’m trying to do is stop the cost shifting to the public programs," Lourey testified.

The bill passed in the Senate Jobs, Energy and Community Development Committee by a voice vote Monday, but it faces an uncertain future. A similar measure failed in a House committee last week.

Labor groups back the bill, saying it puts the responsibility for health care costs on large corporations that can afford it. An amendment would require the state of Minnesota, and other 10,000-worker employers, to meet the same standards. "This bill is not the solution to the health care crisis. What this bill is designed to do, is to make sure the largest corporations pay their fair share for their employees’ health care," said Rick Varco, director of communications and research for the Service Employees International Union Local 113.

Business groups that include the Minnesota Business Partnership, the Minnesota Chamber of Commerce and the Minnesota Retail Federation, said the bill fails to address the real needs of working Minnesotans with inadequate health care. While 94 percent of companies with 500 or more workers provide health care coverage, only 43 percent of companies with 50 or fewer workers provide health care. The bill may actually encourage some businesses not to expand for fear of being included in the 10,000 worker category, they said. "This sends a bad message to businesses considering moving to Minnesota," said Bruce W. (Buzz) Anderson, president of the Minnesota Retailers Association, who said the bill would have its largest impact on retailers, many of whom employ part-time workers and workers who may not want health coverage.

The 800-pound gorilla in the debate is retail giant Wal-Mart. The bill mirrors a national trend among labor groups to target Wal-Mart for its labor practices. Maryland became the first state to require Wal-Mart to spend more on employee health care or pay the difference into the state’s Medicaid fund. The Retail Industry Leaders Association has challenged the law in court.

Wal-Mart, according to the Minnesota Retail Federation, has 13,881 Minnesota workers and does $2.9 billion a year in business with more than 1,200 suppliers in the state.

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The "Wal-Mart Effect" New book explains love/hate relationship

By Gabriel Madway
MarketWatch
Mar 18, 2006                                   [back to top] 

SAN FRANCISCO (MarketWatch) -- Love Wal-Mart, or loathe it, the company does spark passion like the New York Yankees, Michael Moore or a Michael Jackson trial. But like many divisive issues, there is a substantial gray area regarding Wal-Mart, one that often goes unplumbed in the polarized debate. It is there that "The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy" (The Penguin Press; $25.95, 294 pages), an absorbing and relatively evenhanded new book, tries to operate. While not entirely neutral and certainly not dispassionate, the author, Charles Fishman, has written an essential primer about Wal-Mart. Fishman, a senior writer at Fast Company magazine, tells the story of a dynamic company whose zealous obsession with low prices puts it on the leading edge of global commerce -- and how such zeal works to the detriment of not just its competitors, but sometimes its suppliers and even its customers, too. The company is radioactive of late, as evidenced by the industry that seems to have emerged, dedicated solely to fighting its spread. Google "Wal-Mart" and your top 10 results turn up numerous anti-Wal-Mart entities. Googling other high-profile companies like Microsoft Corp., General Electric Co., or even the profit-soaked Exxon Mobil Corp., produces nothing like this. Wal-Mart continues to grow and dominate its industry like few others before it. More than 93% of American households shop at a Wal-Mart. The company employs 1.6 million people (by contrast, Exxon Mobil employs 90,000). In the last two years, Wal-Mart has added more sales than Target Corp.'s total sales. Wal-Mart's rapid ascendancy in the grocery business is the stuff of legend. Fifteen years ago, it barely had a toe in the industry; now it sells more groceries than any company in the world. As Fishman tells it, Wal-Mart is either "one of the boldest, most democratic creations in human history," or "an insatiable, insidious beast exploiting the people it pretends to defend." It is clear that Fishman himself, while obviously fascinated and at times even admiring of Wal-Mart, is also somewhat repulsed by it. This dichotomy, in many ways, represents America's overall sentiment about the company. At times the book veers off-track and starts to sound like it is making a broader argument against globalization. Fishman's repetitive, breathless pronouncements about Wal-Mart's importance ("no business comes close to Wal-Mart's dominance across not just the consumer economy, but the economy as a whole, or ever has") do start to wear on the reader. But none of this takes away from the book's often trenchant analysis. We hear a lot about the so-called debate the country is having about Wal-Mart. And, to be sure, it rages in certain quarters -- namely the media, state capitals and union halls. But whether the average shopper is spending any time pondering Wal-Mart's presumed benevolence or malice is debatable. The polling data is no help. One December survey, conducted by Zogby International for WakeUpWalMart.com, found that 56% of Americans believe "Wal-Mart is bad for America." On the other hand, another December poll, this one by the Pew Research center, found that 69% of those familiar with Wal-Mart had a favorable opinion of the company. If you believe people vote with their feet, then Americans don't exactly seem angry with Wal-Mart -- or at least not angry enough to stay away. After all, the company's fiscal 2005 sales did come in well above $300 billion. The effect and the economy What makes Wal-Mart's story so intriguing is the essential question that lurks beneath its eye-popping sales figures: how much control do we allow the hand of the free market to shape us? The "Wal-Mart Effect" begins with the company's relentless drive to lower prices across the board. Its demand for cost-cutting (often to the tune of 5% a year), in turn, forces its suppliers to get leaner and leaner. Wal-Mart's competitors, meanwhile, must either follow its lead or perish. Consider K-Mart and Sears. This most people can agree on. However, many argue, part of the Wal-Mart effect is a resultant downward pressure on wages, reduced benefits for workers, or jobs shipped overseas by suppliers that cannot afford to make goods in America and sell them at the prices that Wal-Mart demands. In addition, those products from Third-World countries are often made by people working under questionable conditions. Taken even further, the adjunct Wal-Mart effect, some contend, is the destruction of communities, local retail districts decimated as the shopping habits of consumers are "suburbanized." Fishman cites an academic who argues, with evidence, that Wal-Mart's presence literally increases poverty in areas it enters. "We are slaves to our impulse for a bargain" At the heart of the story is a paradox that Fishman calls the "creeping irresistibility of the Wal-Mart economy." That is we, as a collective national conscience, may want our quaint downtown shopping districts to remain intact, to keep American factories manufacturing real goods, or for our Uncle Bob to get health care benefits at his job. But things change at the level of the individual, because everybody loves a deal. Whoa -- a gallon jar of pickles for $2.97! Can't pass that up! In an instant, all our good intentions vanish in the face of the tempting pull of the bargain. For the company's suppliers, Fishman tells us, landing a deal to sell through Wal-Mart is not necessarily the windfall it seems. Some thrive, others struggle. Wal-Mart is known to squeeze its suppliers for every last penny, to the point where, for some, it may not make financial sense sell there. Seeking answers in the fray So, with all the polemics and politics swirling around Wal-Mart, what do we actually know for certain about the company's impact? Surprisingly little, the book says. What academics research has discovered -- no shock here -- is that the company does indeed lower prices, to a greater degree in small cities. In addition, it has been shown that Wal-Mart both creates jobs -- about 30 over five years in a typical county it enters -- and kills them, at existing retailers and wholesalers. On the other hand, Fishman says a broad study of the company's suppliers was inconclusive on the question of whether their performance was hurt by their relationship with Wal-Mart. Meanwhile, a smaller survey found evidence showing that the larger the portion of sales a company does through Wal-Mart, the less profitable they are. The Wal-Mart future Fishman thinks Wal-Mart may be reaching the limits of its success, at least here in the U.S. Its same-store sales growth has fallen from 9% in 1999 to 3.4% in 2005. "America is nearly full up with Wal-Marts," he argues. Even though he thinks the company will remain dominant for years to come and could see $500 billion in sales by 2010. The wider world, after all, is still largely empty of Wal-Marts. Fishman says the company is showing signs of a struggle. Its stock price, which has been sagging for years, shows that investors feel the same. In the final analysis, some say Wal-Mart's problems can be boiled down to a simple image problem; that the company, its recent, much-publicized efforts to go upscale notwithstanding, is exactly what it aspires to be: cheap. The company carries a stigma that may be hard to shake.

Copyright © 2006 MarketWatch, Inc. All rights reserved. 

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Wal-Mart Names Suarez Chief Compliance Officer In US

Gabriel Madway
dowjones.com
03-17-06                            [back to top] 

Wal-Mart Stores Inc. (WMT) late Friday named J.P. Suarez chief compliance officer for its U.S. operations.

The retailer said Suarez will lead a compliance team that centralizes Wal- Mart's current environmental, privacy, immigration and operational compliance functions, in addition to asset protection.

(c) 2006 Dow Jones & Company, Inc

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Wal-Mart Bank Operations Would Be Limited Under Bills

Lauren Coleman-Lochner
Bloomberg
March 17                                         [back to top] 

Lawmakers in Michigan and Maryland have introduced bills to restrict Wal-Mart Stores Inc.'s plans for banking operations in their states.

Rep. John Gleason in Michigan, a Democrat, proposed a bill today that would bar from the state industrial banks like one Wal-Mart is seeking to start. Del. Brian Moe in Maryland, also a Democrat, introduced legislation yesterday that would ban Wal- Mart bank branches from its stores.

State legislators are taking actions to thwart Wal-Mart's banking plans amid opposition from community banks and groups to the company's application for an industrial bank charter. Wal- Mart has said its bank, to be based in Salt Lake City, will save it from using third-party credit-card processing companies and won't open branches or make loans.

``I'm really concerned that they're going to put the local community banks out of business,'' Gleason said. Wal-Mart recently broke ground for a store between two local banks in his district, Gleason said.

Industrial banks, created a century ago to make loans to workers, aren't regulated by the Federal Reserve. They can accept deposits and lend money, raising the possibility that Wal-Mart, the world's largest retailer, could open branches in its more than 3,300 U.S. stores.

``We have no intention of doing what they seem to be trying to prevent,'' Wal-Mart spokesman Marty Heires said. ``Right in our application we state very clearly we have no intention of opening branches.''

`Wal-Mart Bill'

Maryland's legislature in January overrode Gov. Robert Ehrlich's veto of the so-called ``Wal-Mart bill'' requiring companies with more than 10,000 workers in the state to devote at least 8 percent of their payroll to healthcare. California is considering a similar measure.

The Federal Deposit Insurance Corp., which is considering Bentonville, Arkansas-based Wal-Mart's application for deposit insurance, has received a record 1,900 comment letters on the application, agency spokesman David Barr said last week. The FDIC will hold public hearings on the matter on April 10-11 in Washington and April 25-26 in Kansas City, Missouri.

Michigan's banking code allows out-of-state banks to open branches with the approval of the banking commissioner. Gleason's bill would deny industrial banks the opportunity to seek such approval.

Federal Reserve Chairman Ben Bernanke is among officials who have expressed concern about commercial companies operating banks. ``Congress has affirmed the principle of keeping banking and commerce separate,'' Bernanke said in a March 8 speech in Las Vegas to the Independent Community Bankers of America.

California

Wal-Mart failed to open a bank in California in 2002 because lawmakers there ``passed legislation tailored to prevent Wal-Mart from buying an Orange County industrial bank,'' company spokeswoman Sharon Weber said in an e-mail in July.

Shares of Wal-Mart rose 33 cents to $46.69 at 4:18 p.m. in New York Stock Exchange composite trading. The stock fell 11 percent in the past year.

Wal-Mart is finding other ways to expand into financial services. It introduced Wal-Mart and Sam's Club credit cards last year. More than 1,000 independent bank branches operate in Wal- Mart stores and the company has said it's ``actively seeking new financial institutions as tenants.''

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Study finds Wal-Mart has most workers using state-funded health-care

By JEFFREY GOLD
AP Business                       [back to top] 

TRENTON, N.J. (AP) - Wal-Mart Stores Inc. has more workers and dependents using state-funded health coverage than any other employer in New Jersey, although it is the eighth-largest private employer in the state, according to a study compiled by a labor federation and released Tuesday.

The report comes amid a union campaign for legislation in New Jersey and other states that would require the world's largest retailer to pay a fixed amount for employee health coverage.

Wal-Mart, which has resisted unionization, said it has made its coverage more accessible and that rising health care costs need to be addressed nationally.

The study, released by the AFL-CIO, found that Wal-Mart employees and dependents are the biggest group getting state-funded coverage in 19 of the 23 states where figures were available.

In New Jersey, where Wal-Mart has about 12,500 workers, a total of 589 employees and dependents used NJ FamilyCare, the study said, crediting an August report by New Jersey Policy Perspective, a nonprofit liberal think tank, for the number. Second was another large retailer, Home Depot, at 335.

"This abuse of poverty health care programs means Wal-Mart is directly contributing to the nation's Medicaid crisis," the AFL-CIO said.

