Union expects Wal-Mart contract

Wal-mart, other chains, pressure studios for price deals

Wal-Mart's 'Comps' Creep Lower

BusinessWeek Online
Editorial
Tuesday October 31               [back to top]

The Eagles never recorded a tune called "Life In the Slow Lane", but if they did, the country-rock combo could dedicate the ditty to its new marketing partner, Wal-Mart Stores (WMT). The Bentonville [Ark.]-based retail giant unleashed the latest in a string of disappointing sales updates on Oct. 28, announcing that estimated comparable-store sales for its October four-week period -- Saturday, Sept. 30, through Friday, Oct. 27 -- rose an anemic 0.5%, marking the smallest such increase in nearly six years.

Investors made their displeasure known Monday, Oct. 28, rolling back the stock price 2.4% to $49.53 in late-afternoon New York Stock Exchange trading. The shares touched a 52-week high of $52.15 earlier in October.

In a repeat of the company's sales guidance during September, when it steadily downgraded its expectations for "comps" [see BusinessWeek.com, 10/4/06, "Wal-Mart: The Incredible Shrinking 'Comp'"] the company has been backpedaling during October as well. While earlier guidance was for growth of 2%-4%, at an Oct. 23-24 analyst meeting, company management said October comps would be in the 1% range. At the meeting, Bentonville brass expressed confidence about prospects for the holiday season and beyond. Comp-store sales have trended steadily lower, from 2.5% in August to 1.3% in September to October's limp reading.

And while Wal-Mart has tried to engender positive buzz on the Street in recent weeks by announcing expansion plans in China [see BusinessWeek.com, 10/17/06, "Wal-Mart Shops for China's Trust"], dialing back the pace of capital spending [see BusinessWeek.com, 10/23/06, "Less Is More for Wal-Mart"] and even trumpeting a marketing partnership with The Eagles on Oct. 30, the sales numbers remain the elephant in the room.

What's holding back sales growth? Analysts cite the retailer's big store remodeling program. Efforts to entice customers with more upscale merchandise -- especially Wal-Mart's new Metro 7 apparel line -- have failed to catch on. And its core customers may only be starting to recover from the energy-price spike earlier this year.

Wall Street analysts reacted to the October projection in divergent ways. Prudential Equity cut its third quarter comp-sales growth forecast from 3.0% to 1.4% -- below the guidance range provided by Wal-Mart management of 2% to 4%. It also lowered its third-quarter EPS estimate to 60 cents from 61 cents.

In an Oct. 30 research note, Pru analysts Mark Rowen, Aimee Landwehr, and Anne Wickland wrote that they believe "disruptions from remodeling and problems in ladies apparel are continuing to drag down comps". The analysts expressed surprise that lower gas prices have not helped drive store traffic and sales. And they are "concerned" bout Wal-Mart's comp store sales performance over the holiday season.

Meanwhile, Citigroup analysts Deborah Weinswig and Charmaine Tang said in an Oct. 30 research note that Wal-Mart's current October forecast was below the firm's recently revised estimate of 1%-3% and original company guidance of 2%-4%.

The Citi analysts believe that traffic during the month may have been negatively impacted by the store remodelings, though they note that most of the remodels will be completed by the first week of November. They think traffic trends could be aided by the company's $4 generic prescription drug program, now in 27 states. In what may be a sign of an intensely competitive holiday season to come, the analysts noted that in late October, Wal-Mart "rolled back" prices on over 100 toys and games.

The Citi analysts are a far sight more bullish on the company's stock, with a $60 target price and a buy rating, citing a "favorable fundamental outlook". They note that customer traffic continues to be strong, driven by strength in consumables and "compelling" prices and improvements made in apparel, consumer electronics, private label, and branded merchandise. But they anticipate slowing earnings growth for 2007 [12.6%] and 2008 [12.5%] -- below the retailer's 10-year average EPS growth rate range of 13%-19%.

Wal-Mart's official sales release for the October period will be on Nov. 2.

Copyright © 2006 BusinessWeek Online. All rights reserved.

[back to top]

Wal-Mart Ammo Theft Sparks New Questions

City News
Tuesday October 31, 2006                [back to top]

Police are worried that a cache of ammunition could fall into the wrong hands after 250 rounds of bullets for shotguns and rifles went missing from a Wal-Mart in Brampton. Cops say the missing ammo wasn't even being sold at the particular location but was being stored there.

Wal-Mart management wouldn't speak to CityNews, but according to other retailers every individual must have a licence to sell ammunition.

One former Wal-Mart employee says it wasn't the case in his store.

"It wasn't being sold by anyone that was qualified," claims Eric DeSilva. "It was primarily sold by students."

Police say they don't have any solid evidence that the bullets were stolen and admit it may be an inventory mix-up. But the prospect of missing bullets concerned shoppers, with some questioning the store's policies.

"It's a family store. I don't think they should be selling that," remarked one.

[back to top]

Reaction To Expansion Of Wal-Mart Generic Prescription Drug Discount Program Mixed

medical news today
31 Oct 2006                                      [back to top]

The expansion of a Wal-Mart Stores generic prescription drug discount program to 12 additional states on Thursday "will likely provide price relief for the uninsured, a quick surge in sales and matching deals from other large retailers" in those areas, the Baltimore Sun reports (Salganik, Baltimore Sun, 10/27). Wal-Mart last month announced that the program -- under which some company pharmacies would sell 30-day prescriptions of certain generic medications for $4 -- would initially include 65 Wal-Mart, Sam's Club and Neighborhood Market pharmacies in the Tampa, Fla., area and would expand statewide in early 2007 and possibly to other states in the future. This month, Wal-Mart has expanded the program statewide in Florida and to 26 additional states (Kaiser Daily Health Policy Report, 10/26). According to Wal-Mart, the program, which includes 143 different generic medications in a total of 314 dosages, represents almost one-fourth of all prescriptions sold in pharmacies nationwide. However, a list of the 20 most commonly prescribed medications prepared by IMS Health includes only two of the generic treatments offered through the program (Feldstein, St. Louis Post-Dispatch, 10/27). CMS spokesperson Julie Bookhart said that the program is "good news for seniors" and "shows that competition is a good thing" (Karash, Kansas City Star, 10/27). Officials for the American Pharmacists Association said that the group supports more affordable medications but cautioned patients to consult their physicians before they switch to generic treatments included in the program. Kristina Lunner, acting vice president of policy and communications for APA, said that the program "starts to send a message that drugs are just another commodity," adding that they are "very different" (Mui/Wiggins, Washington Post, 10/27). Charlie Sewell, senior vice president of government affairs for the National Community Pharmacists Association, said that Wal-Mart is "misleading patients into thinking they're going to get cheap drugs" (St. Louis Post-Dispatch, 10/27).

[back to top]

Benefiting from Wal-Mart's struggles

Marc H. Gerstein
31 Oct 2006                     [back to top]

Strip-mall REITs, held back by fear of Wal-Mart, may get a second look now that the giant is struggling.

Wal-Mart Stores Inc. <WMT.N> phobia has been an enduring aspect of everyday retailing and among investors who fear the competitive shadow of the Bentonville titan. Case in point: Shares of CVS Corp. <CVS.N> and Walgreen Co. <WAG.N>, whose customers are mostly insured and likely would be little inclined to switch allegiance, fell after the retailing titan announced generic-drug price cuts. But internal issues such as badly-needed remodeling and so-far unsuccessful efforts to sell trendy clothing are causing Wal-Mart to struggle even while other merchants prosper, Reuters reported yesterday. As the giant's competitive stature diminishes, shares of other retailers that have been stuck in Wal-Mart's shadow may be ripe for a fresh look. Good-yielding retail-property real estate investment trusts (REITs) are a good place to start.

Shares of retail companies are one obvious way to participate in consumer spending trends. Another often under-appreciated approach is to invest in companies that lease space to the well-known retail chains. They usually operate as REITs and pay virtually all their income to shareholders as dividends. They have some upside participation in retail spending since commercial rents usually include a percent of store sales, but REITs don't experience the month-to-month volatility we often see in shares of individual retailers that report favorable or unfavorable short-term comparable-store sales growth trends.

Among retail-oriented REITs, much of Wall Street's attention falls on the mall operators, big names like Simon Property Group, Inc. <SPG.N> that often operate upscale malls featuring the best-known specialty chains and quality department stores. These properties tend to emphasize full-price retailers and cater to customers who cherish the shopping "experience." Wal-Mart competition is not something that keeps them awake at night.

But there's another category, strip malls, that is competitive with Wal-Mart. These are small neighborhood shopping centers containing convenience-oriented stores and often anchored by drugstores or supermarkets. They feature everyday items, many of which can also be purchased, often at lower prices, at Wal-Mart. The case for local merchants is based on convenience.

For many consumers, that argument carries the day. But Wal-Mart's success with its own everyday consumables, such as groceries, shows there are plenty who are willing to bear the hassle of getting to Wal-Mart in order to save some money, or at least enough so to induce Morningstar analyst Jeremy Glasser to be cautious on strip mall REIT Weingarten Realty Investors <WRI.N> noting, as a concern, that "almost 70% of the company's centers are in the same market as a Wal-Mart WMT Supercenter."

Being so heavily exposed to Wal-Mart hasn't exactly crippled Weingarten. Funds from operations (FFO) - net income plus depreciation and amortization minus gains or losses from property sales and after adjustments for unconsolidated partnerships and joint ventures, this being the pool of funds from which REITs pay dividends - grew at a healthy 8.5 percent annual rate over the past five years, and historically, the company has paid as dividends only 76 percent of FFO. Yet fear of Wal-Mart may have been holding back Weingarten shares. It yields about 4 percent. Compare that with a non-retail outfit like Boston Properties, Inc. <BXP.N>, an office REIT with a slightly lower FFO growth rate (5.9 percent) and a comparable Dividend-to-FFO payout ratio (74 percent), but a significantly lower 2.6 percent yield.

Wal-Mart, with its ability and demonstrated willingness to cut prices, can never be taken lightly. But with the company now looking somewhat less invincible, investors may become less skittish on Weingarten and other strip-mall REITs.

Table A lists strip-mall REITs with historical FFO coverage ratios below 80 percent. We also exclude REITs that lack analyst estimates for future FFO coverage, and for future dividend and FFO growth rates.

Table A

Dividend (%) FFO (%) Yield Est. Growth Est. Coverage Est. Growth Cedar Shopping Centers <CDR.N> 5.44 2.17 70.06 18.33 Equity One <EQY.N> 4.74 2.70 75.32 3.59 Weingarten Realty Investors <WRI.N> 4.00 3.30 66.82 4.08 Developers Diversified Realty <DDR.N> 3.91 4.85 69.14 9.42 Tanger Factory Outlet Centers <SKT.N> 3.69 3.32 59.07 12.22 Pan Pacific Retail Properties <PNP.N> 3.66 4.24 67.32 5.30 Regency Centers <REG.N> 3.33 3.52 62.78 7.37 Kimco Realty <KIM.N> 3.26 4.00 64.97 9.43 Acadia Realty Trust <AKR.N> 2.90 4.73 66.91 5.09 Notes: Estimated dividend growth rate is for the next three years. Estimated FFO coverage is the average estimate of dividends as a percent of FFO for the current years and the next three years. Estimated FFO growth rate is for the next three years.

At the time of publication, Marc H. Gerstein did not own shares of any of the aforementioned companies. He may be an owner, albeit indirectly, as an investor in a mutual fund or an Exchange Traded Fund.

[back to top]

Reliance to open first stores of 'Indian Wal-Mart'

Afp, Hyderabad
The Daily Star
Tue. October 31, 2006                                    [back to top]

Major company Reliance Industries said Sunday it would open a series of stores here this week with the aim of building an Indian version of Wal-Mart, the world's largest retail chain. The 11 "neighbourhood" stores, to be called Reliance Fresh, will sell groceries and other goods from Friday as a pilot project to "understand customer needs," Reliance said.

"We are starting a pilot journey of listening to customers and learning from them," said Mukesh Ambani, chairman of Reliance Industries whose main business is petroleum refining.

Ambani has said he wants to make the company's new stores arm, Reliance Retail, a "Wal-Mart in India" and has set an annual sales target of 25 billion dollars by 2011.

[back to top]

Wal-Mart: A 'Reputation Crisis'

The giant retailer has been trying hard to improve its image and reignite sales

By Pallavi Gogoi
OCTOBER 31, 2006                [back to top]

The political advertisements include a number of actors talking sarcastically about Harold Ford Jr., the Democratic candidate from Tennessee. The one who has stirred up all the controversy, though, is a bare-shouldered blonde who says she met Ford at a Playboy party and closes the clip by winking and whispering, "Harold, call me."

The ad is taking aim at an African American bidding to become the first black senator from Tennessee since Reconstruction, and it has set off a firestorm of debate, particularly among those who says it's a racist attempt to stoke fears of black men pursuing white women. Those who have taken heat for the ads include Ford's opponent, Bob Corker; the Republican National Committee, which paid for the ads; and Terry Nelson, the Republican strategist who created the ads.

One of the most surprising targets of criticism, however, has been Wal-Mart (WMT). The retailer didn't have any hand in the ads attacking Ford. However, Wal-Mart did have Nelson on its payroll as a consultant, as part of the company's growing effort to burnish its own image. Shortly after the Ford ads aired, Reverend Jesse Jackson came out attacking Wal-Mart and demanded that the company sever its relations with Nelson. Two days later, Nelson bowed to the pressure and submitted a letter ending his relationship to the company.

"A Real Threat" It's been that kind of year for Wal-Mart. The Bentonville (Ark.)-based company has been pushing hard to improve its public image, at a time when its financial fortunes increasingly depend on it. It's come under heavy fire from workers and politicians, for everything from the low wages it pays workers to the small retailers it pushes out of business. That dark reputation has resulted in communities around the country taking on Wal-Mart, by trying to halt construction of new stores or forcing it to pay higher wages and benefits.

At the same time, the company is scraping for every dollar of sales it can get. On Oct. 30, Wal-Mart reported that estimated same-store sales for October rose a slim 0.5%, the smallest such increase in nearly six years (see BusinessWeek.com, 10/30/06, "Wal-Mart's 'Comps' Creep Lower"). Slow sales have resulted in Wal-Mart's stock going sideways for five years, a harsh situation for investors long accustomed to outsized returns.

Wal-Mart has a "reputation crisis," says Gerald Baron, founder and president of AudienceCentral, a public information emergency response group and author of Now Is Too Late 2: Survival in an Era of Instant News. "Wal-Mart understands that the situation they are in is a real threat to their future."

Image Incongruity But Wal-Mart's efforts to improve its public image have been floundering. Besides the company ending its relationship with Nelson, it's had to backtrack on several fronts. In August, Andrew Young, the first African American U.S. ambassador to the U.N., resigned his position as head of the company-backed group Working Families for Wal-Mart, after making anti-Semitic and anti-Korean comments. Then, in October, a folksy blog called "Wal-Marting Across America" drew fire. The blog focused on happy Wal-Mart workers, but the couple writing it hadn't disclosed that the expenses and the writing were paid for with Wal-Mart money. That same month, independent filmmaker Ron Galloway, who had made movies in support of the company, reversed course and resigned from the board of Working Families for Wal-Mart.

The contrast between how critics see Wal-Mart and how the company sees itself couldn't be more stark. While opponents say the retailer hurts workers by paying them low wages and benefits, Wal-Mart execs see themselves as champions of the middle class, making products affordable by pushing suppliers to offer goods at lower prices. In a presentation to Wall Street analysts on Oct. 24, Leslie Dach, the company's newly appointed executive vice-president of corporate affairs and government relations, said that the media, local governments, and lawmakers in the capital "see us in a better way than they did a year ago." He added: "Our favorables are at 70%—numbers that any politician would covet in an election cycle."

Countless Consultants Still, the world's largest retailer recognizes that it has something of an image problem. In the last year, it has hired some of the best-known political and public relations consultants to improve its public face. It also just cut the ties to its ad agency of 32 years, in an effort to remake its image into a hip retailer that is also kind and considerate to employees.

Wal-Mart won't disclose how much it is spending on these efforts, although they certainly don't come cheap. For instance, the company hired Dach in August by offering $3 million in stock, as well as options on 168,805 shares that vest over the next five years. The company hasn't disclosed the salary or bonus for Dach, who was vice-chairman at PR firm Edelman and a former media advisor to President Bill Clinton. Wal-Mart referred questions about Dach to its public filings and declined to elaborate.

Among the other people that Wal-Mart has hired as either consultants or employees are Michael Deaver, former adviser to President Ronald Reagan; Democratic strategist Charles Baker; Jonathan Adashek, a strategist for John Kerry; Taylor Gross, who has handled President George W. Bush's communications; and the controversial Nelson, who was the political director for President Bush's campaign in 2004. Wal-Mart didn't return several calls seeking comment about its relationship with Nelson.

Good PR Is Hard to Find Many of Wal-Mart's political consultants came on board after Wal-Mart hired PR giant Edelman last year. Edelman has been a controversial force in Wal-Mart's image-boosting efforts. Last December, the firm formed the advocacy group Working Families for Wal-Mart, paid for solely by Wal-Mart, to counter criticism from the union-funded groups Wal-Mart Watch and WakeUpWalMart.com. The Working Families group has been at the center of several notable maelstroms swirling around Wal-Mart.

An early disappointment was the high-profile appointment of Young, as head of Working Families for Wal-Mart. He resigned barely six months into the job, after saying in an interview that Jewish, Korean, and Arab store owners had been ripping off urban communities for years.

The Working Families group also hired the couple who published the "Wal-Marting Across America" blog. They were known only as Jim and Laura, and they drove cross-country in an RV to capture the stories of people they met in Wal-Mart parking lots. BusinessWeek.com first revealed that the Working Families group was paying for the RV, the gas, and the blog writings (see BusinessWeek.com, 10/8/06, "Wal-Mart's Jim and Laura: The Real Story").

The effort became notorious in the blogging community, where writers took Wal-Mart to task for tarnishing the reputation of blogs (see BusinessWeek.com, 10/17/06, "Wal-Mart vs. the Blogosphere"). When the Wal-Marting blog was exposed, a Wal-Mart spokesman said, "It was a Working Families for Wal-Mart initiative, and we didn't have anything to do with it." Edelman's CEO issued a mea culpa and took full responsibility for the mess.

Losing Support How much of Wal-Mart's problem is style and how much substance? The answer is unclear at this point. However, at least some consumers are no longer shopping at the company's stores because of its reputation. According to a study by the consulting firm McKinsey & Co. for Wal-Mart, 2% to 8% of the company's customers have stopped shopping there, "because of negative press they have heard." Reputation is even more important as the company pushes upscale, trying to sell everything from organic food to high-end apparel, through its Metro 7 line. So far these initiatives have failed to ignite sales as much as the retailer hoped.

Expansion plans have been scaled back. In late October, Tom Schoewe, Wal-Mart's chief financial officer, told analysts that the company will see its capital spending grow 2% to 4% in fiscal 2008. That is down from the 15% and 20% growth this year.

Even some former supporters wonder whether Wal-Mart has to change its ways. Filmmaker Galloway appeared on several TV shows praising the retailer after making the movie: "Why Wal-Mart Works: And Why That Makes Some People Crazy." But he had a change of heart this year, after meeting with a Wal-Mart employee who had been featured in his film and is now upset because of the company's recently announced wage caps (see BusinessWeek.com, 8/11/06, "The Flip Side of Wal-Mart's Pay Hikes"). "This lady was distraught because she would never get a raise at Wal-Mart," he says. "I think that profiting on the backs of long-term employees isn't right."

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

 [back to top]

Wal-Mart eyes banking Financial services in Canada

It's a way to strengthen ties with its customers: analyst

Hollie Shaw and Carrie Tait
National Post
Tuesday, October 31, 2006                           [back to top]

Wal-Mart Canada Corp. is looking to expand into the financial services business, a potentially lucrative growth area as the retailing price war intensifies over food, clothing and other consumer staples.

The big-box giant recently hired Trudy Fahie as vice-president of financial services at Wal-Mart Canada, a role created for assessing the retailer's options in the sector. Ms. Fahie is the former vice-president of financial services for American Express Canada.

"We will be looking at a range of possible financial services to enhance our offering to our customers," Andrew Pelletier, a spokesman for Wal-Mart Canada, confirmed yesterday, calling the next six months to a year an "exploratory" period. "It's too early to speculate on what those services will be at this point."

The country's biggest general merchant, which strikes fear into the establishment of every new industry it considers entering, has not applied to become a bank like Canadian Tire Corp. has done, Mr. Pelletier said.

"It's not something that we're looking at right now," he said, while not ruling it out for the future. "There is increasing interest among our customers for broader financial services, and we plan to stay up to date with that customer interest."

Industry experts say Wal-Mart Canada could still offer a range of products through a third party: banking products such as mortgages and high-interest savings accounts or home and auto insurance. They said it is likely Wal-Mart would first offer simpler products such as money orders, wiring or third-party extended warranties before delving into retail banking services.

Rival Loblaw Cos. has an official Canadian banking licence, but uses its bank solely for running a profitable credit card business. The grocery giant's PC Financial division offers banking products including no-fee accounts, lines of credit and mortgages in partnership with the Canadian Imperial Bank of Commerce.

The news comes as Wal-Mart prepares to take the plunge into Canada's ultra-competitive grocery retailing business. Loblaw Cos. Ltd., the country's biggest grocery chain, has spent the past two years expanding its grocery superstore format in anticipation of Wal-Mart's arrival in the sector.

Adding financial services is a way for Wal-Mart to strengthen its ties with customers and does not necessarily involve taking on much risk, industry experts say.

"Accessing banking through third parties is not unusual for retailers and it's an effective and efficient way of getting into the business, which gives them access very quickly to a wide range of products," said Keith Sjogren.

Mr. Sjogren is director of strategy consulting at financial services consultancy Investor Economics.

Starting up a proprietary bank can take years and significant capital investment, he noted.

"If you share the risk with a third party the return may be less, but because the investment is lower, it may be more attractive to you. In the case of Loblaw, it's attractive for CIBC to gain access to the Loblaw customer base and for Loblaw, it's attractive [to offer such services] as a way to deepen its relationships with customers."

Wal-Mart Canada, which will compete with Loblaw Cos. and Sobeys Inc. when its new Ontario grocery stores open next month, currently offers house credit cards at its stores and at its Sam's Club warehouse outlets in a third-party agreement with GE Capital, and also has non-bank ATM cash dispensers in its stores.

The retailer's American division has unsuccessfully tried to make inroads into banking in the U.S. In the summer of 2005, Wal-Mart Stores Inc., the Arkansas-based owner of Wal-Mart Canada, applied for a Utah industrial bank charter, which is still pending. Earlier applications by the retailer for bank charters in Oklahoma and California were turned down.

Numerous Canadian retailers have leveraged their customer bases by offering house credit cards or some banking services.

Canadian Tire, which acquired a banking licence in 2003, announced earlier this month that it would start offering high-interest savings accounts in the test markets of Calgary and Kitchener, Ont. The retailer is expected to later roll out products including mortgages and GICs.

Sears Canada Inc. obtained a banking licence in 2003, but did not extend it beyond credit cards before its financial services division was sold last year to JP Morgan Chase & Co., which is expected to use Sears as launching pad to offer consumer banking services in Canada. And grocery chain Sobeys Inc. has been putting small Bank of Montreal branches inside some stores from Ontario to the East Coast of Canada.

© National Post 2006

  [back to top]

Markets Wall Street frets little over Wal-Mart

By Tim Paradis
The Associated Press
Tuesday, October 31, 2006                     [back to top]

NEW YORK — Wall Street ended an erratic session narrowly mixed Monday, largely shrugging off a lackluster sales report from Wal-Mart and news of weak consumer spending last month.

The Dow Jones industrial average fell 3.76 to 12,086.50 after changing course several times.

Microsoft, one of the 30 Dow stocks, gained 19 cents to close at $28.53. Boeing, also a Dow stock, advanced 48 cents to $80.22.

Broader stock indicators rose. The Standard & Poor's 500 index was up 0.59 at 1,377.93, and the Nasdaq composite index rose 13.15 to 2,363.77.

The market's ability to withstand bad news — especially from Wal-Mart, seen as a barometer of consumer sentiment — illustrates the confidence many investors seem to have in the overall direction of the economy and Wall Street.

Still, it was clear investors were somewhat tentative after Friday's weaker-than-expected reading of the gross domestic product, the broadest measure of the economy.

Adding to concerns Monday was the Commerce Department report that consumer spending rose an anemic 0.1 percent in September, the smallest increase in 10 months. Personal income, however, was up 0.5 percent.

"Personal spending was less than expected, but then personal income was better than expected," said Stuart Freeman, chief equity strategist for A.G. Edwards. He said investors will grapple with sometimes negative and seemingly contradictory economic data as they try to determine whether the economy will pull off a soft landing after the Federal Reserve's 17 straight interest-rate increases that ended in July.

Light, sweet crude settled down $2.39 at $58.36 a barrel on the New York Mercantile Exchange amid renewed doubts about whether the Organization of Petroleum Exporting Countries would push through production cuts.

Oil prices saw gains last week, and at times pushed down stock prices, as traders showed confidence that production cuts would take hold.

The markets appeared to dismiss comments Monday from Richmond Federal Reserve President Jeffrey Lacker, who said he was concerned about inflation.

Arthur Hogan, chief market analyst at Jefferies, said Lacker's remarks reiterated previous statements and weren't surprising, given the role he has played as lone dissenter in recent decisions by the Fed.

Hogan said asset managers are likely to continue to plow money back into the stock market as they work to meet their year-end return projections.

"That really becomes a self-fulfilling prophecy," he said, referring to an overall rise in the markets through the end of the year.

Still, he believes the market is ripe for periodic profit-taking. Stocks have had an unusually strong October, with the Dow setting new closing highs in 13 sessions.

Hogan contends that the rise in personal income last month bodes well for the coming holiday season. He doesn't see Wal-Mart's sales results as a sign that retailers over all will see a disappointing holiday period.

Wal-Mart fell $1.20 to $49.53 after reporting sales at stores open at least a year rose 0.5 percent in October, the smallest increase in nearly six years.