New Jersey legislators pushing a measure that would require large employers boost salaries and benefits said the findings illustrate the need for such a law.

"Here's an example where someone has the ability to pay for health care and they are pushing it off on the states," said state Sen. Joseph Coniglio, D-Bergen County.

NJ FamilyCare is a "safety net," said state Sen. Barbara Buono, D-Middlesex County, adding, "It was never intended to be exploited by some of the most profitable retailers."

The program had about 160,000 people enrolled last year, of which over 100,000 were children. It cost about $400 million, of which $175 million came from state taxpayers, and the remainder from federal funds.

Wal-Mart spokeswoman Kelly Hobbs said the Arkansas-based company now insures more than 1 million of its workers and family members, including more than 650,000 of its 1.3 million employees.

"Fair share" bills have been filed in at least 22 states to end taxpayer subsidies for profitable companies that skimp on health coverage. The New Jersey effort would require companies employing more than 1,000 nonunion workers to pay wages that at least match the federal poverty line, and benefits based on an average of what other employers provide.

Such measures "don't do anything to address the real issue of the soaring cost of health care in America," Hobbs said. "This is something that is affecting small and large employers."

Jon Shure, president of New Jersey Policy Perspective, said that unless universal health coverage is offered by the government, companies should not be permitted to shift costs to taxpayers.

"We can't let them off the hook until we have a better system," Shure said.

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School employee fights reprimand over Wal-Mart e-mail

By Ethan Smith
Lake County Leader
March 16, 2006                       [back to top] 

Is the issue over the proposed Wal-Mart supercenter a "political" one? That was the question facing Polson school board officials Monday night after a school district employee filed a grievance, challenging a reprimand she received last November for forwarding an e-mail about the supercenter to other school district employees.

Lynn Witts is the president of the Polson Classified Employees Association, one of two unions that represent school district employees, and the contract the PCEA has with the school district says that the district's e-mail system can be used for union-related business.

Witts claimed that the Wal-Mart-related e-mail she forwarded, which originated with Montana Education Association-Montana Federation of Teachers (MEA-MFT) state union president Eric Feaver, fell under union-related business. But school district employees, including Witts, all received an e-mail from superintendent Sue McCormick in October telling them that the use of the district's e-mail system for "personal-political statements or initiatives" is prohibited after a district employee sent an anti-Wal-Mart e-mail earlier that month following the announcement of the proposed supercenter.

The MEA-MFT is the union that represents most teachers and school district employees around the state, including Polson teachers and staff.

In the e-mail Witts forwarded to several dozen school district employees, most of whom appear to be PCEA staff, Feaver writes "Want to read about Wal-Mart attempting to grow yet another Super Store in Montana? Want more information about how everyone pays more for social services when Wal-Mart comes to town?" it reads.

Feaver's e-mail then includes a link to a Nov. 11 article in the Missoula Independent that discusses the proposed supercenter, including interviews with Moody's Market president Greg Hertz, who is identified as helping to lead the effort against the supercenter, and Wal-Mart manager Dave Tolley. In the article, Hertz and the anti-Wal-Mart group Lake County First are given extensively more coverage than Tolley, leading many of the board members to conclude that the article -- and thus, Witts' e-mail -- was political in nature, not "union business," as Witts and MEA-MFT union representative Tom Gigstad claimed.

Gigstad, who was at the meeting to argue on Witts' behalf, said forwarding an e-mail from the state union president falls well within the agreement between the union and the school district that allows employees to use e-mail for union-related business. Gigstad acknowledged that the school district's personnel policy outlines inappropriate political use of e-mail, including soliciting funds, campaigning for or against a ballot issue such as a mil levy, or endorsing or opposing candidates, but said forwarding a newspaper article on an admittedly contentious topic doesn't fall under any of those restrictions.

"He [Feaver] sent this out to [local] MEA presidents around the state, including Lynn. She received this from the state MEA president, as the local MEA president ... and forwarded it simply for informational purposes," Gigstad said. "There's nothing in here that requires a person to support or oppose ... any ballot issue. There's no solicitation to support or be against anything."

But some board members and McCormick disagreed.

"I think the documentation speaks for itself. The definition of 'political' ... policy, and law are open to interpretation. The article was insightful, [but] it was clear that Lynn and I disagreed about what constitutes 'political,'" McCormick said.

McCormick and some board members argued that the Wal-Mart supercenter issue is political if only because it has to be approved by a political body - the Polson City Council - before it can proceed. Coupled with the earlier warning sent out to district employees based on the first anti-Wal-Mart e-mail, McCormick said Witts should have known better.

But Gigstad said an article about Wal-Mart can be related to employee and teachers unions because Wal-Mart's anti-union stance and low rate of health insurance impacts school district employees and others with health insurance, who end up helping to pay the costs of uninsured residents, such as Wal-Mart employees who don't have health insurance.

"I don't know that it has to do with school issues, per se, but it has to do with union business," Gigstad said.

Gigstad said because he lives in Missoula, his coverage of the supercenter has been limited to articles in the Missoulian, which he acknowledged has also made the subject appear to be political given that the Polson City Council is heavily involved.

But a "Missoulian reporter's choice of words doesn't make it political" even if the Missoulian refers to it as a political issue, Gigstad said.

But board members pointed out that even the Missoula Independent article refers to the issue as "political." The last line of the article says, "Which argument Polson will eventually buy could become one of the more interesting political battles of the year."

Board members also weren't convinced that the e-mail or article qualified as "union business," and would therefore be protected under the district's contract with the teachers and other district employees.

"I don't understand what this has to do with the union," board member Kim Maloney said of the article.

Gigstad said it's not for the board to decide what is union business -- the e-mail was forwarded by the state union president to a local union president, and doesn't fall under the prohibited categories of soliciting funds or trying to impact a ballot issue, for example.

"I'm amazed at your narrow view of what's 'political,'" said trustee Bob Hanson, who characterized the Missoula Independent article as politically slanted.

"This doesn't have a damn thing to do with the school system," Hanson said.

Trustee John Laimbeer said Feaver's anti-Wal-Mart statements in the e-mail Witts forwarded made it a political issue -- not the article's slant.

"I don't think the article has to do with the grievance. I think the statement by Eric Feaver has everything to do with it," he said.

Gigstad noted they weren't claiming Witts' e-mail had anything "to do with kids or the educational system," but reiterated his position that it fell under union business.

Witts, a substitute bus driver and special education paraprofessional at the high school, filed a number of grievances against the district last year, including one last summer in which she claimed she and other bus drivers with seniority were being passed over for out-of-town trips in violation of the contract with district employees. Witts has filed nine grievances against the district in the past two years, she said.

Although this one was done on her behalf only, most of them were filed on behalf of other PCEA employees as the union president. Witts was given the option to have her grievance hearing held behind closed doors, but said she was fine with it being open to the public.

She acknowledged seeing McCormick's October e-mail warning employees not to use the district's e-mail system for personal causes after the first anti-Wal-Mart e-mail was sent, but said she thought McCormick was being extra sensitive to the fact that negotiations between the board and teachers over their contract were still ongoing at the time -- a sensitive issue in and of itself.

She also said the employee who sent the first anti-Wal-Mart e-mail also cautioned her after seeing the one Witts forwarded, telling her, "Hey Lynn, I got in trouble for this."

But Witts said she forwards Feaver's e-mails regularly in an effort to keep her fellow PCEA coworkers informed of issues affecting them, and that she didn't see anything wrong with forwarding the Missoula Independent article, with Feaver's comments included. She said she forwarded several other articles along with the Wal-Mart one.

Board member Vernon Finley asked Witts if she thought it was her responsibility to verify whether something was appropriate or legal before forwarding it.

"I do not endorse this -- I just pass it on. I didn't find it [the Wal-Mart article] political," Witts said, noting that she's forwarded dozens of other union-related e-mails she's received as part of the e-mail list she's on.

Gigstad and Witts were essentially asking that a copy of the reprimand be deleted from Witts' personnel file. The board will have 14 working days to act on her request, and if no action is taken, the reprimand will stand.

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Poll: Cost of living tops area residents' concerns

By Jeff Horseman
Annapolis Capital
March 16, 2006                       [back to top] 

While county residents think Anne Arundel's economy is in great shape, an increasing number are worried about the day-to-day expenses of housing, gasoline and utilities, according to a poll released yesterday. The number of people surveyed who rated the economy as the most important problem facing the county rose from 7 to 15 percent in the poll conducted by the Center for the Study of Local Issues at Anne Arundel Community College.

Growth and overpopulation still topped the list of concerns at 16 percent; that's down 6 percent from when the poll was conducted last fall.

Nearly three-quarters of the 401 adults polled between March 6 and 9 rated the economy "good" or "excellent," up from 71 percent in the October poll.

But 65 percent said the cost of housing was a "very serious" concern. Sixty-three percent were seriously concerned about the cost of utilities, while 62 percent said the same for gas prices.

"It's a perfect storm situation," said Dan Nataf, center director. "All three of those have combined to create a sense of an inflationary environment."

With the fall elections looming, "Politicians who don't have a response (to rising costs) or say, 'It's the market' aren't going to do well," Mr. Nataf said.

The median home price in Anne Arundel County was $324,500 last month, a 13 percent jump from a year ago but lower than January. Housing experts have said the market may be slowing down.

More than a third of those polled said real estate prices influenced their decisions, causing them to buy sooner or stay out of the market altogether.

As of March 9, the average price of a gallon of unleaded gas in Maryland was $2.31, according to AAA Mid-Atlantic. The price was 4 cents below the national average but nearly 35 cents higher than the same time last year.

And Baltimore Gas and Electric customers are anticipating an average increase of 72 percent in their electric bills starting July 1, when rate caps come off.

The Community Action Agency in Annapolis deals every day with people struggling to pay their bills.

"When you hear the economy's going great, the cost of living is going up too," agency CEO Brian Angus said.

While the thousands of jobs coming to the county from Fort George G. Meade's expansion is good news, "as an advocate for people on the other end of the struggle, we need to work to bring everybody along," Mr. Angus said.

Three-quarters of those making $50,000 or less listed housing costs as a serious concern. For those making at least $101,000, the number was 61 percent.

Survey respondents 60 and over tended to take utility costs more seriously; 77 percent said it was a top concern. Fifty-two percent of 18- to 29-year-olds said the same.

Most people - 57 percent - still think the county is headed in the right direction, according to the poll. 55 percent thought that way in October.

All respondents were asked for opinions on a wide variety of issues, including the controversial "Wal-Mart" bill that required large Maryland companies to devote at least 8 percent of their payroll to worker health benefits.

The General Assembly overrode Gov. Robert L. Ehrlich Jr.'s veto of the bill. While critics attacked the bill as anti-business, 62 percent of the poll's respondents supported making large employers spend a minimum amount on health care.

"(The Wal-Mart bill supporters) won the battle of public opinion," Mr. Nataf said.

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The Wal-Mart Brief Low-paid women face off against their boss, the world's largest retailer.

by Maureen Turner
March 16, 2006                 [back to top] 

Author Liza Featherstone takes up the cudgels against Wal-Mart.

Betty Dukes once had high hopes for her career at Wal-Mart. Just a couple of years after being hired as a part-time cashier, making $5 an hour, Dukes, a middle-aged single woman from California's Bay Area, was promoted to customer service manager. While that was still an hourly job rather than a salaried manager's position, Dukes was optimistic about rising in the company. She was inspired by Wal-Mart's up-by-your-bootstraps corporate culture, personified by its late founder, Sam Walton. Then Dukes' career path hit a brick wall. Her bosses, she contends, denied her the chance to get management training while allowing newer, younger male employees the opportunity. When she complained, Dukes, who had had excellent performance reviews, was written up for minor offenses by her managers. Eventually she was demoted back to a casher's position. Today Dukes still works for Wal-Mart, as a "greeter," a low-paying position that requires her to cheerfully welcome customers into the store. But while she spends her days as the happy public face of Wal-Mart, Dukes is, simultaneously, the face of an enormous effort to bring major changes to the corporation. She's the lead plaintiff in Dukes v. Wal-Mart Stores, Inc., the largest civil class-action lawsuit in history, representing 1.6 million current and former female Wal-Mart employees.

The federal suit, filed in 2001, charges that the corporation--the largest retailer in the world, and Fortune magazine's "Most Admired Company" in 2003 and 2004--systematically discriminates against female workers when it comes to pay and promotions. Journalist Liza Featherstone examines the case in Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart (Basic Books).