 [back to top]

Canadian grocers vulnerable to Wal-Mart: analyst

Reuters
Mon Oct 30, 2006                         [back to top]

TORONTO (Reuters) - Wal-Mart Stores Inc.'s <WMT.N> foray into the country's fresh grocery business, increasing already cut-throat competition, means investors should avoid shares of other Canadian food retailers, an analyst said on Monday.

Wal-Mart's first two supercenters on Canadian soil, both expansions of existing stores, opened earlier this month and the U.S. retail giant said it expects to open five more by early 2007.

Merrill Lynch analyst Patricia Baker said that would put the squeeze on Canadian rivals Loblaw Cos. Ltd. <L.TO>, Sobeys Inc. <SBY.TO> and Metro Inc. <MRUa.TO>

"We anticipate much disruption in the market commencing in 2007 and, as such, would not at current levels, advocate putting new money to work in this sector," Baker wrote in a note to clients.

The analyst said that despite "reasonably high expectations," the retailer's first Canadian supercenters were better than anticipated.

"We see Wal-Mart having improved its grocery and perishables offer in Canada in recognition that a better "game" is needed to win on food in this market," she wrote.

Wal-Mart sees significant growth opportunities in the Canadian market with the focus on the food business, Baker said.

The analyst, who sees as many as 15 Wal-Mart supercenters on the ground in 2007, said some 80 percent of the retailer's 275 Canadian stores could be converted into the supercenter format in the long term.

Wal-Mart has been rapidly expanding its share of the U.S. food business in recent years and Baker sees the retailer repeating its success north of the border over the next decade.

Loblaw, Canada's largest supermarket chain, has been wrestling with a huge overhaul of it supply chain over the past year, as it tries to cut costs and boost general merchandise offerings ahead of the expected onslaught from Wal-Mart.

The delayed restructuring has already been hurting Loblaw's profit and sent its stock to six-year lows.

Baker has a 'sell' rating on Loblaw's stock as well as on shares of Sobeys, and rates Metro at 'neutral'.

© Reuters 2006. All rights reserved.

 [back to top]

Interpublic, Aegis Win Wal-Mart Ad Accounts

By William Spain
Dow Jones Newswires
October 30, 2006                     [back to top]

CHICAGO -(Dow Jones)- Wal-Mart Stores Inc. (WMT) confirmed Monday that it has awarded its advertising and media-buying account to units of Interpublic Group (IPG) and Aegis Group (AGS.LN), respectively.

Interpublic's DraftFCB unit will handle the creative content of Wal-Mart's ads, while Aegis' Carat USA will handle the buying of media space for advertising. The pair bested rival bids from divisions of WPP Group (WPPGY) and Omnicom Group (OMC), the latter being the incumbent on a chunk of the Wal-Mart account.

The business is valued at as much as $580 million in billings, according to industry estimates, but the agencies will get only a small piece of that - possibly smaller than usual as Wal-Mart has long had a reputation for squeezing its vendors.

In a written statement, Wal-Mart said "this new agency relationship continues the evolution to a world class marketing communication group that allows the mass retailer to speak to customers in a targeted and refined voice."

When unconfirmed news reports of the Wal-Mart accounts hit last Wednesday, Interpublic's stock popped as much as 6% to a 52-week high of $11.25. The stock has since given most of that back. The stock was up less than 1% at $10.77 in Monday morning trading.

Meanwhile, Aegis was off about 1% in London, Omnicom slipped slightly to $99.89 and U.S.-traded shares of WPP added 6 cents to $63.77

The Wal-Mart decision is a boost for Interpublic, which has struggled with client defections and accounting problems in recent years. The company also piled up a massive debt load during an ill-fated acquisition spree.

Copyright (c) 2006 Dow Jones & Company, Inc.

[back to top]

Wal-Mart's Aggressive Holiday Discounts Could Hit Rivals

By James Covert 
DOW JONES NEWSWIRES
October 30, 2006                                  [back to top] 

NEW YORK -(Dow Jones)- Having fumbled in October, Wal-Mart Stores Inc. (WMT) is looking to recover its footing during the holidays with aggressive discounting that could hit business at smaller chains.

In addition to its smaller, trendier discount rival Target Corp. (TGT), analysts said a price-focused holiday campaign at Wal-Mart could pressure sales and earnings at competitors from Sears Holding Corp.'s (SHLD) Sears and Kmart chains to Bed Bath & Beyond Inc. (BBBY) and Circuit City Stores Inc. (CC).

"The good news is, consumers are going to have a good Christmas," said Arun Daniel, an analyst at ING Investment Management Inc. in New York, which owns shares of Wal-Mart. "The bad news is, there's going to be a number of retailers that feel some pain if these guys get aggressive."

The Bentonville, Ark., retailer said Saturday it expects to report a 0.5% increase in its October sales at stores open at least a year, or same-store sales, a key measure of retail performance. That outlook falls below the company's original forecast for a 2% to 4% gain and is even short of a warning given last week, when executives said October same-store sales were tracking for an increase around 1%, in line with September's 1.3% gain.

Shares of Wal-Mart, which last week were lifted by the company's announcement that it plans to boost profits next year by cutting spending and slightly curbing its expansion, recently traded at $49.42, off $1.31, or 2.6%.

To jump-start its sputtering sales, Wal-Mart said earlier this month it plans to launch a slew of discounts throughout the holidays that will span more than 10,000 items, from toys to electronics to jewelry. The company has begun with holiday "rollbacks," or price reductions, on more than 100 toys and games.

That could be ominous for other retailers. Despite Wal-Mart's October struggles, Minneapolis-based Target said in a mid-month update it expects to report a 3% to 5% same-store sales increase. But the smaller, trendier discounter isn't immune to Wal-Mart's moves. Last November, Target's same-store sales fell short of Wal-Mart's when Wal-Mart launched an early and aggressive holiday campaign.

Target's same-store sales recovered to outpace Wal-Mart's last December. But Wal-Mart has signaled that it plans a more steady and price-focused campaign than last year. Already, industry observers have noted the return of its "Smiley" mascot to some of its ads, cutting prices on holiday goods. That's a contrast to last year, when it ran expensive, lifestyle-focused TV ads early in the season with Garth Brooks and Destiny's Child.

"As always, we expect the holiday season to be highly competitive and expect pricing in key categories such as toys and electronics to be very aggressive," Target said in a written statement Monday. "We remain confident that Target will continue to gain market share by delivering consistent merchandising excitement and compelling value to our guests."

Lee Scott, Wal-Mart's president and chief executive, said last week in a meeting with analysts in Teaneck, N.J., that efforts to upgrade hundreds of stores with remodeled sales floors for apparel, electronics and home furnishings have been surprisingly disruptive to sales. Wal-Mart's apparel focus has been overly trendy this fall, he added, and the company's lower-income customers are taking longer than expected to ramp up spending following a drop in gasoline prices in August.

The company is temporarily curtailing remodeling efforts to make way for holiday traffic, and said it sees signs that shoppers are finally loosening their wallets in the wake of falling prices at the pump. Wal-Mart also expects to be clearing its racks of flopped fashions throughout the holidays.

"Some senior management change in apparel, currently run by Claire Watts, seems increasingly likely" at Wal-Mart, Virginia Genereux, an analyst at Merrill Lynch & Co., said in a Monday research note. (Genereux doesn't own Wal-Mart shares.)

Wal-Mart last week highlighted upgrades to its electronics floors, which have been completed at more than 700 stores. Electronics sales at those remodeled stores have risen by three full percentage points, Wal-Mart said. Wal-Mart's Sam's Clubs also are making a big push in electronics this holiday, with a bigger selection of big-screen TVs from top brands like Sony and Samsung. That could pose a challenge to the likes of Best Buy Co. (BBY) and Circuit City.

But Wal-Mart's effect on apparel destinations like J.C. Penney Co. (JCP) and Kohl's Corp. (KSS) will likely be more limited, says Richard Hastings, an analyst at Bernard Sands, a New York-based retail consultant. In September, J.C. Penney said sales at its department stores rose 8.7%, while Kohl's reported a 16% gain for the month.

"Kohl's and J.C. Penney have a better style and value proposition on apparel, and they're clearly hurting Wal-Mart on the apparel side," Hastings said.

Copyright (c) 2006 Dow Jones & Company, Inc.

[back to top]

Wal-Mart jumps the gun on Black Friday?

Hoping to fire up weak sales, No. 1 retailer is reportedly trotting out some holiday deals, such as a $398 laptop, several weeks early.

By Parija B. Kavilanz,
CNNMoney.com 
October 30 2006                                   [back to top]

It looks like Wal-Mart - after some spooky October sales figures - isn't waiting until Black Friday to unveil its holiday bargains and get people buying again at its discount stores.

According to Gottadeal.com, a Web site that markets itself as the "official Black Friday deals site," Wal-Mart (Charts) will begin offering hot pre-holiday deals as early as next Sunday, including the Compaq Presario V5305WM laptop for $398.

Gottadeal.com says the deal is contained in what appears to be Wal-Mart's ad circular for the period of Nov. 5 to Nov. 11, a copy of which it says it obtained and featured on its site.

The ad says there will be a minimum of 15 such laptops per store and the retailer will limit purchase to 1 per customer.

Typically Wal-Mart and other retailers debut their best deals for Black Friday, the day after Thanksgiving, a few days in advance.

Last year, Wal-Mart offered Black Friday customers a Hewlett-Packard (Charts) Pavilion notebook computer for a low price of $378. Industry analysts said it was one of the hottest deals of the holiday season and even led to in-store fights among shoppers.

"Wal-Mart has concluded that its customers think it's a great place to shop for holiday bargains at the beginning of the season, when shoppers have an entire list to work with, and not so much as the season winds up," said Britt Beemer, a retail industry expert and chairman of market research firm America's Research Group.

"Therefore, it would make sense that Wal-Mart has noticed this trend and is powering up its sales early to go after the full gift list, versus trying to battle the competition for the one or two items left on the list right before Christmas," Beemer said.

Marshal Cohen, chief retail industry analyst with NPD Group, said he's pretty sure Wal-Mart will repeat some of the early discounts, especially on laptops and other gadgets, on Black Friday.

"Expect to find the best deals on televisions, computers, music products, home products and fashion clothing," said Cohen. "Given how poorly Wal-Mart's fashion brands have done this year, it'll be like Wal-Mart is giving away these clothing brands."

Wal-Mart: 'Cheap' better than 'chic'? Earlier this month, Wal-Mart (Charts), the world's largest retailer set deep price cuts on more than 80 of this year's must-have toys, a move that signals its intention to be especially aggressive with pricing over the key November and December gift-buying months, a period accounts for as much as 50 percent of retailers' annual profits and sales.

However, the move didn't help boost Wal-Mart's sales this month. In its weekly sales update Saturday, the retailer reported that October sales at its U.S. stores open at least a year - a key retail metric known as same-store sales - rose a much weaker-than-expected 0.5 percent.

The figure was even lower than Wal-Mart's recently reduced guidance of a 1 percent increase. The retailer initially projected a 2 to 4 percent rise.

Wal-Mart and other chain store merchants report their final October sales results Thursday.

The day after Thanksgiving is dubbed "Black Friday" because it's when retailers are said to finally move out of the red, representing losses, and into the black, indicating profits. It also marks the start of the four-week shopping blitz leading up to Christmas.

Brad Olson, the founder of Gottadeal.com, told CNNMoney.com that he hasn't yet obtained Wal-Mart's specific Black Friday deals. But he was able to get a sneak peek at the juicy bargains consumers can bag Nov. 24 at another retailer - Sears (Charts).

These include a Craftsman 104-piece mechanics toolset for $49.99; Toshiba 42HP66 42-inch widescreen plasma HDTV priced at $1,199.99; 1-carat diamond bracelet for $99.99 and a Kodak EasyShare 7.1 megapixel digital camera with printer dock for $244.

Wal-Mart could not immediately be reached for comment.

 [back to top]

Wal-Mart Dismisses Creator of G.O.P. Ad

Chain Store Age
Monday, October 30, 2006                       [back to top]

Wal-Mart has cut ties with Republican strategist Terry Nelson who helped create a controversial advertisement in support of the Republican candidate who is running for the U.S. Senate from Tennessee, according to the The New York Times. Nelson was hired by Wal-Mart in 2005 to help clean up its image after attacks from organized labor and liberal groups. The ad, which was financed by the Republican National Committee, was created for G.O.P. Senate candidate Bob Corker and showed actors in mock interviews speaking sarcastically about Democratic candidate Harold Ford Jr. In one scene that black leaders say has racist overtones, a white actress says she met Ford, who is black, at a Playboy party. “Harold, call me,” she says coyly in the ad.

In addition, Canadian officials reportedly objected to a separate scene in the ad in which an actor says, “Canada can take care of North Korea. They're not busy.”

After Nelson's affiliation with the Republican commercial became public last week, the Rev. Jesse Jackson demanded that the retailer fire Nelson and a union group threatened to run advertisements in Tennessee linking the retailer to it, the New York Times said. Wal-Mart said in a statement that Nelson's Washington consulting firm, Crosslink Strategy Group, “sent a letter to Wal-Mart ending its working relationship with our company.”

But the New York Times said that a person familiar with the letter said it made clear that the decision to end the relationship was based on requests from Wal-Mart.

[back to top]

Wal-Mart’s Family Values: Who Cares About Kids?