The book is filled with damning statistics about Wal-Mart's treatment of female employees. While 72 percent of its hourly workers are women, only 34 percent of its management are women. Ninety-two percent of cashiers (the lowest paid employees) are women. And women make, on average, less than men at all levels in the company, according to a statistician hired by the plaintiffs' attorneys, from female hourly workers, who make $1,100 a year less than their male counterparts, to women managers, who earn $14,500 less.

Selling Women Short is also filled with infuriating anecdotes about the subtle and not-so-subtle ways women say they've been held back from advancing in the company: women with children being told they're not eligible for promotions because they need to spend more time with their families; others being told by managers that they are paid less than male counterparts because the men have families to support (this despite the large number of single moms who work at the company); numerous women reporting that they never had a chance to apply for open management positions, which were instead passed to chosen employees, usually men. (Wal-Mart officials would not speak to Featherstone for her book.)

While Dukes v. Wal-Mart slogs through the courts--it was certified as a class-action suit in 2004, a move Wal-Mart has appealed--public sentiment against Wal-Mart is building, with workers' rights and environmental groups joining forces to push the company to make changes in its way of doing business. (In the Valley, activists are fighting Wal-Mart's plans to build a 212,000-square-foot "supercenter" in Hadley, vacating its current store in a nearby mall and expanding onto open fields crisscrossed with wetlands.) Much attention has focused on Wal-Mart's notoriously skimpy employee healthcare coverage, which forces millions of its employees to depend on Medicaid.

Public pressure on Wal-Mart is crucial to getting the company to change, says Featherstone, who notes that even a lawsuit as big as Dukes' is limited in what it can achieve. She recently spoke to the Advocate about what the case reveals about life for the 1.3 million Americans who work for Wal-Mart--and, by extension, the entire U.S. retail workforce.

Valley Advocate: What perspective did you get on the company by using this suit as your point of entry?

Liza Featherstone: When I started writing about the lawsuit, all of the other issues that people bring up about Wal-Mart were very real issues--low wages, outrageous tax breaks, the rampant abuse of workers' rights on all kinds of levels--but they didn't have the prominence that they do now in the public debate. I was very interested in all those issues, but really started writing about the lawsuit because it seemed like such an opportunity to look at how a group of particular individuals experienced the company. I was also compelled because these women were, most of them, low-level Wal-Mart employees. Betty Dukes was, at that time, a cashier. The idea that these people, people without very much economic or social power, would stand up to the most powerful retailer in the world--I was fascinated by that and wanted to find out who they were.

I was also really interested in the lawsuit because the issue of poverty being such a female problem is so important, and there aren't very many ways to talk about it that get much attention from the wider public. What little discussion there was about it was in discussions about welfare reform. That's important but limited in the kinds of public conversation you can have, because it boils down to people saying, "Well, do I want my tax dollars going to these people?" and not the larger questions of: Why are women poor? Why are the poorest households led by women? And what happens to women on the jobs that keeps this cycle going? I thought the lawsuit against Wal-Mart was a really good opportunity to look at that.

You write, "Wal-Mart is making billions from female poverty."

It's remarkable. The company has figured out how to make profits from the poverty of female consumers, first of all, who are desperately trying to make ends meet and very often need the low prices that Wal-Mart offers, and, on the other hand, the female workers who often find themselves confronted with similarly limited options. It's often very difficult for women who lack college educations to find decently paying work. So they don't necessarily have the option of rejecting a job at Wal-Mart.

But then there's a more sinister cycle, wherein Wal-Mart--both in how little it pays its own female employees and in its influence as an industry leader--is creating a situation in which workers, female workers especially, can only afford to shop at Wal-Mart.

A question people ask me all the time [is], "Why pick on Wal-Mart? There are so many bad employers that are discriminating against women and not paying people enough." The reason is, Wal-Mart is an industry leader, and it provides an example for other employers of how to make immense profits, and it puts competitive pressure on other employers to pay as little as it does. It operates both as a model and as a direct market force.

You know, it's funny--I do a lot of public speaking on this issue lately, and I sometimes feel people don't like that answer. Because people want to be fair; they feel like, "Well, if all of these other employers are bad, we should be criticizing all of them." People don't like the answer that we focus on Wal-Mart because it holds this strategic place in the economy. People want to be morally right, and of course the morally right thing to do would be to never darken the doorstep of these employers that didn't pay workers adequately, but I feel that wouldn't be a very strategic way to bring about any change.

Like most fields that are predominantly composed of women workers, retail is a low-wage industry. Within that industry, Wal-Mart is an outlier in low wages; it pays several dollars an hour below the retail average. And then, within that, women at Wal-Mart pay a double female tax, not only of the low wages that come from working in a largely female industry, but they are also discriminated against, so they receive lower wages than their male counterparts. That's true at some other retailers, the discrimination piece, but not all. Actually Target--while an overall low-wage employer and not a company we should be handing out corporate responsibility awards to--seems to do a pretty good job of treating men and women equally. About half of their managers are women, which is substantially better than Wal-Mart does.

What does an average disgusted consumer do? It's hard to imagine there'll ever be a mass boycott of Wal-Mart--even some of the [Dukes] plaintiffs you talked to shop at Wal-Mart.

My feeling is that consumer gestures of that kind are just never enough. Even if you did get a really large number of people not to shop at Wal-Mart, it would still be such a small dent in their bottom line. It's really much more important to confront them on the political level: be active in the community coalitions that are trying to keep Wal-Mart from expanding or building new stores, and write to your legislators urging them to support bills that would cut down on Wal-Mart's bad practices.

That said, when I wrote the book, I was very pessimistic about the prospects of any kind of effective consumer action against Wal-Mart. The customers are poor and they need the low prices, and telling people not to go there is kind of pointless. But [in 2005] two national groups emerged to pressure Wal-Mart on all of these issues. They're both very good groups: Wake Up Wal-Mart and Wal-Mart Watch.

Wake Up Wal-Mart particularly has, I think, an interesting approach to the consumer issue. They aren't calling for an outright boycott, but they are trying to discourage people from shopping there. They will call for a boycott on a particular day: don't buy your school supplies at Wal-Mart, or don't buy your Mother's Day presents there. They are hoping to convince more and more people to shop less at Wal-Mart, and certainly research that people in the labor movement have done has shown that people are willing to cut back on purchases at Wal-Mart.

And, in fact, Wal-Mart's own internal research shows that two to eight percent of Wal-Mart's customers recently stopped shopping at Wal-Mart because of bad things they read about the company, and something like 56 percent of Americans right now agree with the statement "Wal-Mart is bad for America." These groups are definitely having some impact.

What about the labor movement--are you any more optimistic about unions getting in and organizing Wal-Mart workers?

When I was working on the book, there was an attempt going on by the [United Food & Commercial Workers] to organize the workers at Wal-Mart. That's not going on now. There is no national campaign on the part of any national union. [UFCW] ... decided that the strategy of trying to organize Wal-Mart workers was not working and what would make more sense would be to appeal to the public to bring pressure on the company to improve its practices, and to work through the political process and try to get legislation to crack down on Wal-Mart. Hence the founding of Wake Up Wal-Mart, which is actually a project of UFCW. I think they might have been right to turn their attention in that direction. This group's certainly been very effective.

Why has it been so hard for unions to get into Wal-Mart?

One reason is that the labor law in the United States is so weak in its protections of workers and workers' rights that violating workers' rights when they try to organize unions--doing things like spying on them, firing workers for trying to organize--even when employers are punished for it, the penalties are so light that that sort of thing becomes the cost of doing business.

That's really happened at Wal-Mart. Wal-Mart has made union-busting essential to its business model. They're really determined to keep unions out, and they've had such a more consistent strategy on that, with much more resources devoted to it, than any union has devoted to organizing the workers in the company. I also think there has been perhaps a lack of vigor and creativity on the labor movement's side.

It's hard to be optimistic about the potential for exerting political pressure on Wal-Mart when you look at how much political muscle it has--how much money it gives to legislators [Wal-Mart is the second-largest PAC in the U.S.], under what is obviously not a very labor-friendly administration.

I think the prospects of legislation that would crack down on Wal-Mart on the federal level are pretty hopeless. Reforms that I think do have a prayer of success are bills on the local and state level, most of which focus on the healthcare issue, [like] requiring that employers larger than a certain size need to provide a certain baseline level of healthcare coverage to their employees. That's fantastic, because one of the ways that Wal-Mart has been able to compete so effectively against other retailers is by offering far more stingy health benefits and by being subsidized by Medicaid, effectively, because those workers have to go on state assistance to make up the difference. That's particularly a way Wal-Mart has been able to compete so effectively against unionized grocery stores. [After this interview, Wal-Mart announced some improvements to its healthcare coverage, although critics say they're still not enough.]

I think that what these state and local bills do that is so interesting is take healthcare out of the realm of competition. If a company can't get a competitive edge over other companies by being stingy with its employees' healthcare, that's really a very good thing for all of us.

I was struck, in your interviews with the plaintiffs and other Wal-Mart workers, by how many of them were true believers in the Wal-Mart mythology: the family atmosphere and the ability to get ahead by hard work.

One of the things that surprised me most in doing the interviews for this book was how firmly and sincerely so many women really did believe in the company and its promises. ...The company is really able to make people feel they're part of something exciting and even something good and socially conscious. They really believe this is a good company and they're doing something good by being part of it--that it has family values, and it brings low prices to the people who need it. There's a real team spirit I think people do experience at Wal-Mart.

We hear a lot about what an individualistic society we are, but I think that, in fact, people are always so ready to be a part of something larger than themselves, even if it's just the store you work for. There's something rewarding about feeling you're not just going to work, but you're part of something big and exciting.

It seems that the "Sam Walton, self-made man" story becomes a strong model for people: If I work really hard at my crappy-paying job, maybe I'll be the next Sam Walton.

The substance of the Wal-Mart mythology is very crucial. The substance is: Sam Walton was a self-made man; he started from nothing and made this great global empire and became the richest guy in America.

The fact is, that's not really true. Sam Walton made his fortune the way everybody does: through a little bit of privilege and a little bit of good luck. His wife, Helen, came from a very wealthy family in the region, and they helped Sam get started in his business. It wasn't like he went from selling newspapers to become a titan of industry. As is almost always the case in these stories, he had some help.

But the factual substance of the myth doesn't really end up [mattering]. The myth is so compelling, and it's specifically compelling to the poor and working people who work for the company. Even today the mythology is passed along to the employees in all kinds of other forms. The managers will constantly tell the lower-level employees their own Sam Walton stories: "I started out gathering pushcarts in the parking lot, and now I'm a district manager."

It's not all bullshit--more than two-thirds of Wal-Mart managers do come from the ranks of hourly employees, and the company used to have a tradition of favoring people from within, rather than seeking out college graduates or business school graduates. That's much less true now than it was in the past, but it's still a very important part of the culture. The reality piece of this mythology works much better if you're a man. The managers are overwhelmingly male.

What effect could this suit have on Wal-Mart, and on the industry?

The suit has already really scared Wal-Mart. You can see that in the number of ads Wal-Mart takes out in which smiling women talk about what a great company it is to work at, especially if you're a woman.

Wal-Mart has greatly standardized its job posting and job application procedures. One of the issues in the lawsuit was that women were often not told when there were openings in management because managers would just tell their buddies. And if the managers were men, their buddies were probably men, so women often were never given the opportunity to apply. That has, to some extent, been changed by mandates that jobs be posted throughout the company. They've also somewhat streamlined the application process, so you can go on the company computer system to apply for a job--you don't have to go to your manager, so that removes an element of prejudice and intimidation from the process.

These are the sort of wonky changes that human resources departments spend a lot of time thinking about. They don't sound very dramatic or sensational, but they can have a big effect on how the company operates. Those are the kinds of changes that often companies don't do until a class-action suit is concluded, but this class-action suit has gotten so much publicity and had such a harmful effect on the company, in part because of its scale and in part because of the heated political climate around Wal-Mart's employment practices. There has been so much activism around Wal-Mart, so much community opposition. I think all of those things have made the lawsuit already a little bit more effective than it would have been.

That said, a lawsuit is pretty limited in what it can accomplish. Perhaps in the end there will be a consent decree, a document stating that Wal-Mart has to change its practices in a few specific ways. There will be a payout of money that [will sound] big but probably won't be that much to Wal-Mart, and certainly won't be that much to any individual woman, because there are so many people in the lawsuit. And because they're low-wage workers, any amount that a person gets to make up for her lost wages isn't going to be that much money.

I think that Wal-Mart will be forced to make some small changes, and I think the extent of the impact on Wal-Mart depends on whether the political climate of scrutiny of this company continues. I think that's becoming even more important to Wal-Mart than what happens in the courtroom--what happens in the public eye, what's happening legislatively, how many communities are trying to stop them from expanding their operations.

I think all of those things could influence them to make more substantive changes and make a more meaningful effort to treat women better. And I think that's a really important lesson to come out of this: while legal action is somewhat limited all by itself, in the context of a large movement, with people taking action in various other ways, it's quite possible it could do something substantive.

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TV ONE TO AIR PROGRAMMING IN WAL-MART

Deal brings lifestyle content from network into more than 2,850 stores.

EurWeb
March 16, 2006                     [back to top] 

*Soon, shoppers at more than 2,850 Wal-Mart stores across the country will be able to see select shows from the African-American cable channel TV One piped through the chain’s in-store TV network.

Premier Retail Networks (PRN), the largest in-store TV network in the U.S., has announced that the Silver Spring, MD-based channel will provide lifestyle and entertainment-oriented programming to the Wal-Mart Television Network.

"Our goal is to help enhance the shopping experience by being relevant to the consumer,” said Tom Sebastian, SVP of Programming for PRN. “TV One's lifestyle and entertainment programming, which targets the adult African American audience, will be an outstanding addition to Wal-Mart TV.”

The select programming will include lifestyle tips on a wide range of issues including fashion, beauty, home, and personal finance, as well as entertainment-based content that respects African American culture and heritage and values the intellectual and cultural diversity among African Americans.

TV One Executive Vice President of Advertising Sales and Marketing, Keith Bowen, commented: "This agreement supports our goal to be distributed in markets where African Americans represent a significant segment of the population. We will select lifestyle and entertainment programming to highlight the breadth and depth of the African American culture that we believe will be highly appealing to the viewers of Wal-Mart TV."

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Wal-Mart's hired advocate takes flak

By Larry Copeland
USA TODAY                             [back to top] 

ATLANTA — Andrew Young, who's never been shy about staking out controversial positions, is at it again.

Andrew Young's company, GoodWorks International, is being paid to help promote Wal-Mart. By Michael A. Schwarz USA TODAY

Young, one of the Rev. Martin Luther King Jr.'s top aides, a former United Nations ambassador and former mayor of Atlanta, announced last month that he would head a group formed to spread the word about the positive contributions of Wal-Mart Stores (WMT).

Young says he was drawn to the Wal-Mart venture because the company is creating wealth, especially in rural and inner-city communities shunned by other retailers.

Young has record of going his own way If Andrew Young's deal with Wal-Mart shocked some, it should come as no surprise to longtime Atlantans. Young, 74, is known for going his own way.

• He was forced to resign as United Nations ambassador in 1979 after he met with a representative of the Palestinian Liberation Organization, then considered a terrorist organization with which U.S. officials were forbidden to meet.

• Young sparked headlines in the 1984 presidential campaign when he said that Democratic candidate Walter Mondale's campaign was being run by a group of "smart-ass white boys who think they know it all."

• As Atlanta mayor in the late 1980s, Young drew criticism from human rights activists when he considered bringing members of the Guatemalan national police to Atlanta for training. He later decided against the plan.

• In 1997, Young defended the working conditions in overseas factories that made shoes for Nike after he took a tour of Asian plants. Nike later agreed to make improvements at factories it used.

Young, an ordained minister who in 1972 became Georgia's first black congressman since Reconstruction, was pivotal in bringing the 1996 Summer Olympics to Atlanta. He says he helped ensure that black businesses landed 42% of about $2.2 billion in construction for the games.

Young, a professor at Georgia State University's Andrew Young School of Policy Studies, is national spokesman for Operation Hope, a non-profit effort to teach youths financial literacy.

By Larry Copeland

"I got involved with Wal-Mart because I think Wal-Mart is making middle-class lifestyles available to poor people. ... I agreed to chair the (national steering) committee of Working Families for Wal-Mart because there was another side of the story that wasn't being told," he says.

His company, GoodWorks International, is being paid an undisclosed amount to help promote Wal-Mart through interviews, speeches and editorials. One of Young's goals, he says, is to get the retailer into Africa. Working Families was formed last year and is funded primarily by Wal-Mart Stores.

Wal-Mart, the world's largest retailer, faces intense criticism. Its leading critics, including two union-backed groups, have accused the company of skimping on wages and benefits, discriminating against women and hurting small businesses and the environment. In January, Maryland passed legislation requiring Wal-Mart to spend more on employee health care. More than 22 other states are considering similar measures.

Last month, Wal-Mart CEO Lee Scott announced that the company was improving employee benefits. Last year, Wal-Mart was named one of the 30 Best Companies for Diversity by Black Enterprise magazine; an independent study by Global Insight, a privately held economic analysis company, found that Wal-Mart saved each American household, on average, $2,329 in 2004.

News of Young's deal with Working Families dismayed some of his labor union supporters, who have long regarded him as a staunch ally. It shocked some of his colleagues from the civil rights movement, who had also criticized him in 1997 for a similar deal with Nike, which was then drawing protests for doing business with overseas sweatshops.

"All I'll say is that Andy's had a wonderful career as ambassador, congressman and mayor, and in his old age he's taken some strange turns," says the Rev. Joseph Lowery, 81, a Georgia activist and former head of the Southern Christian Leadership Conference. "I haven't had a chance to discuss it with him, but I'm concerned about his partnership with Wal-Mart. Everybody who's talked to me about it has been shocked. They'd sort of gotten over the Nike debacle, and now this."

Allies disappointed

"It's one thing for him to have a contractual relationship with Wal-Mart to help them improve their business practices," says Markel Hutchins, 28, an Atlanta activist who blasted the agreement this month in an opinion-page column in The Atlanta Journal Constitution. "But utilizing his civil rights iconic leadership status to defend the business practices of Wal-Mart is another issue."

Hutchins says he has a contractual relationship with the United Food and Commercial Workers International union, which funds WakeUpWalMart.com.

Chris Kofinis, communications director of WakeUpWalMart.com, which is seeking reform of Wal-Mart business practices, says: "We would hope and expect that Ambassador Young will use his position to pressure CEO Lee Scott and help us change Wal-Mart for the better, rather than somehow defend an abysmal record of cruelly and needlessly exploiting 1.3 million working families, children, immigrants and American taxpayers."

Young, characteristically, brushes off the criticism. "The opponents of Wal-Mart are really opponents of globalization, and I think that battle has been lost," he says. "Globalization is not a political phenomenon but a technical phenomenon. It's not bad for America. But we have to manage it and lead it rather than fight it."

Young has some criticisms of Wal-Mart. It needs more diversity among its suppliers, needs to show more community sensitivity and needs to add security cameras and parking lot patrols at some stores, he says.

Support from Pat Boone

GoodWorks International is an Atlanta-based consulting group that promotes business ventures, especially in Africa and the Caribbean. It has a contract with Working Families for Wal-Mart, whose national steering committee also includes singer Pat Boone, and Ron Galloway, who co-produced the 2005 pro-Wal-Mart documentary, Why Wal-Mart Works and Why That Makes Some People C-R-A-Z-Y.

"You need to look at who's complaining about Wal-Mart," Young says. "If it's not 100 million people shopping there every week and it's not 8,000 people competing for 500 jobs (at a new Atlanta store), who is it? They're complaining because they're wrong and they don't understand that ending poverty means generating wealth and not just fighting to redistribute the existing wealth."

He describes Wal-Mart's business practices this way: "It's hard-nosed capitalism that's very rough around the edges. But that's what it takes to produce a quality lifestyle for poor people."

"And there was another way of looking at Wal-Mart that people were reluctant to see. ... Poverty in America is market potential unrealized. The largest underserved market in the world is not China or India. It's the (American) rural poor and the inner cities. That's approximately a $2 trillion market that nobody pays attention to."

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Costco Shares Get Pricey

By Nat Worden
TheStreet.Com
March 15, 2006                            [back to top] 

Wal-Mart (WMT:NYSE) may be the world's largest retailer, but in terms of the stock market, Costco (COST:Nasdaq) has emerged as lord of the discounters. Shares of Costco have climbed 16.2% since the beginning of 2005. During that span, rival warehouse retailer B.J.'s Wholesale Club (BJ:NYSE) added 7%, while Target (TGT:NYSE) rose 6% and Wal-Mart dropped 12%.

Strong same-store sales gains, growth opportunities, labor harmony and an impeccable reputation for execution have all lent momentum to Costco. Amid speculation that the Seattle-based warehouse chain will soon raise its membership fees, shares hit a five-year intraday high Tuesday of $54.70. Now, some observers are wondering if the company's valuation has gotten too big for its britches.

"I'm not disputing that Costco is a great company," says HSBC analyst Mark Husson, who is one of two analysts out of 24 on Wall Street who holds a negative rating on the stock (his firm has an investment banking relationship with Costco). "I just think the stock has gotten too expensive considering the risks that it's facing."

At over $54, shares of Costco are trading at more than 20 times its earnings estimates through 2007. That's a hefty premium compared with Wal-Mart, which trades at less than 14 times estimates. B.J.'s trades at just over 14 times estimates, and Target trades at about 15 times projections.

As the largest U.S. warehouse club chain, Costco competes most directly with Wal-Mart's Sam's Club chain, which posted a 5.1% same-store sales rise over its previous four quarters, compared with Costco's 7.5% gain. B.J.'s logged a 4.1% increase in that span. Same-store sales, or comps, is a key performance gauge in retailing, measuring sales at stores open for at least a year.

"Costco's stock is starting to get pricey, but I think it definitely deserves a premium over Wal-Mart since it's one of the few retailers out there that competes head-on with them and, quite frankly, beats the pants off them," says Morningstar analyst Anthony Chukumba. "They're incredible merchants. Their customer service is pretty much the best out there in all of retail. They treat their employees better. They pay them more. Their benefits are better, and the company still has room to grow both at home and abroad."

Chukumba says the average hourly wage at Costco is $17, compared with $10 at Wal-Mart. Also, Costco workers pay only 10% of their health premiums, on average, compared with the 33% paid by Wal-Mart's workers and the retail average of 23%. While this generosity has sparked criticism from Wall Street, Costco claims its compensation policies reduce employee turnover to less than 17%, excluding seasonal factors.

Higher compensation also lowers training costs, and it helps the company avoid the storm of public criticism that has been directed at Wal-Mart from unions, politicians and community activists.

"For our business, it has been important that we hired good people," says James Sinegal, Costco's co-founder, chief executive and president. "We've been a growth company since our inception. We want to continue to grow, and we promote almost entirely from within our company. Our view has been that if you hire good people and provide good jobs and good careers at good wages, then good things will happen to your business."

Thanks to its merchandising prowess, Costco has also been able to attract higher-income customers. It's the nation's largest seller of wine and it's also a prolific seller of items like designer clothing. Recently, the company has been expanding its online business, as well as its offerings in fresh foods and home furnishings. Sinegal says the company has plans to expand in other markets, but he declined to divulge specifics of those plans.

Meanwhile, Costco has consistently generated returns on its invested capital that are well higher than its average cost of capital. Chukumba estimates that its cost of capital is about 9.3%, while its returns have averaged roughly 14.2%. He expects that metric to increase to 15% this year.

On the growth front, Costco recently told investors it expects to add about 30 new stores this year. That marks an increase from the 16 warehouse clubs opened last year and the 20 opened in 2004. It currently operates 471 warehouses.

"The way we view things at the moment, we think it's possible that we could double the size of our company in the next 10 years, but that's obviously easier to say than to do," Sinegal says. "That plan could be altered by a lot of different things. We can't account for floods, wars, depressions and everything else that could happen."

Traders view recent $5 increases in membership costs at both Sam's Club and B.J.'s as a positive catalyst for Costco, which has maintained its fees at $45 for a new basic or business-level membership. If it was winning market share before its competitors raised prices, that trend could pick up more steam now.

Alternatively, Todd Slater, an analyst with Lazard Capital Markets, said in a recent research note that he expects an increase in membership fees from Costco, considering recent changes in California's tax law.

"Perhaps Costco is attempting to both make B.J.'s and Sam's sweat and to pick off defecting members alienated by its competitors' recent fee increases," Slater said (his firm makes a market in shares of Costco). "However, we believe a [fee] hike is inevitable in the very near future, particularly given an increase in the California sales tax exemption to $50 from $45 for membership fees."

Sinegal declined to comment on Costco's plans for its membership fees.