By Nicholas von Hoffman
New York Observer
October 30, 2006                              [back to top]

Maybe people are so used to learning disturbing things about Wal-Mart that the latest news from America’s largest and most frightening corporation didn’t cause much of a ripple. There was a dearth of denunciation after The New York Times published a well-reported piece on Wal-Mart’s decision to put 40 percent of its workers on part-time and place a ceiling on what they can earn. In addition, the giant retail chain is ordering its workers to be available for duty anytime, day or night, at its nearly 2,000 24-hour-a-day stores. The company wants to have people on tap for the evenings and weekends, when shopping is heaviest, but in the interest of complete manpower flexibility doesn’t want to provide its employees with a set work schedule. They are to be available whenever the phone rings. Since Wal-Mart has more than a million and a quarter workers, what it does has ramifications.

The havoc this must cause in families with children needs no elaboration. How do you arrange for childcare or after-school supervision if you must wait to be told when you’re going to be working? This is not a problem that Sam Walton’s five heirs are likely to face. One is safe in assuming that they can get a baby-sitter on short notice since, even after being decimated by the death tax, they have managed to salvage $75 billion for their very own, according to Forbes magazine’s latest listing of the 400 wealthiest Americans.

The domestic arrangements of the Walton family aside, this last announcement by the company is a reminder of the enormous power of business in shaping family life. Wal-Mart claims that its new work rules and pay scales are the same as that of other, though smaller, retailers, such as Sears and Target-which, if true, makes the effects all the worse.

Companies that make it impossible for parents to give their children the attention and supervision necessary for raising them properly are asking for trouble-if not for themselves, then for the larger society. We all know that the odds are that the less carefully a child is reared, the more ghastly the adult. And what a moment for the largest employer in the United States to intensify its anti-family policies.

I doubt that Wal-Mart thinks about such things-and if it does, it may have concluded that it makes no never mind if the next generation has a high proportion of slovenly brutes, lazy slobs, ignorant boobies, drugged-out morons, kleptomaniacs and just plain jerks. That this is the social equivalent of eating one’s seed corn does not seem to weigh on Wal-Mart’s executives. That its present employees’ children may form the population from which Wal-Mart will have to draw its future employees apparently is a concern to be left to future Wal-Mart executives. The idea is to make all the money you can now and fuck the future.

Since the founding of the Republic back in Federalist times, business has played a huge part in determining what American family life was and is. Nor has it always been deleterious. The first cotton mills in New England drew for their workers farm girls, thereby opening up for them a richer and more exciting life than any to be found in remote New Hampshire villages. For more than a century, business provided Americans with labor-saving devices which freed them from a life that was accurately described as one of never-ending toil.

From Andrew Carnegie, who made the cheap iron pipe which put running water in our homes, through John D. Rockefeller, whose kerosene lamps pushed back the night, to Bill Gates’ computers, there is no end to the benefits that business has brought-but it has come with consequences, and not all of them are to be desired. Business has reshaped and strained and sometimes nearly destroyed family and community.

The social reorganization stemming from first the industrialization and then the commercialization of society has wrought huge changes in family life. Dinner, the big noontime meal, has vanished. Breakfast was the next to go, and now, in millions of homes, the family supper where all sit down together is a once-a-week activity. The ancient rituals built around food are no more in an era where fewer and fewer people know how to prepare food other than taking it out of a box. Larger houses, TVs and computers in every bedroom have all but abolished family life in the evenings. In families where every member over 16 has a car, the relationship between its members bears no resemblance to that of 50, much less 150, years ago.

The changes caused by the demands of business organizations took the father out of the home in the 19th century and have all but marginalized the father in the 21st. The same may be happening to the mother. In this century, the home, as a sanctuary from the world or a place in which families decided the shape and content and tempo of life, is all but gone, as the corporations penetrate everywhere and contest with parents over who gets to instill values, standards and taste in children.

Advertising has long since penetrated the schools-once thought to be a place where commerce was barred-and now, with the coming of the iPod, commercial messages with their inculcating beliefs as well as tastes will flow into young heads every minute of the day. Against this, parents with different ideas and other values usually struggle in vain. A family that insists on raising its children its way has little choice but to home-school and live in a manner that will brand it as eccentric and not exactly American.

It has taken half a century to begin to hold corporations to account for the physical damage they may have caused in the course of business. Even so, as BP’s recent record of environmental injury or Merck’s performance with Vioxx makes clear, these large organizations are by no means closely or successfully regulated.

The social damage they may do does not count, save for rare exceptions like the child-labor or family-leave laws. The new Wal-Mart anti-family policies are brutal and crass, but the whole tendency of business is in the same direction: The idea that a company has an obligation to pay enough “to raise a family on”-which once had some influence on business practice-has vanished entirely.

Short of those in the billionaire-millionaire class, everybody else in the working world is under constant pressure to put in longer hours and take shorter vacations. The right to create an inclusively anti-family, child-hurtful social environment via advertising power goes undisputed, unless it is by a few funny-looking people who are considered only slightly less crackpot than conspiracy theorists.

If Wal-Mart is the enemy of the young, it is also, so it appears, the enemy of the old. The company is accused of pushing older longtime employees into quitting because they make slightly more money than younger workers with the same productivity. The means used to get the geezers out the door includes such tricks as taking away the stools they sit on when checking out customers. Done on a grand enough scale by the nation’s largest employers, the consequence might be to throw a large class of still-productive persons onto one form of public charity or another-but apparently the effects of what Wal-Mart does beyond the parking lot gets no more than a shrug of the shoulders in the executive suite.

On the other hand, even though the Walton heirs don’t need more billions, Wal-Mart is a private company performing valuable services. Using public power to make it change the way it conducts its affairs carries risks and unpleasant consequences of its own.

But if, in the course of running their own businesses, these gigantic corporations run ours, even if by indifference and inadvertence, the costs are intolerable. Nothing much will be done about it, however. Like global warming, the changes happen, and people are confused and do not begin to connect the cause to the effect until the process is well underway. Nobody can agree on what to do about it, and when agreement is finally achieved, the will and power to carry it out isn’t there.

One consolation of sorts: Just as the billionaires who did so much to ruin the environment will choke in the hot, poisoned air with rest of us, so too will they have to contend with a generation whose parents were sucked out of the home by big business.

 [back to top]

Wal-Mart critics, supporters speak at law school symposium

by Elizabeth Omara-Otunnu
October 30, 2006                                [back to top]

Wal-Mart, the world's largest retailer, was both praised and criticized at a symposium held Oct. 20 and 21 at the Law School.

And one well-known advocate for the company surprised attendees by speaking out against recent wage caps at the retail giant.

Ron Galloway, a former member of the steering committee of Working Families for Wal-Mart, said he has left the advocacy group.

“If you've been [working at Wal-Mart] 15 years and you're making $15 per hour, you're capped out. That's wrong,” said Galloway, one of two keynote speakers at the symposium, which was organized by the Connecticut Law Review and the Connecticut Journal of International Law.

“If you start at Wal-Mart today, and you know wage caps are in place, that's fair. But to foist this on long-term employees … I don't think you grow your business on the backs of your long-term employees.”

Still, he insisted, he is not a “Wal-Mart hater” – as critics of the corporation are dubbed – and he also spoke in its defense.

Galloway, the producer-director of the film Why Wal-Mart Works & Why That Makes Some People C-r-a-z-y, said that although “Wal-Mart is sometimes bashed for low wages … they pretty much pay what retail pays.

“People have choices,” he added. “[Wal-Mart employees] don't make a lot of money, but a lot of the people who make $15 an hour at Wal-Mart are quite happy doing that.”

Keynote speaker Bob Ortega, a journalist and assistant professor of journalism at Ryerson University School of Journalism in Toronto and author of In Sam We Trust: The Untold Story of Sam Walton and Wal-Mart, the World's Most Powerful Retailer, was critical of Wal-Mart's employment practices.

Although the company has changed for the better in the past few years, Ortega said, he is still skeptical.

He said recent changes were prompted by negative publicity, often have a hidden downside, and in many cases help or have a minimal impact on the bottom line.

Wal-Mart has, for example, hiked workers' starting pay by 6 percent, and introduced low-premium health insurance for employees.

However, the company did not call attention to the fact that the pay raise does not apply to existing employees, Ortega said.

Nor did it reveal that some job descriptions have been re-written in order to discourage potential employees with health problems; that the insurance deductibles are very high; and that employees must work at least a year before they are eligible for health insurance.

Wal-Mart has also adopted environmental goals, including cutting solid waste, improving the efficiency of its trucks, reducing packaging, and lowering energy use at its stores.

And it is selling more organic food and high-efficiency light bulbs.

Yet these initiatives are not driven by altruism, Ortega said. Instead, they represent a profitable business move.

“The divergence between image and substance is nothing new,” he said, but has characterized the company since it was founded.

Ortega said Wal-Mart has been “relentless” in its efforts to squeeze the lowest prices from manufacturers, in many cases switching to suppliers in countries with lower pay and child labor.

“Wal-Mart forces suppliers and competitors to turn into shadow versions of Wal-Mart,” he said, with low wages and poor working conditions.

He said that as the company buys more from overseas, its profit margins have increased.

“They could significantly impact workers' conditions by accepting the same margins they were getting three to four years ago,” he said.

Speaker after speaker painted a picture of Wal-Mart as a “behemoth,” or “Modern Leviathan,” that has become a law unto itself; often has devastating effects on economies and societies around the world; and affects everyone, even if they neither shop nor work at the store.

“Beyond just size,” said Kurt Strasser, interim dean of the School of Law and Professor Phillip I. Blumberg Professor of Law, “Wal-Mart and everything it represents has become such a sprawling phenomenon,” not just in the U.S., but worldwide.

ss compunction. Targeting Wal-Mart is fine, but this goes well beyond Wal-Mart.”

“We know we're seeing something new and different,” he added, “and we're trying to figure out what it is.”

Panelist Larry Catá Backer, a professor of law at Penn State Dickenson School of Law, said Wal-Mart is side-stepping established legal systems.

“We are seeing the beginning of a global system of norm-making ... in which governments and governmental norm-making are largely irrelevant,” he said.

Until now, legal systems have been developed by political communities based on democratic principles, he said.

In the emerging system of law-making, the principal actors are corporations, non-governmental organizations, the media, and customers, including the investment community and financial markets.

Another panelist, Chris Tilly, professor of regional economic and social development at the University of Massachusetts-Lowell, described Wal-Mart as “the new superpower.”

But, he said, it should not be assumed that its impact is the same in other countries as in the U.S.

In Mexico, for example, said Tilly, who has made a special study of Wal-Mart in that country, for the average consumer “a trip to a Wal-Mart superstore is a high-end experience.”

Low wages are found throughout the retail sector, he said, and all retailers have similar sourcing practices, such as importing goods from China.

Despite its aggressive expansion overseas, “Wal-Mart is not unstoppable,” said Tilly.

He noted that the company is pulling out of South Korea and Germany.

Besides, he said, there can be “Wal-Martization” without Wal-Mart: “In Mexico, if you took Wal-Mart away, its competitors would be very happy to do what Wal-Mart is doing, perhaps with evenss competition. Targeting Wal-Mart is fine, bu tthis goes well beyond Wal-Mart."

© University of Connecticut 

[back to top]

Wal-Mart: 'Cheap' better than 'chic'?

Discounter says Oct. sales rose a dismal 0.5%; sees unexpected setback with its trendy 'Metro 7' clothing line

By Parija B. Kavilanz
CNNMoney.com
October 30 2006                               [back to top]

NEW YORK (CNNMoney.com) -- Is Wal-Mart, the king of "cheap," shooting itself in the foot by straying from its low-priced strategy in favor of more upscale offerings?

In its weekly sales update on Saturday, the world's largest retailer reported that October sales at its U.S. stores open at least a year -- a key retail metric known as same-store sales -- rose a much weaker-than-expected 0.5 percent.

This figure is even lower than Wal-Mart's recently reduced guidance of a 1 percent increase. It initially saw a 2 to 4 percent rise.

Wal-Mart and other chain store merchants will report their final October sales results on Thursday.

Upscale fashion to blame?

In his presentation to a group of Wall Street analyst last week, Wal-Mart (Charts) CEO Lee Scott admitted the world's biggest retailer has seen at least one big setback to its attempts to boost sales by offering fancier, higher-priced merchandise.

"We have to understand why Metro 7 does well in 600 stores but [doesn't] do well when you expand it [into more stores]," Scott said. Scott was referring to Wal-Mart's fashionable private-label clothing brand called "Metro 7" that the company launched last year.

Top-dollar sporting goods

Compared to the basic T-shirts, sweatshirts and jeans Wal-Mart typically sells, Metro 7 was a step up in fashion - and price.

Moreover, Wal-Mart supported the brand's launch with a splashy and expensive marketing campaign.

The strategy worked, at first. Wal-Mart couldn't get the product into stores fast enough. The retailer expanded Metro 7 into 600 stores quickly, hoping to leverage the brand's early success.

Then the unexpected happened. Metro 7 failed to take off in some markets. Wal-Mart had planned to roll out the line in more than 1,000 locations but has since scaled back that target to between 700 to 800 stores.