In the end, some investors could become the victims of Costco's success, as all the good news may be boosting its stock price too high. HSBC's Husson notes that its three-year annualized growth in earnings per share is 10.1%, compared with Wal-Mart's 12.5% and Target's 20.1%. He also thinks Costco's middle-class customer base, and its store concentration on the West Coast, make it particularly sensitive to the slowing real estate market.

"The housing market in California looks particularly frothy, and Costco's customers are just the sort of consumers whose spending has been powered by extracting cash out of their homes," Husson says. "A housing slowdown could hurt their ability to keep spending and that could hurt Costco's sales."

On the contrary, Sinegal says Costco's wealthier customers on the discount scale will be the last demographic to be hurt by a housing slowdown, but he does acknowledge concerns about the long-term health of the economy.

"I get very nervous about the housing market," Sinegal says. "I've seen some of the numbers out there that imply there's a significant amount of adjustable, interest-only mortgages out there. If interest rates were to increase, the cost of those monthly payments could escalate about 50% to 70%, depending on how much interest rates go up. That's scary, so we're cautious in that regard."

Sinegal declined to comment on his company's stock price. Husson says the economic concerns aren't priced in to the market's current valuation.

"When things are going well like this, people tend to forget about valuation and they just keep bidding the stock higher," Husson says. "As soon as something goes wrong, valuation suddenly comes into focus, and that often results in a selloff."

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Wal-Mart taking control of Central American retail chain Associated Press

HoustonChronicle.com
March 15, 2006                          [back to top] 

Wal-Mart Stores Inc. is taking control of a Central American retail chain that it first bought into last September as it expands in Latin America to bolster its international growth, the world's largest retailer said today.

Wal-Mart said it had raised its stake in Central American Retail Holding Co., also known as CARHCO, to 51 percent from the 33.3 percent it bought last year. Terms of the latest deal were not disclosed.

CARHCO is Central America's leading retailer with 375 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica. It has about 23,000 employees and had 2005 sales of about $2.2 billion, Wal-Mart said. Wal-Mart had $312.4 billion in worldwide sales last year.

The new stake gives Wal-Mart control of the company, which will be renamed Wal-Mart Central America, and adds to its growing interests in the expanding economies of Latin America. The region is a key part of Wal-Mart's strategy of growing internationally, including China, Japan and Korea in Asia and Britain and Germany in Europe.

"Central America is a very strong region. In general, Latin America is a very strong region for us. We certainly intend to keep growing in the region," Wal-Mart spokeswoman Amy Wyatt said.

Wyatt declined to say if Wal-Mart would increase its stake in CARHCO.

It bought its first minority stake in CARHCO from Dutch retailer Royal Ahold NV. CARHCO's remaining owners are the Paiz family, the major shareholders of La Fragua, with headquarters in Guatemala, and Corporacion de Supermercados Unidos, with headquarters in Costa Rica.

Wal-Mart's international division is growing faster than its flagship U.S. operations. In 2005, the international business that operates in 15 countries saw net sales and operating income rise 11.4 percent, compared to 9.4 percent for sales and 8.2 percent for operating income at the U.S. division minus Sam's Clubs.

Late last year it extended its overseas business by buying 140 Sonae stores in Brazil and increasing its stake to a majority in Japan's Seiyu Ltd., which has 405 stores.

Wal-Mart already has a strong presence in Mexico but before acquiring its CARHCO stake last year had no storefronts in Central America. Wal-Mart has long bought apparel from the region. The company said it imports more than $350 million worth of goods from Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica.

CARHCO president Rodrigo Uribe will become chairman of Wal-Mart Central America's board of directors.

Uribe said Wal-Mart's investment "will enable the corporation to provide a larger assortment, better service and prices to consumers in Central America."

Wal-Mart shares slipped 9 cents to $45.28 in midday trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $42.33 to $52.43.

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Wal-Mart and Tesco eye Carrefour’s Korean outlets

Shopping giants including Wal-Mart and Tesco are expected to bid for some of Carrefour’s under-performing outlets in South Korea, amid significant restructuring in the country’s fiercely competitive $120bn retail sector.

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Learning on the job

By George Smith
Kennebec Journal
March 15, 2006                           [back to top] 

The smell of roasting cashews, the banter with customers at the cash register, dozens of opportunities every day to wait on customers who were "always right." Staff that spent their lives working there and became part of an extended family. These are some of my wonderful memories from growing up in Wilson's Dollar Stores on Winthrop's Main Street. My dad was part-owner and I worked in the store. Over the years, every task was mine, but my favorite job was waiting on customers. At that time, you could buy everything you needed in Winthrop, and our store was the friendliest gathering place you'd ever hope to find.

Forty years later, I still run into customers who remember the store and always ask about Dad.

Today, I hate to enter a retail store, although once upon a time I was certain that's where I would spend my career. At the University of Maine, I studied business management and marketing, fully expecting to emulate Dad's career in the retail business.

Upon graduation, my best job offer came from a large department store chain and a visit to their New York headquarters cured me of the notion that there was a future for small businesses like Dad's. I drifted in a different direction and never looked back.

Dad sold out to his partner in his mid-50s. He is still going strong today, but Wilson's is long gone, as is the friendly customer-based retail industry I remember so fondly.

This history brings a certain irony to the recent work of my son Joshua. A graduate of Stonehill College who seems headed toward a career in public service, Josh returned home last August from a year of serving the homeless in Portland, Ore. In a month, he will head to Africa for a year of traveling and more service.

While he was home, however, Josh decided to see for himself what it was like to work at Wal-Mart, a business he had researched extensively. Was it as bad as the books reported?

Well, yes it was. In some ways it was worse. You can read of Josh's Wal-Mart experience at http://workingatwal-mart.blogspot.com.

He has become a critic of the retail giant and was interviewed recently for major stories in Lincoln County newspapers about the effort to keep Wal-Mart out of Damariscotta. And that offers yet another irony: Damariscotta is the headquarters of Reny's, one of my Dad's old rivals, and a family business that has -- against all odds -- remained viable through all of these challenging years.

One member of the Reny family -- a second or third generation from founder Bob Reny, a much admired business leader throughout the state in his day -- expressed her concerns on a TV news program about Wal-Mart's plans to open a superstore in Damariscotta.

She has a right to be concerned, given Josh's personal experience working for a company that, as he says, has "a fundamental lack of respect for employees," and that cleverly operates with many part-time employees so as to not pay any benefits.

Josh testified a couple of weeks ago at the Legislature on behalf of a bill sponsored by Senate President Beth Edmonds to require the collection of data on public health care expenditures for employees of large companies that shift the costs of health care to taxpayers.

In Josh's words, explaining Wal-Mart's approach to health insurance to Kennebec Journal reporter Susan Cover, "When I breached the topic with co-workers of whether they were covered by the company's insurance, the question was shrugged off as absurd since they too were ineligible or could not afford the plan. Those who did receive coverage were well aware of the problems with the insurance, but did not have any other options."

It is with a sense of great pride that I watched Josh speak at a Statehouse press conference and later at the legislative hearing. He looked polished and professional well beyond his years and many compliments were received from legislators and even the press. Some of the more liberal members of the Legislature and lobbying community were incredulous that this enlightened young man could possibly be the son of the crusty old native conservative.

My answer was the standard response I always give: Linda and I encouraged our children to think for themselves. Today, I am often delighted to be educated by my own children.

Now, I'm not saying Josh was motivated in this project by our family history in the retail business. In fact, I am certain he was not. Josh's concern is for people who struggle in low-wage jobs, who live on the street, who suffer anonymously without hope. These people are his motivation.

But while I was sitting there listening to him testify, I could smell those cashews roasting. I had a deep sense of what has been lost.

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Wal-Mart gets majority of Central American grocer

by Emily Kaiser
Wed Mar 15, 2006                        [back to top] 

CHICAGO, March 15 (Reuters) - Wal-Mart Stores Inc. <WMT.N>, which entered the Central American grocery market by investing in a joint venture in September, on Wednesday said it had obtained majority control of that company and would rename it Wal-Mart Central America.

The move further extends the world's biggest retailer's reach in Latin America, giving Wal-Mart a stronger foothold in the largely poor region of around 41 million people that bridges Mexico with South America.

The United States generated roughly 80 percent of Wal-Mart's $312 billion in sales for the latest fiscal year, but international operations are growing faster. The success of the company in Mexico, where it is the No. 1 retailer, has also heightened its interest in Central America.

Central American Retail Holding Co., which will become Wal-Mart Central America, has 375 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica and posted sales of about $2.2 billion in 2005, Wal-Mart said.

CARHCO was formed in 2001 as a joint venture among three equal partners: Dutch retailer Royal Ahold NV <AHLN.AS>; the Paiz family, the major shareholders of Central American supermarket chain La Fragua; and Corporacion de Supermercados Unidos, or CSU.

Wal-Mart acquired Ahold's 33-1/3 percent stake in CARHCO in September, saying it hoped to have a majority stake in about a year.

Wal-Mart disclosed its additional investment, which brings its stake to 51 percent, on Wednesday, but did not divulge terms of any of the purchases.

Rodrigo Uribe, whose family founded CSU, will become chairman of Wal-Mart Central America's board. Fernando Paiz, whose family founded La Fragua, will be vice chairman. Both said they and other family members would remain active in the company's management, according to Wal-Mart.

Uribe said the company planned to build new stores and remodel existing facilities this year, and expected more than 6,000 jobs to be created in the next two years.

Mike Duke, vice chairman of Wal-Mart and head of Wal-Mart International, said in a statement that there were no immediate plans to change the names of any of the store formats operating throughout the region.

Wal-Mart already directly imports more than $350 million in goods from Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica and purchases goods from many suppliers with farms and factories in Central America, the retailer said.

Paiz said that export agreements, such as a recent pact for the shipment of pineapples from Costa Rica to Wal-Mart stores in the United States, are under development.

Shares of Wal-Mart, which is based in Bentonville, Arkansas, were down 6 cents at $45.31 in morning New York Stock Exchange trade.

(With reporting by Emily Kaiser)

© Reuters 2006. All rights reserved.

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Union: Wal-Mart a drain on Medicaid

Report emerges as states try to get No. 1 retailer to pay up; company contends many employees were already on public assistance.

March 15, 2006                               [back to top]

WASHINGTON (Reuters) - More workers at Wal-Mart Stores Inc. than any other company in at least 19 states are relying on government health-care assistance, the AFL-CIO said in a report issued Tuesday.

In its report, the 54-union federation portrays Wal-Mart (Research), the country's largest employer with 1.39 million workers, as a key contributor to states' exploding cost of Medicaid, which provides health-care coverage to the poor.

"That Wal-Mart should play such a prominent role in the Medicaid crisis is unjustifiable by any measure," the labor federation said in its report, "The Wal-Mart Tax: Shifting Health Care Costs to Taxpayers."

The report comes after a union-led drive in Maryland succeeded in enacting legislation in January to require employers of 10,000 workers or more to spend at least 8 percent of their payroll on health benefits, or pay the rest into a state low-income health-insurance fund.

The law, which faces a legal challenge, would force Wal-Mart to spend more on health care. State officials said other Maryland companies of that size already spend at least 8 percent of their payrolls on health care.

The AFL-CIO is backing similar legislation in about two dozen other states, although with many legislative sessions coming to a close, only a handful of bills have a chance of passage this year, said Naomi Walker, the federation's director of state legislation.

The report examined the 23 states where information about Medicaid and other state poverty health-care recipients could be linked to their employers.

While the results were unclear in four states, in the other 19 it found that more workers from Wal-Mart than any other company relied on state health-care assistance and that Wal-Mart workers posed the biggest single financial burden on those states' Medicaid costs, Walker said.

Even in Iowa, New Jersey and Utah, where the retail giant was not the state's biggest employer, more workers from Wal-Mart than any other company relied on government health-care assistance, the report said.

Wal-Mart disputes report Wal-Mart spokeswoman Kelly Hobbs said the report failed to point out that many employees were on public assistance before they went to work for the company. She said Wal-Mart found that even though 7 percent of employees were on public assistance when they joined Wal-Mart, the figure dropped to 3 percent for two-year employees.

"What they're missing is that Wal-Mart is helping thousands of Americans gain access to private health plans," Hobbs said.

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Wal-Mart Upgrades Central American Retail Stake To 51%

Dan Burrows
Dow Jones Newswires
03-15-06                                 [back to top] 

Wal-Mart Stores Inc. (WMT) said Wednesday that it raised its stake in Central American Retail Holding Company to 51% and changed the name to Wal-Mart Central America.