"We overexpanded it. We had a pretty good idea. I think what happened is we didn't follow the strategy. We overloaded the fashion part. We need to remember who we are," Scott said.

"We need to have a little bit of fashion so our customers know we have a sense of what's happening in the world. If we try to do more [with fashion], we're not going to do well," he added.

Wal-Mart to slow U.S. growth With Wall Street breathing down its neck over sluggish sales and a stock price that's been stagnant for five years, Wal-Mart is under intense pressure to rev up growth and fight growing competition from archrival Target (Charts), other "big-box" retailers like Costco (Charts), and value-priced department store chains like J.C. Penney (Charts).

To that end, Wal-Mart in recent months set in motion a plan to court wealthier shoppers and boost profits and sales by introducing more upscale items that generate fatter profits.

For instance, in addition to Metro 7 Wal-Mart has added other fashion labels like the trendy urban line for men called "Exsto" and a clothing line from designer Mark Eisen. It's introduced organic baby clothing under its "George" label, expanded its higher-priced organic food offering and added more brand-name flat screen TVs and personal computers in electronics.

It would appear that Wal-Mart is trying to emulate Target's tremendous success with its "cheap-chic" merchandise approach. But some industry watchers warn that Wal-Mart is no Target.

"Wal-Mart is not cool. It's impossible for Wal-Mart to be cool because they would have to discredit their entire business to do that," said veteran retail consultant Howard Davidowitz.

For its part, Target created the "cheap-chic" market by being the first to enter into collaborations with high-profile designers like Mossimo, Isaac Mizrahi and Todd Oldham to market affordable clothing, home furnishing and kitchen products.

Target, the No. 2 discounter, is now among the leaders in the "cheap-chic" space. Despite its roots as Wal-Mart-like discounter, Target's become synonymous with the term "trendy." Many consumers say it's "cool" to pay just a bit more, and walk out carrying Target's well-known bull's-eye logo on their shopping bags.

But retail experts said Wal-Mart simply isn't there yet in terms of changing its image.

"Any time that Wal-Mart tries change, it's tricky because of who they are," Davidowitz said."There are very few retailers with such a solid established image as Wal-Mart. To consumers Wal-Mart means every-day low prices. In apparel, Wal-Mart sells body covering. It's what its customers expect."

Retail stocks

Not that there's anything wrong with that. "Wal-Mart's been very successful selling basic apparel," he added.

Davidowitz, for one, hopes the Metro 7 setback doesn't scare Wal-Mart away from pushing ahead with tinkering with its merchandise mix, especially in organics and electronics, two areas where it's already luring wealthier shoppers.

"Wal-Mart has to seek out new customers in order to grow. That's a given. But the Metro 7 issues show they can't do a blanket upscale push," he said.

Doing it on a region by region basis makes more sense. "Store profiling is key. Look at your customer base in each market and target the merchandise accordingly," Davidowitz said.

Wal-Mart's Scott told analysts that the company has to become better at the "idea of customer segmentation " and "which stores to put which merchandise."

Richard Hastings, senior retail analysts with Bernard Sands, agreed the chain has work to do.

"Going upscale in clothing is not the solution for Wal-Mart. It won't work because of Wal-Mart's discount store experience and layout," he said. "You can't put clothing 20 feet away from groceries and create the same ambience that consumers have shopping for clothes in a specialty or department store."

He, too, suggested that Wal-Mart go more upscale in food, beverages and other household products. "Wal-Mart can get really competitive in these areas and get a good payout."

[back to top]

The Great Wal-Mart of China

To move into China, America's biggest and most successful retailer had to learn its business all over again.

By Keith Naughton
Newsweek
Oct. 30, 2006                                      [back to top]

In the grocery section of a big-box store in north Beijing, shoppers struggle to catch a bargain. And a fish. "We'd still rather pick it out ourselves," says law student Guo Jiao, as she and a friend repeatedly plunge fishing nets into a tank full of slippery grass carp. Other shoppers with nets mob serve-yourself tanks swimming with crabs, clams and eels. Nearby, Yang Fuming has already landed his fish and carefully watches a clerk gut it. Once his fresh catch is eviscerated, Yang takes the bloody bag of still-convulsing carp and drops it into his shopping cart beside a pair of duvets he's buying to cover his sofas, and a new kitchen apron. "I come here every day or two for the fresh stuff," says the retired physicist. "They've got everything you need."

Such is life in the Great Wal-Mart of China. Recognize the place? For Wal-Mart, China represents the biggest frontier since it conquered America. China's voracious consumers are pushing retail sales to a 15 percent annual growth rate; that market will hit $860 billion by 2009, according to Bain & Co. But the standard-bearer of American retailing has pains-takingly discovered that success in China requires more than dutifully replicating its formula of cheap, steep and deep. It requires the kind of flexibility Wal-Mart has rarely shown: it requires going native. And now, after a decade of ingratiating itself to Chinese consumers by adopting their customs and culture, Wal-Mart is making its move from a minor player with just 3.1 percent of the market to a dominant force. Word emerged from Asian retailing sources last week that Wal-Mart is more than doubling its presence in China by spending $1 billion to acquire Trust-Mart, a Taiwanese-owned chain of more than 100 big-box stores in 20 Chinese provinces. The deal, expected to be approved by the Chinese government by the end of the year, will catapult Wal-Mart past its main foreign rival in China, French retail giant Carrefour, which it outbid for Trust-Mart. All three retailers declined to comment on the deal because it is still pending.

Wal-Mart execs have long cited China as the best place on earth to export the U.S. merchandising miracle Sam Walton began 45 years ago. China represents the same wide-open retail landscape and burgeoning middle class that made Wal-Mart ubiquitous in the United States. Wall Street is also starting to believe. "China will be as big and as successful a market for Wal-Mart as the United States," says retail analyst Bill Dreher of Deutsche Bank Securities.

For now, it's a distant prospect. China remains an economy controlled by domestic retailers. Becoming the largest foreign retailer there will give Wal-Mart less than 9 percent of the Middle Kingdom's vast retail market. And for Wal-Mart, China is still small change. After absorbing Trust-Mart over the next three years, Wal-Mart will have fewer than 200 stores in China, generating about $2.6 billion in annual sales—a slender sliver of the $312 billion in annual sales that makes the retailer America's biggest company. In fact, Wal-Mart will build more stores in America this year—370—than it will have managed to amass in China in 13 years.

Still, Wal-Mart's Great Leap Forward is essential to its future growth, and sheds light on the company's ability to adapt successfully to new markets. Wal-Mart has struggled to export its brand of American consumer culture elsewhere, as it rigidly tried to reproduce its Everyday Low Price model overseas. It pulled out of South Korea and Germany this year after battling strong labor unions and more nimble competitors. At home, Wal-Mart is suffering a slowdown in sales as its relentless expansion finally reaches a saturation point and it increasingly confronts community backlash. (Virtually every American now lives within 25 miles of a Wal-Mart.) "Wal-Mart is really hitting the wall in the U.S.," says retail consultant Burt Flickinger III. "So China is absolutely critical."

In China, Wal-Mart seems to have found kindred spirits in a culture of shopkeepers and bargain hunters. "Chinese consumers are more open to Americana than shoppers in Europe," says Dreher. But Wal-Mart, for its part, learned to do things the Chinese way, starting with food, which consumers insist be freshly harvested, or even killed in front of them. Initially, Wal-Mart offended Chinese consumers by trying to sell them dead fish, as well as meat packaged in Styrofoam and cellophane. Shoppers turned up their noses at what they saw as old merchandise. So Wal-Mart began displaying the meat uncovered, installed fish tanks and began selling live tortoises for turtle soup. Sales soared. "Between the fish and the turtles," says Dreher, "it feels more like you've walked into the pet department of a U.S. Wal-Mart."

As it did at home, Wal-Mart is growing up with China's middle class, which is expected to quintuple to 200 million by 2015. "They offer a fantastic opportunity," says former Wal-Mart vice chairman Don Soderquist, "because they've been underserved and overcharged." When it opened its first Chinese store in 1996, Wal-Mart didn't offer cosmetics, which then seemed an unnecessary luxury. Today, Wal-Mart's stores have elaborate cosmetics counters just inside the front door, complete with moody backlit displays beneath giant posters of attractive Asian women with extreme makeovers. Nearby, rows of Johnson's Baby Oil are stocked alongside moisturizers infused with sheep placenta—which the natives swear reduces wrinkles. Wal-Mart's buyers even learned to chart the Chinese calendar. They stocked up on diapers in the Year of the Monkey because it's considered a lucky year to bear children. The Pampers flew off the shelves.

The biggest cultural change for Wal-Mart, though, has been its acceptance of organized labor in China. At home Wal-Mart fiercely fights unions, and it took the same hard line in its first eight years in China. But analysts suspect that Wal-Mart initially didn't appreciate the role unions play in China. Unlike those in the United States, they don't bargain contracts. Instead, Chinese unions are an arm of the state, providing funding to the Communist Party, and, in the government's view, securing the social order. "Taking on a Chinese labor union is not tantamount to taking on the Teamsters," says Flickinger. In 2004 Wal-Mart softened and agreed to accept unions, but it still put up a roadblock—it required workers to ask for representation. In a country where unions are seen as a management tool, no workers asked. But the Chinese government persisted, sending union organizers directly to Wal-Mart workers. The move wore down Wal-Mart's resistance. Finally seeing organized labor as a cultural and political imperative in China, the company accepted the first union into its stores this past July.

It was a pivotal moment in Wal-Mart's assimilation into China. Analysts believe it set the stage for Wal-Mart to win the Trust-Mart bid. But the company took one more step last week to solidify its China cred: it replaced its Asia chief, Joe Hatfield, a 32-year Wal-Mart vet, with a Hong Kong retailing executive. The move surprised analysts who viewed Hatfield, a chain-smoker with a heavy Southern drawl, as the "Sam Walton of China." But sources familiar with the transition, who asked not to be named because they're not authorized to speak about it, say Wal-Mart wanted a big operator rather than a start-up man to take its Chinese business to the next level. Wal-Mart declined to comment, as did Hatfield. Its new China boss, Ed Chan, ran 1,400 stores in Asia for the Dairy Farm chain, opening 800 since 2001. Hatfield, by contrast, methodically opened just 66 Wal-Marts in a decade.

Chan's challenge now is to delicately integrate the Wal-Mart way into Trust-Mart, a downscale chain most known for its rock-bottom prices. (Sure, that might sound like Wal-Mart to you, but it's not the Wal-Mart of China.) He can learn plenty from Wal-Mart's international hits and misses. In places like Germany, South Korea and Japan, where the big retailer has lost $1 billion, its troubles partly came from underestimating the local competition and failing to grasp the local culture. In Mexico, though, Wal-Mart first invested in a threadbare retailing chain in 1991 and gradually transformed it by incorporating its Everyday Low Price strategy while hiring locals to manage the stores and make sure the merchandise reflected its surroundings. Today, Wal-Mart de México controls 60 percent of the market. Industry insiders expect Chan to emulate the Wal-Mex approach by leaving the Trust-Mart name on the stores until they can be brought up to Wal-Mart standards.

Judging by a visit to a Trust-Mart in Beijing last week, Wal-Mart has its work cut out for it. The store was badly in need of a Wal-Mart smiley face. Cheap watches, cell phones and shoes lined its cluttered aisles. At the seafood tanks, the clerks do the fishing. And they're not very patient. When one young woman couldn't decide whether she wanted to take away her shrimp dead or alive, an older female clerk dumped them out. "There," she snapped. "They'll be dead soon." So will Wal-Mart if it sticks to that approach in China. But the big retailer's recent China policy suggests it's already learned plenty about how to woo Chinese shoppers. Grab your net.

With Sarah Schafer and Jonathan Ansfield in Beijing and Jackie Lin in Taipei

[back to top]

Wal-Mart nemesis admits fear

The Reading woman who was the lead plaintiff in a class-action suit against the giant retailer says the experience was unsettling

By Tony Lucia
Reading Eagle
October 29, 2006                       [back to top]

Oct. 29--Dolores Hummel won't lie: Facing down the world's largest retailer in a court of law was pretty intimidating. "I was very scared," admitted the Reading resident, a former employee at Sam's Club in Muhlenberg Township.

She was the lead plaintiff in a class-action suit against Wal-Mart Stores Inc., owner of Sam's Club.

"But I just knew that we weren't being treated fairly, and I just thought we should do something about it, to try to make it better for the people who work for Wal-Mart," Hummel said.

On Oct. 13, a jury in Philadelphia court agreed with Hummel, her other plaintiffs and attorneys, ruling Wal-Mart must pay $78.5 million for making Pennsylvania employees work through breaks and after work hours.

Another $62 million in damages is being sought by the plaintiffs' lawyers because the jury said Wal-Mart acted in bad faith. That would increase the award to more than $140 million.

Neal S. Manne, the lawyer with Susman Godfrey of Houston, who led Wal-Mart's defense team, said he expects the firm to appeal.

Hummel, 53, who worked for Sam's Club as a cake decorator from 1992 to 2002, devoted hundreds of hours of time to the case over several years and did it for the principle, not the cash.

Her lawyer, Michael D. Donovan of the Philadelphia firm Donovan Searles, said she stands to gain only $1,000 to $2,000.

"It was a long haul, but I was determined to stick with it," Hummel said. "I'm one who will stick with things. I knew there would be a lot of intimidation and so forth.

"I'm not looking for anything, just to help the people of the state of Pennsylvania," she said, pausing as her voice faltered from the emotion. "Wal-Mart has to pay when you're working off the clock, and when you're asked to give up your lunch break. It's not right."

Donovan said Hummel, one of six lead witnesses in the case, was very credible on the stand.

The lawyer said he was impressed by Hummel's fortitude, and said she's one of the few who would have the courage to go through such a long and enervating process.

"A lot of people, they're meek, and they don't stick up for themselves, and try to please everyone and still get stepped on," he said. "Most people let it slide.

"Other people can't let it go and get up the courage to do something. I think there was comfort for her in the fact that it was happening to other people, and also there was a fair amount of frustration with what had happened to her."

Manne, Wal-Mart's lawyer, said he could not comment on Hummel's effectiveness on the stand, but spoke well of her.

"She's a very nice lady," Manne said. "I enjoyed meeting her."

In her testimony, Hummel said that on numerous occasions, when her shift was over and she had punched out, or was on her lunch break, she'd be called back to the bakery to work.

"I was a single parent with bills to pay, and I did it," she recalled.

She said she worked eight to 12 unpaid hours each month.

Donovan said that in addition to compelling testimony from Hummel and others, there was evidence that Wal-Mart knew about and condoned such practices.

For instance, a Wal-Mart internal audit in 2000 showed that workers were missing 76,400 meal and rest breaks a week at the 127 stores audited, he said.

"They then directed internal audit not to do any more audits," Donovan said. "On top of that, they directed the computer department not to keep track of rest breaks any more."

He also said managers who cut their payrolls year to year were eligible for annual bonuses of up to $250,000, on top of their salary. "These were people making $300,000 for managing a Wal-Mart," he said.

The lawyer waxed philosophical when asked whether awards such as this one and another in a similar case in California that cost Wal-Mart $172 million would lead to permanent change.

"I have a sinking feeling that we're a mosquito on the back of an elephant," he said, adding that "140 million (dollars) is not a lot to a company that makes over $300 billion a year."

But if Wal-Mart appeals, Hummel said she'll be there, "Absolutely."

She won't lie.

[back to top]

Wal-Mart's October U.S. Same-Store Sales Rose About 0.5 Percent

By Lauren Coleman-Lochner
and Nancy Kercheval
Bloomberg
October 28, 2006                               [back to top]

Oct. 28 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said October sales at U.S. stores open a least a year rose about 0.5 percent, the smallest gain since August 2004 when it reported a similar increase. The retailer provided the preliminary sales figure in a recorded telephone call today. Wal-Mart U.S. stores chief Eduardo Castro-Wright told analysts Oct. 23 that October sales-to-date were up only about 1 percent, below the company's previous forecast of a 2 to 4 percent gain.

Chief Executive Officer Lee Scott said Wal-Mart has been hurt by weaker-than-expected clothing sales and disruptions from store renovations. The Bentonville, Arkansas-based company needs to re-emphasize selling basic items for low prices, Scott told analysts.

``They've struggled on more fashion-oriented, higher-end apparel,'' said Rick Rubin, an analyst at Mercantile Bankshares Corp. in Baltimore, which has $22 billion in assets including Wal-Mart shares.

Target Corp., the second-largest U.S. discount chain, said Oct. 16 it expects a 3 percent to 5 percent October same-store sales gain. The International Council of Shopping Centers has forecast a 3 percent increase for the retailers it monitors.

Shares of Wal-Mart fell $1.02, or 2 percent, to $50.73 yesterday in New York Stock Exchange composite trading. They have gained 8.4 percent this year, while Target has risen 6.5 percent. Wal-Mart had 6,689 stores worldwide as of Oct. 1, including 3,944 locations in the U.S.

Wal-Mart Strategy

October results weren't acceptable, Scott told analysts at the two-day conference. Sales should improve as gasoline prices fall and holiday merchandise is in the stores, he said. Shoppers made midweek trips to stores closer to home when gasoline prices rose, Scott said, costing Wal-Mart sales.

The average price of a gallon of unleaded gasoline in the week ended Oct. 23 was $2.21, according to the Energy Department. That's 26 percent less than this year's monthly high of $2.98 a gallon in July and 15 percent lower than a year earlier.

In the past year, Wal-Mart has introduced new clothing lines including Metro 7 for women and Exsto for men and promoted them with advertising in magazines such as Vogue. The new collections are part of the company's effort to sell more profitable items in addition to the everyday household goods that draw shoppers.

Wal-Mart is also remodeling more than half of its U.S. Wal- Mart stores to make them less cluttered and upgrade restrooms and changing rooms. The company will have completed about 1,200 renovations by the end of this month, with the remaining 600 scheduled to begin in February.

In September, Wal-Mart had a same-store sales gain of 1.3 percent, compared with a 6.7 percent increase from Target.

``Management made a compelling case for turnaround, though we expect that process will be long,'' Virginia Genereux, an analyst at Merrill Lynch & Co. in New York, wrote in an Oct. 25 report. She rates shares ``neutral.''

Wal-Mart has made ``great progress'' in selling higher-end electronics, Scott said. The company has added products such as an RCA 37-inch high-definition television for $1,397. Success with home decor and clothing has been ``mixed,'' he said.

Wal-Mart has also cut prices on a number of items, including toys and baby food to draw customer traffic. Earlier this week it expanded a $4 generic-drug plan to a total of 27 states.

[back to top]

From Managua to Guang Zhou, it ain't easy being Wal-Mart

By Michael King
The Austin Chronicle
October 27, 2006                         [back to top]

When Ana Barahona, visiting from Nicaragua, dropped into a U.S. Wal-Mart, she was stunned to see slacks similar to those she had sewn in a factory back home priced at $29.99. "They pay us 12 cents to produce those pants," she said Tuesday through a translator on the UT campus. "Seeing them at that price, it gave me chills – I wanted to vomit." While you're pausing to calculate what intermediate costs might justify that ferocious retail markup, recall also the conditions under which Barahona worked, in a "free-trade zone" beloved by transnational corporations: women age 19 to 25 (summarily dismissed for being "too old" or "too fat") on a production line, using toxic chemicals with no protective equipment, allowed no more than two bathroom passes a day, subject to periodic 24-hour lock-ins with no overtime pay, further subject to firing and blacklisting for such offenses as getting pregnant or talking union. Seeing the results of her labor in a Wal-Mart, said Barahona, shocked her anew "to see how they exploit us." (She since moved to a Nicaraguan-market factory and also works as a labor organizer in the free-trade maquilas.) "I just want people to know," she said, "that the clothing Wal-Mart customers buy, it carries the blood of the people who make it."

Barahona is touring under the sponsor-ship of the women's labor group STITCH (www.stitchonline.org), the Campaign for Labor Rights (www.clrlabor.org) and other international labor groups. She was joined by Kate Chen of Guang Zhou, who told even more harrowing tales of Chinese factories producing toys for Wal-Mart, Disney, McDonald's, and other corporations. The state union is a Stalinist joke; workers are often injured by unmaintained equipment; insurance, social security, and workers' comp are fairy tales. "I worked under two contracts," said Chen, "a 'legal' one that I have no copy of, but is shown to outside inspectors, and an illegal one that requires me to work 12 hours a day, seven days a week, for 25 cents an hour."

The Wise Men

Wal-Mart insists that these charges are false, and its supply companies subscribe to a rigorous company code of conduct, enforced by regular inspections. The workers say the inspections are nothing but "window-dressing," often announced weeks in advance, and that workers are either rewarded for lying about factory conditions or else know that their jobs depend on it. According to Trina Tocco of the International Labor Rights Fund, "Even Wal-Mart admits that only 8% of their audits are unannounced; they say they have a goal of 20% – but they don't report where or when such unannounced inspections have actually occurred."

The workers spoke a day after the Statesman's Monday re-publication of John Tierney's op-ed from The New York Times ("Third World has Wal-Mart to thank for jobs"), nominating the world's largest retailer for a Nobel Prize for "lifting people out of poverty." That's roughly akin to crediting the slave trade for liberating African-Americans from lives of rural privation, but hey, you don't get to be an international Times pundit by sweating the small stuff.

I've spent enough time on factory lines – steel mills, machine shops, pre-fab homes, Fiberglas boats – to know that no columnist should be allowed to write one word about working people until he's spent a few months at manual labor, for minimum wage. (If Barbara Ehrenreich can do it, so can George Will.) The thought of Thomas "My Brain Is Flat" Friedman trying to explain, to his Nacogdoches shop foreman, what he learned of modern production methods from a cabdriver in Mumbai ... ah, well, I can dream, can't I?

Tierney, lifting most of his information from recycled Wal-Mart propaganda, thinks it's peachy that some foreign "sweatshops" (his sneering quotation marks) pay $2 a day, more than villagers earned from farming (driven into destitution, he fails to note, by subsidized Western "free trade"). Ana Barahona is familiar with that princely wage. "He doesn't mention that the company deducts $1 for lunch and 50 cents for transportation," she said. "A lot of the women skip the meals so they have something left." Well, I suppose that makes it easier for them to stay sufficiently slender to keep their jobs.

Get With the Flow

In his panegyric to Wal-Mart, Tierney draws heavily from the neoliberal musings of Michael Strong, who happens to have an Austin connection. He's the co-founder, with Whole Foods CEO John Mackey, of FLOW, a "transpartisan initiative ... devoted to liberating the entrepreneurial spirit for good." Mackey has never been content to be the world's most successful upmarket greengrocer. He wants to be known as the philosopher-king of libertarian altruism.

Nevertheless, Strong makes Mackey sound positively self-effacing. As both CEO and Chief Visionary Officer (I swear, I'm not making this up) of FLOW, Strong posts on his Web site (www.flowproject.org) reams of laughably self-absorbed bilge on how he learned to abandon evil leftist politics and working-class solidarity when he came to understand that libertarian economics – under which unregulated self-interest and capital accumulation are the only public virtues – provide the only path to international prosperity and peace. Tierney trumpets Strong's new "social justice" slogan: "Act locally, think globally: Shop Wal-Mart."

At least since Voltaire's Prof. Pangloss, it's no news that rich people like to be celebrated for getting even richer. But now that Wal-Mart has declared they're muscling into the organic-foods market, I wonder just how long Mackey's personal Pangloss will be singing Wal-Mart's praises, especially when they start undercutting Whole Foods' suppliers and making "animal-friendly" factory farming as obsolete as the subsistence farming it exterminated.

Frankly, I prefer the visionary wisdom of Ana Maria Barahona. "We're not here to tell you not to shop at Wal-Mart," she said. "But we just want you to know what goes into that clothing. ... I cannot be quiet, I cannot keep still. I don't want my children to live this way."

[back to top]

Wal-Mart dumps consultant in political row

United Press International                   [back to top]

BENTONVILLE, Ark., Oct. 27 (UPI) -- Wal-Mart Stores Inc., reacting to criticism from black leaders and unions, has dumped a consultant responsible for a controversial political ad in Tennessee.

Terry Nelson and his company, CrossLink Strategy Group, were hired by Wal-Mart last year in an effort to make over its image. Nelson was also responsible for a Republican commercial that featured a white woman talking about meeting Rep. Harold Ford, the Democratic candidate for the U.S. Senate in Tennessee, at a Playboy party. Ford is black.

Jesse Jackson and other leaders signed a letter distributed by WakeUpWal-Mart.com, calling on the company to end its relationship with Nelson, The New York Times said. Wal-Mart announced Friday it had received a letter from CrossLink pulling out of the deal.

Citing sources, the Times said Wal-Mart, not CrossLink, took the initiative.

Nelson had been involved in a voter registration drive among Wal-Mart employees.

© Copyright 2006 United Press International, Inc. All Rights Reserved

[back to top]

Jesse Jackson Urges Wal-Mart To Fire Consultant Over Ad

Mary K. Brunskill
All Headline News
October 27, 2006                     [back to top]

Nashville, TN (AHN) - The Rev. Jesse Jackson and a union group said in a joint statement Thursday that Wal-Mart should fire a Republican consultant connected to a Senate campaign TV ad Jackson and other critics say is racist. Wal-Mart hired two political consultants last month - one a Republican and the other a Democrat - to help get information to its U.S. employees in its inaugural voter registration drive.

The Republican consultant, Terry Nelson, heads a group that made the ad for the Republican National Committee. The NACCP and other critics say the ad, which targeted Democratic candidate Harold Ford Jr., contained racist sexual innuendo.

In the ad, a blond white woman with bare shoulders looks into the camera and whispers, "Harold, call me," and then winks. Ford is black, and the ad does not mention it.

The Republican National Committee (RNC), which is headed by Nelson, funded the ad. The RNC denies the ad contains a racist subtext.

Wal-Mart says it has been working to increase diversity in the work force in the past year. Jackson and the union-funded WakeUpWalMart.com say firing Nelson would show the company does not tolerate racism.

WakeUpWalMart wrote in a letter to Chief Executive Lee Scott, "If Wal-Mart is truly interested in changing for the better, we implore you to send a message to all Americans, especially African-Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation.

Wal-Mart has not responded and the chain's spokesman, Dave Tovar, says there is no reason it should.