The Bentonville, Ark., company acquired a 33% stake in the Central American retailer in September 2005 from Dutch retailer Royal Ahold NV (AHO).

(c) 2006 Dow Jones & Company, Inc

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China to build Wal-Mart like stores in countryside

China Economic Net
2006-03-13                        [back to top] 

Recently, Bo Xilai, Minister of Commerce, expressed on the spot meeting of "Village Market Project" held in Yangzhou that the government has decided to include rural retails and wholesales into the rural infrastructure construction, trying to cover over 65 percent of administrative villages and 85 percent of townships with standardized village stores by the end of "the eleventh five-year period".

An investigation from Ministry of Commerce showed that rural population, occupying two thirds of China's total population, only consumes one third of the total goods. Liao Jiancheng, director of Department of Market System Development, Ministry of Commerce, believed that along with the rapid rise of farmers' purchasing capacity, rural consumption will experience continual expansion accordingly; there hides huge market potentials in China's rural areas waiting to be exploited.

"We live in deep mountains. In the past, we had to walk more than ten kilometers of cranky mountain roads to buy our living supplies, whereas now it has become much more convenient for us that we can eat whatever we want to eat at any time and sell our surplus specialties like eggs, wild herbs and coarse cereals to village stores, which then send them to the supermarkets in the cities." A villager in Bogeyu village Siwan town Xichuan county Henan province said with his face expanded with a smile.

Since the implementation of "Village Market Project" by Ministry of Commerce in last February, tens of thousands of farmers have gained tangible benefits, and the buying and selling problems of farmers have been resolved."Buying trivial supplies from individuals, living supplies in village markets, and large goods in cities" --- such deep-set consumption habit of farmers has now been changing gradually.

Early this February, Premier Wen Jiabao made his instruction on Report on Accelerating the Construction of Modern Rural Logistics: "Support the business net of urban logistic enterprises to expand to rural areas; fully utilize supply and marketing cooperative operation net to provide convenience for farmer consumption. Develop modern logistic system, Suguo Supermarket [headquartered in Nanjing, Jiangsu Province] for example, on the current basis." This is the third clear instruction made by Premier Wen on the Suguo mode.

Suguo Supermarket took shape from supply and marketing cooperatives in difficulties. At present, the total sales volume of Suguo Supermarket achieves RMB 18.1 billion, ranking the 7th among all supermarket chains. It started its business in cities, while half of its markets are now in rural areas, where 50 percent of its sales volume is realized. Among all its business varieties, 70 percent were agricultural products and related processing products. Currently, Suguo Convenient Store has marched into many administrative villages on the outskirts of Nanjing, including Lishui, Gaochun, Jiangdu, and so on.

Ma Jialiang, CEO of Suguo Supermarket believed that at that time, the capital, management and talents of Suguo were not able to support the supermarket to develop rapidly in urban markets; so turning to rural areas is a wise choice that can reap multiple benefits.

Zhang Yulin, associate researcher in Chinese Academy of International Trade and Economic Cooperation, expressed that the difficulties assailing rural economy have transformed from the contradiction between production and consumption to that between logistics and consumption. Against the current background that the development of rural economy has grown rapidly and the demands of rural consumption have been rising, "it's just the right time to re-construct rural logistic market."

It's the most key point for "Rural Wal-Mart" project to introduce middle and large logistic enterprises to rural commerce and trade markets. However, "large retail enterprises are not willing to open chains in rural areas". A person in the Department of Market System Development pointed frankly that it's the biggest difficulty that assails the expansion of rural markets at present.

A manager of a large retail enterprise in Beijing expressed that the operation mode of a business enterprise in city can't be duplicated in villages since the purchasing capacity there is relatively low, resulting in long investment return period. Both the logistic cost and operation cost in rural areas are higher that in cities; therefore, it'll be very difficult for middle and large logistic enterprises to earn money through establishing rural business nets.

The current financial subsidies provided by Ministry of Commerce and local governments can't assure large enterprises to realize profitable and sustained development once they began new business in rural areas. For this problem, Ministry of Commerce, Ministry of Finance and other relevant departments are now brewing a new set of subsidy scheme aimed at middle and large retail enterprises. People in the Department of Market System Development told the reporter that the scheme has already worked out, but hasn't been announced yet.

Source:CE.cn Related articles

　· Commodity retails on the rise [2005/04/14]

　· Retail giant reports growing sales volume　 [2005/02/16]

　· Shuttle buses lure shoppers [2004/05/11]

　· Cuts in operational costs boost retailer's earnings [2004/04/27]

　· Retail sales continue to grow [2004/09/16]

@ China Economic Net All rights reserved

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Nitro Wal-Mart Changes Scheduling

By Joe Morris
Charleston Gazette
March 12, 2006                         [back to top] 

Workers at the Nitro Marketplace Wal-Mart say the store has renewed a controversial scheduling policy designed to force out higher-paid employees with benefits and replace them with part-timers. Last week, managers told longtime employees who have had the same weekday daytime schedules for years that they now must add night and weekend shifts, or else face drastic reductions in hours. The workers said they were told no exceptions would be made for people with children who could not arrange for child care.

“They said this came down from the home office and that there were no ands, ifs or buts,” said one worker who asked not to be named for fear of retribution. A mother of two, she has worked the same schedule for five years. “You have to choose between your work and your family,” she said.

Babysitters are unaffordable, and no local child-care services are open on the weekends, said several parents working at the store. Workers who have not yet agreed to increase their available hours have been warned by managers that they may be scheduled for zero hours some weeks, said several employees who also asked not to be named.

One worker said she contacted a district manager and was told that the store would try to accommodate her schedule. But store managers told her and several other employees that their new schedules would be generated by a corporate computer and could not be changed in any way.

Nitro store managers would not comment, but a representative from Wal-Mart’s corporate office issued a statement acknowledging that the store’s scheduling policy had been tightened.

Work schedules at the Nitro store “have deviated over time from the optimal schedule to best serve our customers,” said spokesman Dan Fogleman in the statement.

“In order to ensure an appropriate number of associates are available to help customers, associates who have in the past worked a specific schedule, typically daytime hours on weekdays, are being asked to be more flexible with their availability to meet the needs of the customers. ... Sometimes we have to make tough decisions. Ultimately, we will staff our stores in a manner that best meets the needs of our customers.”

Another Wal-Mart representative, Mia Masten, said on Saturday that the store would do everything it could to accommodate workers with children. “We’re always looking at how to serve our customers best,” she said. “But we also try to be flexible and accommodate associates’ needs.”

Masten would not say if employees would be fired or stripped of work hours for refusing to open their availability. She also denied that the scheduling changes were aimed at squeezing out higher-paid full-time workers.

Full-time workers at the store are eligible for health insurance and enrollment in a 401(k) plan after six months on the job. After a year, they get one week of vacation, and at five years they get two weeks. At seven years, full-timers are fully vested in the company.

About 15 people turned up at a rally held at the Capitol on Saturday to protest the policy. Organizers, who included current and former employees of the Nitro store, circulated a petition denouncing the scheduling changes as “unfair labor management.”

Last spring, the Nitro store’s managers instituted an “open availability” policy, requiring workers to commit to working practically any shift on any day or face being fired. Shortly thereafter, the corporate office nullified the policy, saying store management had acted improperly.

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Wal-Mart controversy pits Clinton's political ambition against her past

By Beth Fouhy
Associated Press
March 11, 2006               [back to top] 

With retail giant Wal-Mart under fire to improve its labor and health care policies, one Democrat with deep ties to the company Sen. Hillary Rodham Clinton has started feeling her share of the political heat. Clinton served on Wal-Mart's board of directors for six years when her husband was governor of Arkansas. And the Rose Law Firm, where she was a partner, handled many of the Arkansas-based company's legal affairs.

Hillary Clinton had kind words for Wal-Mart as recently as 2004, when she told an audience at the convention of the National Retail Federation that her time on the board "was a great experience in every respect."

But in recent months, as the company has become a target for Democratic activists, she has largely steered clear of any mention of Wal-Mart. And late last year, Clinton's re-election campaign returned a $5,000 contribution from Wal-Mart, citing "serious differences with current company practices."

As Clinton sheds her Arkansas past and looks ahead to a possible 2008 presidential run, the Wal-Mart issue presents an exquisite dilemma: how to reconcile the political demands she faces today with her history at a company many American consumers depend upon but many Democratic activists revile.

"The interesting question is not just Hillary Clinton's history at Wal-Mart, but why it's delicate for her to talk about Wal-Mart," said Charles Fishman, author of "The Wal-Mart Effect," a book on the company's impact on the national economy. "Plenty of Democrats denounce Wal-Mart, but there are also plenty of people who need it, love it and rely on it."

In 1986, when Wal-Mart's founder, Sam Walton, tapped Clinton to be the company's first female board member, Wal-Mart was a fraction of its current size, with $11.9 billion in net sales.

Today, Wal-Mart is the world's largest retailer and largest private employer, with over $312 billion in sales last year and 1.3 million employees or "associates" in the U.S. alone. But recently, the company has drawn intense scrutiny for its labor practices from its wages to the lack of affordable health coverage for employees, to its stiff resistance to unionization.

Throughout the 1980s, both Bill and Hillary Clinton nurtured relationships with Walton, a conservative Republican and by far Arkansas' most influential businessman.

Among other things, Hillary Clinton sought Walton's help in 1983 for Bill Clinton's so-called Blue Ribbon Commission on Education, a major effort to improve Arkansas' troubled public schools. The overhaul became a centerpiece of Clinton's governorship.

And Wal-Mart's Made in America campaign, which for years touted the company's sales of American products in its stores, was launched after Bill Clinton persuaded Walton to help save 200 jobs at an Arkansas shirt manufacturing plant. The Made in America campaign has virtually vanished in recent years, as the company's manufacturing has gradually moved overseas another point of criticism by many anti-Wal-Mart activists.

The Clintons also benefited financially from Wal-Mart. Hillary Clinton was paid $18,000 each year she served on the board, plus $1,500 for each meeting she attended. By 1993 she had accumulated at least $100,000 in Wal-Mart stock, according to Bill Clinton's federal financial disclosure that year. The Clintons also flew for free on Wal-Mart corporate planes 14 times in 1990 and 1991 in preparation for Bill Clinton's 1992 presidential bid.

Wal-Mart has little to say about Hillary Clinton's board service, and will not release minutes of the company's board meetings during her tenure. Lorraine Voles, Clinton's communications director, turned down a request for an interview with the senator.

Still, details have come to light over the years.

Bob Ortega, author of "In Sam We Trust," a history of Wal-Mart, said Clinton used her position to urge the company to improve its gender and racial diversity. Because of Clinton's prodding, Walton agreed to hire an outside firm to track the company's progress in hiring women and minorities, Ortega said.

"These were things the company was not addressing and wouldn't have, had she not pushed them to do so," Ortega said. "She's somebody who could definitely get things done."

In fact, Clinton proved to be such a thorn in Walton's side that at Wal-Mart's annual meeting in 1987, when shareholders challenged Walton on the company's lack of female managers, he assured them the record was improving "now that we have a strong willed young lady on the board."

Clinton was particularly vocal on environmental matters, pressing the company to boost its sale and use of recycled materials and other "green" products.

Garry Mauro, who served with Clinton on a Wal-Mart environmental advisory committee, pointed to many successes, such as persuading the company to establish recycling centers and sell products like recycled oil and long-life light bulbs.

"Hillary had real impact when she had an idea, things got moving," he said. "When she resigned from the committee, it stopped having any innovative ideas and stopped being effective."

Still, critics say there was little tangible change at Wal-Mart during Clinton's tenure, despite her apparent prodding.

"There's no evidence she did anything to improve the status of women or make it a very different place in ways Mrs. Clinton's Democratic base would care about," said Liza Featherstone, author of "Selling Women Short: The Landmark Battle for Worker's Rights at Wal-Mart."

The Wal-Mart debate has been playing out in Legislatures and city councils around the country in the last year, even hitting close to Clinton's adopted home.

New York State legislators of both parties are promoting bills requiring businesses including Wal-Mart to provide health coverage to their workers. And in October, New York City passed a law, aimed squarely at Wal-Mart, requiring large grocery stores to pay most workers a health care benefit worth an estimated $2.50 to $3 an hour. The law helped stall Wal-Mart's efforts to move into the city, even though recent polls indicate a majority of New Yorkers would welcome Wal-Mart.

Amid the deluge of legislative proposals around the country, Wal-Mart CEO Lee Scott announced last month that the company would expand its effort to enroll more workers in a new, low-premium health plan. The company will also trim the waiting period for part-time employees to become eligible for coverage.

But Hillary Clinton, who as first lady proposed a wide-ranging but ultimately unsuccessful plan to reshape the nation's health care system, has had little to say about Wal-Mart's health care record.

"That was a long time ago," she said recently when asked if she had done anything about the company's health care policies while she served on its board.

That comment was met with disbelief from Jonathan Tasini, a longtime labor organizer mounting a longshot challenge to Clinton in New York's Democratic Senate primary.

"Voters would find it a strained argument to believe that the senator who prides herself on intelligence and knowledge of detail can't recall any details in this case. It just strains credulity," Tasini said.

Nonetheless, Clinton and her advisers continue to insist that Wal-Mart has fundamentally changed since her tenure on the board.

"Wal-Mart was a different company then and the country was not facing the same health care challenges we face today," communications director Lorraine Voles said.

Even Clinton's decision to return Wal-Mart's campaign contribution illustrated the complicated role still Wal-Mart plays in her political life.

Wake-Up Wal-Mart posted several entries on its Web log applauding the decision, but others complained that the move seemed hypocritical and opportunistic given her history with the company.

Meanwhile, Republican National Committee spokeswoman Tracey Schmitt called the move "standard operating procedure" for Clinton.

"When push comes to shove, the senator allows politics to trump principle every time," Schmitt said.

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Another Port Deal: Mexico, China, Wal-Mart

by William F. Jasper
March 11, 2006                       [back to top] 

The Hong Kong-based shipping company Hutchison Whampoa Ltd. and retail giant Wal-Mart Stores Inc. are partners in a new $300 million expansion of Mexico's Pacific port of Lazaro Cardeñas, according to a February 12 report from Reuters news service.

Since U.S. west coast ports are becoming clogged with container ships filled with made-in-China goods, Wal-Mart and its Chinese suppliers are looking for new ports to bring their wares into the United States. The expansion project, reportedly, would increase Lazaro Cardeñas’ current annual handling capacity of 100,000 containers to 700,000 containers over the next couple years, with possible expansion to two million containers.

Hutchison Whampoa Ltd. is run by Hong Kong billionaire Li Ka-shing, whose business empire is intertwined with companies that front for the communist intelligence and military arms of the People’s Republic of China, such as the China Ocean Shipping Company (COSCO), China Telecom, and the China International Trust and Investment Corporation (CITIC). Li Ka-shing, a key agent in China’s global agenda, controls key ports around the world, including the ports at both ends of the Panama Canal.

© Copyright 2005 American Opinion Publishing Incorporated

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Union to ballot Asda depot workers on strike

Reuters
March 10                   [back to top] 

LONDON- Depot workers at UK supermarket chain Asda, owned by U.S. retail giant Wal-Mart Stores <WMT.N>, will be balloted on a strike after talks with the company failed to resolve a pay and rights row, the GMB union said on Friday.

Union officials will set the timetable for the ballot on March 14.

Voting papers for official strike action will be sent to union members at 21 Asda depots employing 11,000 workers.

Other union members at the retailer's 300 stores will be polled informally over industrial action.

The GMB says it has 25,000 members out of Asda's total 140,000 staff in the UK.

The union is in dispute with the company over three issues:

-- an annual bonus payment of 250 pounds not being paid to 100,000 workers

-- the company's refusal to give the GMB national collective bargaining rights at all depots

-- pay levels for store workers, where the GMB has no bargaining rights.

"We have the spectre of low paid employees generating 5,500 pounds profits per person last year being denied a payment of 250 because of the missing of an arbitrary target," said GMB official Jude Brimble.

Last month Wal-Mart, the world's largest retailer, said Asda had missed its quarterly sales and profit forecasts.

The chain has struggled in the face of fierce competition from J. Sainsbury and market leader Tesco.

On Thursday, Britain's competition watchdog called for a full inquiry into the dominance of the country's big supermarket chains, a move that could force the grocery giants to abandon some of their expansion plans.

Last month Asda said it would create 7,000 new jobs this year from the opening of at least 25 stores and from investment in five existing outlets.

© Reuters 2006. All rights reserved.

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Wal-Mart Argentina To Invest ARS90 Million In 3 New Stores In 06

By Wailin Wong
Dow Jones Newswires
03-10-06                                       [back to top] 

BUENOS AIRES -(Dow Jones)- Wal-Mart's (WMT) Argentine subsidiary is investing 90 million Argentine pesos ($29.2 million) in 2006 to open three new stores in different provinces, a company spokesman said Friday.

Gaston Wainstein said each of the locations - Cordoba, Mendoza and San Luis - will require an ARS30 million disbursement. He was unable to provide exact opening dates for the stores, but said that the Mendoza location might not be ready until early 2007.

With the three new stores planned for this year, Wal-Mart will have 14 total locations in Argentina. The company's investment plan for this year calls for spending in other areas, but Wainstein declined to disclose further details.

In Argentina, Wal-Mart's main competitors are French-owned Carrefour ( 12017.FR) and Jumbo, which is run by Chilean retailer Cencosud (CENCOSUD.SN). These three companies, along with four other supermarket chains, signed an agreement with the government in early December to lower prices on more than 200 basic items for two months. The industry and the administration are negotiating a new accord that would cover more products. The price pacts are the key part of the government's strategy to contain inflation, which rose a worrying 12.3% in 2005.

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Tubbs Jones Asks FDIC to Reject Industrial Bank Charter Application for Wal-Mart

PRNewswire via COMTEX
March 10, 2006                             [back to top] 

WASHINGTON, Today, Congresswoman Stephanie Tubbs Jones sent a letter to Federal Deposit Insurance Corporation (FDIC) Vice Chairman Martin Gruenberg urging them to reject the Industrial Bank Charter Application of Wal-Mart Stores, Inc. Rep. Tubbs Jones was joined in this effort by 39 of her colleagues in Congress.

"I oppose Wal-Mart's application for an ILC Charter because of their demonstrated predatory business model. If Wal-Mart expands its operations into banking, there is nothing to stop them from expanding their operations into the retail banking industry. This not only threatens community banks and credit unions but national banking institutions as well.

"There is also the issue of the potential failure of a bank of this nature. What if Enron or WorldCom owned banks? The failure of these companies would have not only been detrimental to the many employees who lost their jobs and retirement plans, but it also would have been a tremendous blow to local and national financial systems.

"Community banks and credit unions have a vested interest in the communities in which they serve. They fund and support local businesses and they are community partners. Additionally, community bankers live in these communities, and their children attend school in these communities. If Wal- Mart bank decided to abandon a town, the repercussions would be devastating to the survival of a city, even a region. Therefore it is important that we continue to have a diversified financial service industry that remains strong through fair and healthy competition."

Editor's Note: A copy of the letter is below

March 10, 2006

Mr. Martin Gruenberg
Vice Chairman
Federal Deposit Insurance Corporation
550 17th Street N.W.
Washington, D.C. 20429

Dear Mr. Gruenberg:

The undersigned Members of the U.S. Congress oppose the application by Wal-Mart Stores, Inc., for a Utah industrial bank charter and ask that the FDIC reject its application for deposit insurance.

Granting Wal-Mart an industrial bank charter would violate long-standing U.S. policy, most recently reaffirmed in the Gramm-Leach-Bliley Act of 1999, of maintaining the separation of banking and commerce. This policy is essential to maintaining the integrity and competitiveness of the financial system and protecting communities and consumers.

Moreover, we have grave concerns about Wal-Mart's record as a corporate citizen and believe its ownership of a bank will have a serious negative impact on local communities.

Safety and Soundness & Lack of Consolidated Supervision

Wal-Mart's plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation's payments system. Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system. The potential losses to the FDIC are staggering. Consider the consequences if Enron or WorldCom had owned a bank.

These risks are especially significant because -- as an industrial bank -- Wal-Mart Bank would be exempt from the Bank Holding Company Act. That Act imposes ownership and transaction limitations and provides for consolidated supervision by the Federal Reserve at the ownership level. Unlike other banking organizations, the Federal Reserve would have no authority to regulate Wal-Mart. Without proper regulatory scrutiny, an industrial bank owner may put the solvency of the bank and parent at risk.

Industrial banks are regulated by the FDIC, but a recent Government Accountability Office report noted that the FDIC does not have the same powers to oversee a holding company's operations as does the Federal Reserve. The Federal Reserve can examine the bank holding company itself and any of its non-bank subsidiaries at any time, while the FDIC is generally unable to examine affiliates of banks.

The Federal Reserve can also establish consolidated capital requirements to ensure that owners are a source of financial strength for the subsidiary bank. Corporate parents of industrial banks are not subject to these capital requirements.

Wal-Mart, Communities & Consumers

Wal-Mart is a poor corporate citizen. It is one of the most often sued companies in history. Many of these cases involve gender discrimination, child labor, and other wage and hour violations. Wal-Mart was also subject to a substantial fine for Clean Water Act violations. These raise serious questions about the character of Wal-Mart's management. They cast grave doubt on Wal-Mart's ability to abide by the rules applicable to banking operations.

While Wal-Mart claims it will not open bank branches outside of its Utah location, that could easily change once it gets its bank charter. A Wal-Mart Bank with thousands of branches would create competitive imbalances in the banking world and threaten small businesses, including community banks. As the world's largest corporation, it has already used predatory pricing practices and other techniques to run local competition out of business in many communities.

The same could happen to community banks which bring value to the communities they serve well beyond their asset size by providing funding and loans to support local businesses and economic development.

Wal-Mart Bank could skew loan decisions by steering capital away from businesses that compete against Wal-Mart. The notion of small businesses being forced (because of the lack of options) to apply for credit from a bank owned by its competitor is anathema. Credit decisions should be based on merit, not to gain a competitive advantage.

These concerns about Wal-Mart's record in communities - as well as its record in dealing with its work force - leave us especially troubled by Wal- Mart's application for an exemption from the Community Reinvestment Act. CRA has been essential in many of our communities, ensuring that banks are good corporate citizens. Unfortunately, Wal-Mart wants the advantages of a bank charter and Federal deposit insurance without being willing to meet the same responsibilities as the rest of the banking industry. By seeking a CRA exemption, Wal-Mart reinforces its indifference to the economic health of local communities.

For all of these reasons, the undersigned recommend that the FDIC reject Wal-Mart's application for Federal deposit insurance.

Sincerely,

/s Stephanie Tubbs Jones Member of Congress

/s Carolyn Kilpatrick Member of Congress

/s Elijah Cummings Member of Congress

/s Tim Ryan Member of Congress

/s Dennis Kucinich Member of Congress

/s Marcy Kaptur Member of Congress

/s Robert Brady Member of Congress

/s Chaka Fattah Member of Congress

/s Tom Udall Member of Congress

/s Mike Doyle Member of Congress

/s David Wu Member of Congress

/s Michael Capuano Member of Congress

/s Neil Abercrombie Member of Congress

/s Bill Pascrell Member of Congress

/s Alan Mollohan Member of Congress

/s Richard Neal Member of Congress

/s Tim Holden Member of Congress

/s Linda Sanchez Member of Congress

/s Loretta Sanchez Member of Congress

/s John Larson Member of Congress

/s Dennis Cardoza Member of Congress

/s Debbie Wasserman Schultz Member of Congress

/s Jan Schakowsky Member of Congress

/s Jesse Jackson Member of Congress

/s George Miller Member of Congress

/s Maxine Waters Member of Congress

/s Lynn Woosley Member of Congress

/s Bernie Sanders Member of Congress

/s Ted Strickland Member of Congress

/s Stephanie Herseth Member of Congress

/s Raul Grijalva Member of Congress

/s Brad Sherman Member of Congress

/s Hilda Solis Member of Congress

/s Bob Filner Member of Congress

/s Louise Slaughter Member of Congress

/s Barbara Lee Member of Congress

/s Julia Carson Member of Congress

/s Rick Larsen Member of Congress

SOURCE Office of Congresswoman Stephanie Tubbs Jones
Nicole Y. Williams of Office of Congresswoman Stephanie Tubbs Jones

Copyright (C) 2006 PR Newswire. All rights reserved.

[back to top] 

Lawmakers decry Wal-Mart's bank plan

The retail juggernaut's proposal threatens stability of U.S. payment system, say some House Democrats.

March 10, 2006                    [back to top] 

WASHINGTON (Reuters) - A group of lawmakers said Friday an industrial bank owned by Wal-Mart, the world's largest retailer, could threaten the stability of the U.S. financial system and drive community banks out of business.