Tovar tells the AP, "This has noting to do with Wal-Mart, so it would be absurd for us to comment on it."

The RNC said it is pulling the ad, but it was still seen in some Tennessee markets Thursday.

[back to top]

Walmart.com gets a facelift

By Carlie Kollath
DSN Retailing Today
Friday, October 27, 2006                 [back to top]

Wal-Mart Stores on Tuesday unveiled an extensively redesigned Walmart.com. The site redesign is a sweeping overhaul that touches 1,000 categories and more than 2 million pages at Walmart.com, with new designs of the home, apparel and electronics departments. Wal-Mart said the redesign is part of its larger commitment to upgrade a significant portion of its nationwide stores over the next year and enhance the overall customer experience. Elements in the site redesign include:

• New Look & Feel - Features larger images, clean, bold design, and clear, crisp messages.

• Fewer Clicks - Allows for fewer than 4 clicks to product checkout from any starting point.

• Rich Interactive Content - Interactive elements on more than 5,000 site pages allow users to obtain information without going to another page.

• Smart Home & Apparel options - Home and apparel collections that enable users to shop by room collection or apparel outfit.

• CNET Information - CNET buying guides were added so that customers can research information online and make more informed purchase decisions.

"Given that half of Wal-Mart store shoppers with Internet access also visit Walmart.com, our enhanced online store signals a big step in our transformation to become more relevant to our customers—especially in how they shop for quality, information and value at Wal-Mart," said John Fleming, evp and chief marketing officer for Wal-Mart Stores. "As our company's most visible and accessible store, the new and improved Walmart.com underscores our commitment to enhance the overall customer experience—both online and in our stores —and also supports the evolution of the Wal-Mart brand."

Prior to the site redesign, Walmart.com conducted a customer research process, including eye-tracking studies, to better understand its online customers. The results found that study participants dramatically improved their perception of the Wal-Mart brand when presented with visuals of the redesigned online store.

"Most important, our site redesign aims to emotionally inspire and present solutions and ideas to our customers in a way that emphasizes quality, enriches lifestyles, and saves time and money," said Carter Cast, ceo for Walmart.com

[back to top]

Wal-Mart urged to fire consultant linked to Republican ad that caused racial uproar

The Associated Press
October 26, 2006                            [back to top]

A union group and the Rev. Jesse Jackson demanded that Wal-Mart fire a Republican consultant connected to a Senate campaign ad that critics call racist. Veteran Republican strategist Terry Nelson is the head of an outside group that created the Tennessee ad for the Republican National Committee. Nelson is also one of two political consultants -- the other is a Democrat — that Wal-Mart hired last month to help get information to its more than 1.3 million U.S. employees in its first companywide voter registration drive.

Union-funded WakeUpWalMart.com and Jackson, in a joint statement Thursday, said Wal-Mart must fire Nelson to show it does not tolerate racism.

Wal-Mart declined to respond.

"This has nothing to do with Wal-Mart, so it would be absurd for us to comment on it," Wal-Mart spokesman Dave Tovar said.

A message seeking comment was left Thursday at Nelson's office.

The ad targeted Democratic candidate Harold Ford Jr. in a way that critics — including civil rights group the NAACP — called racist sexual innuendo about a black man and white woman.

In the ad, a white woman with blond hair and bare shoulders looks into the camera and whispers, "Harold, call me," then winks. It doesn't mention that Ford is black.

The RNC, which paid for the ad, denied it had racial subtext. Party Chairman Ken Mehlman said it was produced by an independent organization.

Nelson, the RNC's deputy chief of staff in 2002 and the Bush campaign's political director in 2004, is the head of that group, RNC spokesman Danny Diaz said.

Jackson and the union group said the Bentonville, Arkansas-based retailer must prove that it can live up to its stated goals of promoting diversity. In the past year, Wal-Mart says it has expanded targets for increasing diversity in the work force, doing business with more minority and women-owned companies and putting money into programs for minority small businesses and job creation programs.

"If Wal-Mart is truly interested in changing for the better, we implore you to send a message to all Americans, especially African-Americans, that Wal-Mart will not do business with consultants who use race as a political tool to divide our nation," WakeUpWalMart wrote in a letter faxed to Chief Executive Lee Scott.

"Wal-Mart will determine what it will do based on how they view the gravity of the situation. It will be a reflection of their values," Jackson said.

The ad began a five-day run Friday, and the RNC said Wednesday the commercial would no longer air, although it was still seen in some Tennessee markets Thursday.

[back to top]

Calloway Agrees to Buy, Lease 16 Sites for About C$1 Billion

Bloomberg
Oct. 26                      [back to top]

Calloway Real Estate Investment Trust, a Canadian property developer, agreed to pay C$1 billion ($885 million) to buy or lease 16 retail centers, including 14 sites anchored by Wal-Mart Stores Inc.

The properties include nine operating shopping centers with more than 1.6 million square feet of leased space and 600,000 square feet of expansion potential, Vaughan, Ontario-based Calloway said today in a statement. The properties were bought from SmartCentres, a closely held firm.

The transaction includes a property management business and seven development properties with 1.8 million square feet of potential space. Those sites likely will be completed over the next three to four years, Calloway said. Calloway will make an initial payment of C$440 million, with the rest payable as the sites are developed.

After the purchase, Calloway will own five of the first seven Wal-Mart supercenters to operate in Canada. The transaction also will allow Calloway to bring management of its properties in-house, the company said.

CIBC World Markets advised Calloway on the purchase, which is expected to close in December. Half of the centers are in the Toronto area.

Calloway shares rose 28 cents to C$28.43 at 11:25 a.m. on the Toronto Stock Exchange, and have risen almost 20 percent this year.

[back to top]

Wal-Mart dismisses 2 longtime ad agencies

By Stuart Elliott
The New York Times
THURSDAY, OCTOBER 26, 2006                    [back to top]

Wal-Mart has sent a clear signal that it wants to change the way it speaks - and sells - to consumers, by cutting ties to both of its longtime advertising agencies.

Wal-Mart Stores on Wednesday notified GSD&M in Austin, Texas, which has worked with the retailer since 1987, that the agency would be dismissed at the end of January 2007. In August, Wal- Mart gave a similar thumbs-down to its other longtime agency, Bernstein-Rein in Kansas City, Missouri, which has worked for the company since 1974.

Wal-Mart spends an estimated $570 million a year on advertising in major media like television, print, radio and outdoor advertising, making the change one of the biggest account shifts in recent years. The company announced in May that it would for the first time in decades review the lineup of agencies that create and direct its campaigns.

Wal-Mart intends to replace Bernstein-Rein and GSD&M, which is part of Omnicom Group, with two agencies. One is the newly formed Draft FCB division of Interpublic Group, which will handle tasks like creating ads. The other is Carat USA, part of Aegis Group, which will handle media services: planning where ads should appear and then negotiating to buy the time and space.

The selection of Draft FCB is a coup for Interpublic, which has been taking drastic steps to help reverse years of subpar financial and operational performance. Draft FCB was formed just last month by merging two Interpublic agencies - Draft and Foote Cone & Belding - that had very different histories and cultures.

Representatives of Carat USA and Draft FCB referred inquiries to Wal- Mart, which said the decision would not actually be made until next week. Some agencies that took part in the review but were told they had not won began speaking to reporters Wednesday morning, and coverage then started appearing on trade Web sites like adage.com and adweek.com.

The selections are to be formally announced in the next few days, executives at several agencies said, after Draft FCB and Carat have a final meeting with Wal-Mart. The executives spoke on condition of anonymity because they were not authorized to discuss Wal-Mart's plans.

Wal-Mart, by far the largest retailer in the United States, is striving to alter its image of folksy employees selling cheap goods - an image carefully cultivated for decades in ads by Bernstein-Rein and GSD&M, which featured bright yellow smiley faces, cheerful workers and proclamations of "Always low prices."

A new cadre of advertising and marketing executives at Wal-Mart wants to make over the retailer's brand image to stimulate sales growth.

Although tens of millions of more affluent Americans shop at Wal-Mart each week, they tend to buy mostly lower-margin packaged goods like toothpaste, pet food and detergent. If Wal-Mart could persuade these "selective shoppers," as the company calls them, to buy bigger-ticket items like TV sets, coats, iPods and baby carriages, it could accelerate revenue growth and fend off challengers like Kohl's, J.C. Penney and Target.

"They have a large base of shoppers with household incomes over $100,000," said Candace Corlett of WSL Strategic Retail in New York, a retail consultant. "The idea is to give them more to put in their baskets."

Michael Barbaro contributed reporting.

Copyright © 2006 The International Herald Tribune

[back to top]

Wal-Mart Adds 12 States to Drug Plan

Wal-Mart's $4 Generic Prescription Drugs Extended to a Dozen More States

The Associated Press                        [back to top]

LITTLE ROCK, Ark. - Wal-Mart Stores Inc., the world's biggest retailer, said Thursday it is extending its $4 generic prescription drug plan to another 12 states, bringing to total to 27 states.

The move brings 1,008 more stores under the program, under which Wal-Mart charges $4 for a one-month supply of 314 different prescriptions. That number includes 143 drugs in a variety of dosages and solid or liquid forms.

Bentonville, Ark.-based Wal-Mart rolled out the program in Florida three weeks ago and last week added 14 states to the list. The low-priced drugs are now available in 2,507 Wal-Mart, Sam's Club and Neighborhood Market stores.

The company said in a news release that it accelerated the launch of the low-priced prescriptions because of customer demand.

Analysts say the program will help Wal-Mart by bringing in more customers who will shop in other store departments, and extend its reach in another segment of the retailing industry - the drug store business.

Union-backed Wal-Mart critics have also accused the company of using the low-priced drugs to divert attention from its own employee health insurance plan, which anti-Wal-Mart groups say does not offer adequate coverage.

States added Thursday were: Alabama, Georgia, Iowa, Kansas, Maryland, Michigan, Mississippi, Missouri, New Hampshire, Ohio, South Dakota and Virginia.

States already with the program were: Alaska, Arkansas, Arizona, Delaware, Florida, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.

Copyright 2006 The Associated Press. All rights reserved.

[back to top]

Wal-Mart’s Chief Says Chain Became Too Trendy Too Quickly

By Michael Barbaro
New York Times
October 25, 2006                           [back to top]

The chief executive of Wal-Mart Stores, H. Lee Scott Jr., said yesterday that the introduction of upscale products, like silk camisoles and 300-thread-count sheets, had proved “choppier than it should be” and that the company had “moved too far too fast” with fashionable clothing. In wide-ranging remarks to Wall Street analysts yesterday, Mr. Scott also said that consumers had been reluctant to splurge at Wal-Mart even as gas prices have fallen, that the company would be “very aggressive” on toy prices this holiday season, and that the chain’s reputation with elected leaders has improved because of its environmental initiatives and $4 generic drug program.

Speaking at Wal-Mart’s analyst meeting, held in Teaneck, N.J., this year, Mr. Scott said he was unhappy with the chain’s performance in September, when sales at stores open at least a year rose only 1 percent, missing a company forecast.

At one point, he appeared to admonish executives for leaving the impression that the sales figure was acceptable. “If anyone caused you to believe we are comfortable with a 1 percent” sales increase, he said, “I want to apologize. We are not.”

Explaining the sluggish September results, Mr. Scott said shoppers had favored local stores when gas prices spiked and had not yet decided to switch back to Wal-Mart, though it generally offers lower prices.

“We have got to as a company reinforce that that customer needs to go to Wal-Mart, that the value creation is great enough to break the habit,” he said. “I think we clearly have the ability to say that.”

Mr. Scott said Wal-Mart would be able to drastically reduce the growth in its spending on new stores — from up to 20 percent this year to up to 4 percent next year — because of lower construction material costs and plans to build some smaller stores.

Wall Street cheered the lower expenses. After they were announced on Monday, Wal-Mart’s shares rose 5 percent, closing above $50 for the first time since December. Yesterday, shares rose 2 cents, to close at $51.30.

Mr. Scott hinted that Wal-Mart, which has already reduced prices on 100 popular toys this holiday season, could make even deeper cuts before Christmas. Recalling the 2003 holiday season, when Wal-Mart touched off a price war among retailers, he said, “I think you will see a very aggressive toy market at Wal-Mart.”

After withdrawing Wal-Mart from Germany and South Korea because of poor sales, Mr. Scott said he was determined to make the chain a success in Japan, where it has struggled. Joking with the head of the company’s international operations, Michael T. Duke, he said that if Wal-Mart failed in the country, “neither you nor I will be here.”

Mr. Scott offered the most detailed explanation to date of why apparel sales at Wal-Mart, a major focus under the new head of marketing, John Fleming, have proved disappointing.

“What we did was overload the fashion part,” he said, by introducing new trendy clothing lines like Metro 7, a Wal-Mart-designed brand, in too many stores too quickly. The solution is to carry “fashion basics” that are less intimidating to the company’s consumers, Mr. Scott said.

Wal-Mart, which has had a reputation for dowdy clothing, is trying to appeal to style-conscious consumers who buy at rival chains like Target, Kohl’s and J. C. Penney.

The entry into fashion has been closely watched by competitors and New York designers, who are anxious to see if the retailer, the world’s largest seller of food and laundry detergent, can master dresses.