In a highly critical letter to the acting chairman of the Federal Deposit Insurance Corp., obtained by Reuters, a group of more than 30 congressmen asked the bank regulator to reject Wal-Mart's (Research) application to open a bank in Utah.

"Wal-Mart's plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation's payments system," the lawmakers wrote. "Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system."

The group included Ohio Democrats Rep. Stephanie Tubbs Jones and Rep. Tim Ryan, Hawaii Democrat Rep. Neil Abercrombie and California Democrat Rep. Loretta Sanchez. A complete list of signatures was not immediately available.

Wal-Mart is trying to open an industrial bank to handle electronic payment processing. Industrial banks are state-chartered and state-regulated, and fall under the supervision of the FDIC. Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify them as banks.

[back to top] 

US lawmakers: Wal-Mart threatens US payment system

By Kristin Roberts
Reuters                               [back to top] 

WASHINGTON, March 10 (Reuters) - A group of lawmakers on Friday said an industrial bank owned by Wal-Mart <WMT.N>, the world's largest retailer, could threaten the stability of the U.S. financial system and drive community banks out of business.

In a highly critical letter to the acting chairman of the Federal Deposit Insurance Corp., obtained by Reuters, a group of more than 30 Congress members asked the bank regulator to reject Wal-Mart's application to open a bank in Utah.

"Wal-Mart's plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation's payments system," the lawmakers wrote.

"Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system."

The congressmen said the losses to the FDIC, which insures deposits at banks and thrift institutions, could be staggering if Wal-Mart begins to have financial troubles that bleed into its bank's business.

"Consider the consequences if Enron or WorldCom had owned a bank," the group said.

The group included Ohio Democrats Rep. Stephanie Tubbs Jones and Rep. Tim Ryan, Hawaii Democrat Rep. Neil Abercrombie and California Democrat Rep. Loretta Sanchez. A complete list of signatures was not immediately available.

Wal-Mart is trying to open an industrial bank to handle electronic payment processing.

Industrial banks are state-chartered and state-regulated, and fall under the supervision of the FDIC. Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify them as banks.

But as "industrial loan companies" owned by non-financial companies, they escape a level of federal bank regulation.

Wal-Mart's application has attracted heightened attention in Washington from some members of Congress, consumer groups and banks that fear competing with the retail giant.

Some lobbyists and analysts, however, say the opposition is not surprising, given's Wal-Mart's size and the criticism it regularly receives from labor unions and other groups. Those sources say that if the FDIC follows statute, there is little reason why Wal-Mart's application should be denied when rival Target Corp. <TGT.N> succeeded.

The Wal-Mart bid generated a record number of public comments and calls from Capitol Hill for the regulator to slow down its review. The FDIC, under Acting Chairman Martin Gruenberg, has agreed to hold public hearings on the application -- the agency's first formal public hearings on a bank application ever.

Wal-Mart has said it welcomes the public hearings.

Some groups, particularly banks, fear Wal-Mart will use its industrial bank as a base to offer a wider array of services in its branches.

Others who oppose Wal-Mart's application say the bank would violate the historic separation in the United States between banks and enterprises that do not engage primarily in finance. Still, other corporations have already set up industrial banks, such as General Electric <GE.N> and General Motors <GM.N>.

© Reuters 2006. All rights reserved.

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Writing About Wal-Mart? Choose Words Carefully

Author Discusses the Challenges of Profiling the Retailing Giant

By CHARLES HERMAN
March 9, 2006                             [back to top] 

When you write a book about Wal-Mart, the world's biggest and perhaps most powerful retailer, you'd better be sure to choose your title wisely. Anthony Bianco of Business Week confidently settled on "The Bully of Bentonville: How the High Cost of Wal-Mart's Everyday Low Prices is Hurting America." The word "bully" was a "carefully considered word," he said.

At 52, Bianco, originally of Rochester, Minn., but now a long-time Brooklyn resident, has been reporting on business at the magazine for over 25 years. In October of 2003, he wrote a cover story about Wal-Mart, carefully examining its impact on American society. The response was overwhelming. Overwhelmingly angry. One reader asked him "How dare you attack America, are you a traitor?" he said. A retired colonel told Bianco his article put U.S. troops overseas at risk.

"How many corporations inspire that kind of basic human feeling?" Bianco wondered at the time. Editors at Doubleday wondered as well and signed Bianco to write a book profiling the retailer. Previously, Bianco had written about Wall Street rainmaker Jeff Beck; the Reichmanns, a wealthy real estate family who built the World Financial Center; and a cultural history of three blocks of 42nd Street in New York City.

Writing about a company as big and influential as Wal-Mart had its challenges. Nearly everything about it is extreme. More than 138 million shoppers visit Wal-Mart's 5,300 stores per week resulting in revenues of more than $245 billion last year. To finish the book, Bianco worked early in the morning for over two years and eventually, he took an eight month leave of absence from work to finish it.

Bianco concluded that the retailer's aggressively reduced prices have kept inflation low throughout the entire United States and saved customers over $100 billion a year. Those benefits, however, came at cost.

"Wal-Mart comes into a community and has a depressing effect on wages. Wal-Mart has a net negative effect on employment in America," he explained. The low-cost leader has been accused of paying low wages and of offering little to no health care for its more than 1.4 million workers.

Sam Walton founded Wal-Mart in 1962 in the Ozark town of Bentonville, Ark. For Bianco, that fact was the key to understand Wal-Mart. "This company is a pure product of the Ozarks which in the time that the company was created, was one of the most poor, insulated and in some ways backwards parts of America," said Bianco. "The business model that Wal-Mart developed was calculated to both take advantage of the Ozarks and satisfy the Ozarks."

As the company expanded to become the world's largest retailer, it kept that small town mentality. It also thought that, like a bully, it could get its way wherever it went and at the same time, Bianco pointed out that CEO Lee Scott believed the company could "hide back in the hills of the Ozarks and be left alone."

Opening a new store every day and a half and yet somehow hiding from public view and intense scrutiny has proven nearly impossible for the company. But one thing that probably that won't be examined closely in Wal-Mart stores, Bianco's book. "I'd be absolutely shocked to see my book at Wal-Mart."

Copyright © 2006 ABC News Internet Ventures

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Under fire, Wal-Mart prepares schmooze fest

By Parija Bhatnagar
Cnnmoney.com
March 9, 2006                          [back to top] 

As retail behemoth readies for two-day media conference observers say it needs to stay focused on business and not get distracted by its image-boosting offensive. NEW YORK (CNNMoney.com) - Once upon a time, Wal-Mart couldn't care less about the media.

Times have certainly changed for the world's largest retailer. For two years running now Wal-Mart has sent out "save-the-date" announcements to members of the media, inviting them for an exclusive face-to-face with its spin squad back at home next month.

The media event is planned for April 18-19 in Rogers, Arkansas.

Wal-Mart (Research) is not yet ready to divulge the details about its Media Day conference, spokeswoman Sharon Weber said. However, last year Wal-Mart trotted out senior executives that included CEO Lee Scott for individual presentations and rare question-and answer sessions.

Some industry observers speculate that Wal-Mart's efforts to get warm and fuzzy with the media are not purely altruistic but mainly because it must protect its image especially as the damaging public relations setbacks keep coming. [See Related Stories box]

Howard Davidowitz, chairman of New York-based retail consultancy and investment banking firm Davidowitz & Associates, said it's a burden Wal-Mart will have to bear because its size and industry leader status will always make it a bull's eye for watchdog groups like WalMart Watch and WakeUpWalMart, who criticize Wal-Mart for its employment and benefits policies.

Scott, referring to both groups, has repeatedly acknowledged that Wal-Mart is confronted by one of the most well-financed and well-organized corporate campaigns the company has ever seen.

"When you're as big as Wal-Mart, everybody's going to be after you," but Wal-Mart needs to get its story out too, Davidowitz said.

Watchdog groups have seen some success in tarnishing Wal-Mart's image, however, he said. "But who's funding these groups? It's the labor unions. Labor unions have their own agenda. They're trying to get more members at a time when their membership is dropping," Davidowitz said.

"Wal-Mart will never be unionized. I don't think Wal-Mart has to worry about that," he added. "What it need to be worried about is what happened in Maryland with the healthcare bill. Businesses don't want the government to get involved."

Careful, Uncle Sam's watching Burt Flickinger, an independent retail analyst, agreed with Davidowitz that the Maryland "healthcare bill," which passed in January, could have substantial implications for the world's largest retailer.

The Maryland measure, also known as the "Fair Share Healthcare Bill," requires companies with more than 10,000 employees to spend at least 8 percent of their payroll on health benefits, or pay the balance into a state low-income health insurance fund. Wal-Mart currently employs about 17,000 in the state.

Wal-Mart has been a lightning rod for criticism about its wage, labor and benefits policies. Critics allege the retailer's high healthcare premiums tilt workers toward opting for taxpayer-funded public healthcare options, such as Medicaid, for their healthcare needs.

Flickinger worries that the Maryland vote could eventually result in more states to follow suit.

"Ohio and California are already a major battleground," he said, adding that as many as 30 other states have looked at the issue.

"I don't think the union-based special interest groups and the government are two separate issues. I think they're tied together," said retail consultant George Whalin. "Now more than ever Wal-Mart is facing a lot of pressure coming from so many different directions. I think that's why Wal-Mart is putting more effort into communicating with the media."

Is Wal-Mart's brand cachet suffering? Possibly.

For instance, Wal-Mart fell to No. 12 from its previous No. 4 slot in Fortune magazine's 2005 ranking of America's most admired companies. The ranking is based on a survey which asks people to vote for the companies that they admired most.

Wal-Mart held the No. 1 position in both 2003 and 2004.

Robert Passikoff, a branding expert with Brand Keys Consulting, says the Wal-Mart brand has taken a hit. He cited the latest results of the firm's annual customer loyalty index based on a semi-annual survey of 16,000 consumers between the ages of 18 and 65 and their attitude toward more than 300 well-known brands.

Specifically, the index identifies the values that bond consumers with a particular brand and measures the relationship between brand loyalty and profitability.

In the January survey, Wal-Mart slipped in the ranking to No. 29 from No. 25 the previous year, Passikoff said.

Why should Wal-Mart take note? "In retailing, the success of a brand is determined by consumers votes. And consumers vote with their wallets," Passikoff said. "We're not saying this means fewer people are shopping at Wal-Mart but that maybe they're not going back a second or third time in the same week."

Others disagree. "Wal-Mart gets more than 100 million customers a week. It's still growing its sales double-digit every year," said Phil Rist, vice president of strategy for market research firm BIGresearch.

Wal-Mart logged $315 billion in sales last year, up 10 percent from the prior year.

"Wal-Mart's making consumers happy," said Rist. "In an era where gas prices, heating bills are rising and credit card companies are doubling payments, people can count on Wal-Mart on low prices all the time."

And let's not forget Wall Street Even as it continues to boost revenues and profit, Wal-Mart's stock price has been rangebound between $40s and $50s for the past six years.

"I'm sure shareholders are frustrated," said Edward Weller, analyst with ThinkEquity Partners.

If Wal-Mart's management wasn't distracted by its public relations war, perhaps they could focus more attention on the business and improving the stock performance, he said.

"Wal-Mart has been accused of some pretty systematic shortcomings and I think the stock performance may be symptomatic of these other problems Wal-Mart faces," Wellers said.

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Surrey Wal-Mart faces union certification

CBC News
March 9, 2006                        [back to top] 

A small group of tire and lube workers at a Surrey Wal-Mart have voted seven to two to join the United Food and Commercial Workers Union. It's the latest round in the ongoing battle between the UFCWU and the world's largest retailer.

The union has been trying to certify Wal-Mart employees since the company came to Canada in 1994. But not one collective agreement has been implemented.

The UFCWU says the Arkansas-based giant is anti-union, citing the closure of a store in Quebec last year as proof.

Wal-Mart closed the store after workers there won union certification, saying it wasn't profitable to stay open.

UFCWU spokesperson Andy Neufeld calls the Surrey workers courageous, given the company's stance on unions.

"It's a very difficult choice to make when they understand the kind of pressure that they're put under by Wal-Mart to do everything possible to avoid a union."

Wal-Mart spokesperson Andrew Pelletier says the company is planning to challenge the Surrey vote results in court.

"We think it is completely unrepresentative and frankly undemocratic to try to carve out from a store of about 250 to 300, seven to 10 workers, and say they should be a separate bargaining unit."

Wal-Mart is also appealing a certification vote by tire and lube workers at its Cranbrook store.

Wal-Mart has 256 stores across Canada, and six Sam's Club stores, with a total of about 70,000 full- and part-time employees.