While apparel sales have not met expectations, those of everyday products like socks and laundry detergent have surged. Mr. Scott said Wal-Mart has sold 675 million pairs of white socks in the past year.

[back to top]

UPDATE 3-Wal-Mart picks new agencies for ad work-source

(Updates stock price, adds Carat unavailable, byline)

By Paul Thomasch                       [back to top]

NEW YORK, Oct 25 (Reuters) - Wal-Mart Stores Inc. <WMT.N> has awarded its $578 million advertising work to agencies owned by Interpublic Group of Cos Inc. <IPG.N> and Aegis Group <AGS.L>, a source close to situation said on Wednesday, marking a major media shift by the world's largest retailer.

Wal-Mart plans to move its creative work to Interpublic unit Draft FCB and shift its media agency work to Carat, owned by Aegis, the source said. Work for Wal-Mart had previously been done by Omnicom Group Inc.'s <OMC.N> GSD&M and independent agency Bernstein-Rein.

A spokeswoman for Wal-Mart said: "We haven't made any decisions or announcements."

At Interpublic, whose shares rose 4 percent, the Wal-Mart account would mark an important win after struggling with client losses, earnings restatements and management changes. It has also recently won work from Discover Card, H&R Block Inc. <HRB.N> and Circuit City Stores Inc. <CC.N>.

A spokesman for Interpublic, which in June decided to put together Draft FCB by combining a highly successful direct marketing service with a creative agency, was not immediately available for comment.

Wal-Mart, working for nearly 20 years with GSD&M as well as Bernstein-Rein, built itself into the world's largest retailer with the help of campaigns like its smiley face and low-prices slogan. Last year, the retailer spent $578 million across all media, and so far this year has spent about $239 million, according to TNS Media Intelligence.

But Wal-Mart decided put its ad accounts up for review as part of its move toward a more polished image, which included adding more upscale items such as flat-panel televisions and trendy clothing. The retailer, for instance, recently signed on as sponsor of ESPN's Monday Night Football to promote its high-definition TVs.

The push into upscale goods has not been entirely successful so far. Wal-Mart acknowledged this week that women's clothing sales have been disappointing in part because it brought in too much fashionable clothing when its customers were looking for basics.

For Omnicom, the loss of Wal-Mart business comes even as it continues to draw in clients, bringing in net new business of roughly $1 billion in the third quarter. Still, it also lost the account of another large retailer, J.C. Penney Co. Inc., earlier this year.

In a conference call to discuss quarterly earnings on Tuesday, Omnicom CEO John Wren said the company's "exposure with Wal-Mart is more emotional than financial."

Wren added: "But we continue to do everything that we possibly can to talk to them, to make sure they believe the incumbent, and it's always hard when you are the incumbent, can be successful."

A spokeswoman for Carat, meanwhile, could not be reached for comment.

(Additional reporting by Emily Kaiser in Chicago_

© Reuters 2006. All rights reserved.

[back to top]

Wal-Mart recalls footstools for collapse hazard

Reuters
Wed Oct 25, 2006                      [back to top]

WASHINGTON (Reuters) - Wal-Mart Stores Inc. has agreed to recall about 165,000 footstools because they can collapse, causing users to fall and injure themselves, the U.S. Consumer Product Safety Commission said on Wednesday.

There were seven reports of injuries with the Home Trends Wood Footstools, including a broken neck and toe, as well as a slight concussion and whiplash, the agency said.

The stool is 11.5 inches tall and has a sticker on it with the UPC number: 87065900001. They were manufactured in Malaysia and sold in stores for about $10 from December 2005 to September 2006.

The CPSC advised consumers who bought the stool to return it to Wal-Mart, the world's largest retailer, to get a refund.

© Reuters 2006. All rights reserved.

[back to top]

Managing Globalization: Is Wal-Mart a win-win model?

International Herald Tribune
WEDNESDAY, OCTOBER 25, 2006                   [back to top]  

MANAGING GLOBALIZATION

Daniel Altman

The International Herald Tribune's global economics columnist, Daniel Altman, discusses news of the day online with an eye to how individuals, companies and governments are coping with the challenges of globalization, and readers have a chance to respond. Here are excerpts from recent blog entries:

The New York Times published a column by John Tierney that begs for discussion. Not wishing to take anything away from Grameen Bank and Muhammad Yunus, this year's Nobel Peace Prize recipients, Tierney argued that Wal-Mart had done more than any other organization to lift people out of poverty.

Wal-Mart uses suppliers from around the developing world, and they employ lots of people - perhaps millions - at wages that can be relatively high in their countries. Tierney also pointed out that while Wal-Mart may put some American shop owners out of business, it benefits American consumers by offering low prices on a wide range of goods.

He didn't mention that many of the world's poorest people don't have access to the kinds of jobs Wal-Mart's suppliers offer. But still, is this really the best possible, win-win model for economic development?

Wal-Mart is helping those who already have something, while Mr. Yunus and his Grameen Bank have helped the poorest of the poor. Those often without anything, and hardly any hope at all: women in developing countries. I don't think a multinational corporation hiring poor people creates sustainable development. Lending money to unemployed poor people, so that they can create their own jobs and maybe even jobs for others, is a lot better.

Vegar Strand, United States

Not getting a job at a Wal-Mart supplier doesn't mean you're losing. You're simply not winning (yet?).

Is this the best model we've got to offer? After hearing the stories about how Wal-Mart treats its American employees, I certainly hope not.

Koen Leuveld, Netherlands

Has anyone thought of the disruption to families and villages if everyone suddenly started working in factories? I guess the preservation of cultures is not a variable in the global economic models.

Rose Dlhopolsky, Netherlands

Looking to India

I see three major areas of significance in Tata's bid to buy Corus, the Anglo-Dutch steel maker. The first has nothing to do with the nationalities of the parties. With the Mittal-Arcelor merger in the rearview mirror, both Tata and Corus were undoubtedly looking to expand. The second area: India's big companies are taking the next step in asserting the country's international importance. The third area is something that's yet to be revealed in its entirety. Usually, an acquisition like Tata's means the replacement of a certain number of top executives of the target company. In some cases, the entire management culture may change. If this happens to Corus, it will be an acknowledgment that the Indian way of doing business - not just the Indian economy - has gained global recognition.

Your third point, the Indian way of doing business, may not have that much significance. Corporate practices and management style in India are very similar to Western countries - with one of the best corporate governance standards among emerging markets. Indian managers are increasingly reaching top management positions in many global corporations (Vodafone, Pepsi, Berkshire, etc., besides many global banks) and their approach is no different from their peers', despite being educated and having worked in India.

Rex Mathew, India

Although the group's main firm, Tata Sons, is headed by a Tata, the business is always run by professionals. As the (managing director) of Tata Steel told various analysts, this deal is not because India's system of management is different or superior. This acquisition is because Tata Steel and Corus complete each other.

Tata Steel gets size, visibility, high- margin business and access to the European Union and the United States. Corus gets to leverage Tata Steel being the world's lowest-cost producer of steel. Mohit Beriwala, India

All the same, point three is logically sufficient. Evolving global business and economic models do get mixed up during cultural transmission. It will be interesting to see how Tata copes in the global marketplace.

I don't mean to say that transmission of ideas and technologies is unidirectional (north-south or east-west) in the way once thought. That is not the point. Indian accountants use spreadsheets and don't think of them as any more foreign than, say, late medieval European mathematicians regarded Arabic numerals as Muslim math. Rather, in a global market driven by technology and defined by free movement of labor and ideas we are cultural consumers as never before.

Hasan Jafri, United States

Dearth of suppliers

Just as several airlines are asking Airbus to pay penalties for late A380 deliveries, several of Sony's customers for laptop batteries may ask for compensation for its recall process. Would they have found themselves in these predicaments if there had been more competition?

I have seen this same phenomenon in my industry, which has substantial barriers to entry due to very heavy regulation and unique skill sets. As such, a very limited number of suppliers are available for the materials, resulting in poor customer service and a less-than-conscientious commitment to quality.

Jack Davis, China

Copyright © 2006 The International Herald Tribune

[back to top]

German Regulator OKs Metro-Walmart Deal

OCT. 25                       [back to top]

Metro AG's deal to buy Wal-Mart Stores Inc.'s German operations received approval Wednesday from Germany's antitrust regulator, clearing the way for an acquisition that will expand Metro's presence in its home market.

The Federal Cartel Office approved the deal after deciding the addition of the 85 Wal-Mart stores would not give Metro a dominant position in the market.

The deal calls for Duesseldorf-based Metro to take over 19 pieces of Wal-Mart real estate and lease the remaining locations. Neither company has disclosed the deal's value.

Metro will fold the stores, which had sales of nearly euro2 billion in 2005, into its Real hypermarket brand. The first conversions are set to be finished before Christmas, and the rest should be integrated by mid-2007. The addition of Wal-Mart's warehouses and logistics systems is expected to strengthen the position of Metro's existing 550 Real stores in the German market.

Metro operates more than 2,100 stores in 30 countries worldwide.

The deal, announced in July, marked Wal-Mart's second withdrawal from a major foreign market.

In May, it pulled out of the highly competitive South Korean market. The Bentonville, Arkansas-based retailer is concentrating on expanding in China and Central America.

Wal-Mart entered the German market in 1997 with the acquisition of the Wertkauf and Interspar hypermarket chains. But the German stores, which employ 11,000 people, struggled to break into the local market.

Shares of Metro were down less than half a percent to euro45.64 (US$57.24) in Frankfurt trading.

Copyright 2006, by The Associated Press. All rights reserved.

[back to top]

Wal-Mart, GE launch card

Wal-Mart Stores and General Electric's finance arm are joining the race for a share of China's growing consumer credit market by issuing their own credit card this week, a Wal-Mart spokesman said Tuesday.

ASSOCIATED PRESS
Wednesday, October 25, 2006                  [back to top]

Wal-Mart Stores and General Electric's finance arm are joining the race for a share of China's growing consumer credit market by issuing their own credit card this week, a Wal-Mart spokesman said Tuesday. The card, part of the Visa network, is to be formally launched Friday and can be used for purchases in China and abroad, said Jonathan Dong, a spokesman for Wal-Mart China. Wal-Mart's partners are GE Money and China's Shenzhen Development Bank.

China's credit card industry is booming as issuers jump into the market in hopes of tapping growing consumer spending and Beijing eases restrictions on their operations. The number of credit cards in China topped 12 million at the end of last year, up from three million just two years earlier.

In 2004, Citibank and HSBC Corp became the first foreign banks to win government approval to issue credit cards in China, working through local lenders. American Express issued a card in China later the same year.

Chinese banks also have started issuing their own cards, usually with foreign help.

The new card from Wal-Mart and GE will be dual-currency, meaning holders can charge purchases in the yuan or a foreign currency such as the US dollar, Dong said. "It can be used throughout the country as well as overseas," Dong said.

The card is the second issued by Bentonville, Arkansas-based Wal-Mart in China in as many months.

In September, the company issued a card with HSBC Corp and China's Bank of Communications, according to Dong. That card is part of the Mastercard network.

Wal-Mart has been expanding rapidly in China, where it opened its first outlet in 1996. The company now has 66 stores with 36,000 employees and news reports say it is bidding to buy a Taiwanese-owned chain of hypermarkets in a US$1 billion (HK$7.8 billion) deal.

The card with GE will be issued in southern China, while the card with HSBC is being issued in the north, Dong said.

[back to top]

Wal-Mart 'Not Comfortable' With October Sales

Financial Times
October 24, 2006                        [back to top]

Wal-Mart, the world's largest retailer, on Tuesday said it was not "comfortable" with a same-store sales rise of about 1 per cent and expects sales to improve as it cuts prices during the holiday season. October sales at stores open at least a year are up about 1 per cent so far and are tracking below Wal-Mart's forecast for an increase of 2-4 per cent. Last month, same-store sales rose a paltry 1.3 per cent.

"We understand what is happening and do not accept it as inevitable or acceptable," Lee Scott, chief executive, said on Tuesday. "I would expect that as gas prices continue to level off, and as we implement our aggressive strategy across meaningful categories in the holiday season, we will see stronger sales. It is not our expectation to proceed with 1 per cent comps."

Earlier on Tuesday, Walmart.com, the retailer's web channel, revealed a site redesign intended to make shopping easier, whether online or in-store.

The revamped website comes as retailers gear up for the all-important holiday shopping season and consumers increasingly turn to the internet to research a purchase or shop online.

Carter Cast, chief executive of Walmart.com, said site visits would quadruple in November and December. Walmart.com has about 700m visitors a year, with nearly 100m expected in December alone.

By contrast, 130m customers visit Wal-Mart stores each week in the US.

Mr Cast said more than 70 per cent of those shoppers have internet access and more than half visit Walmart.com to shop online or do research before going into a store.

"We have about 50m shoppers who use Walmart.com as a way to make it easier for them to shop Wal-Mart. The goal of the redesign was to make it easier for them to shop with fewer clicks," he said.

While Wal-Mart does not break out online revenues, it is estimated Walmart.com generates about $1.5bn in annual sales.

According to Nielsen//NetRatings, an internet research firm, just over 19m people visited Walmart.com last month, or about 12 per cent of the active internet audience in the US.

Nearly 42m visited amazon.com in September and nearly 20m browsed target.com.

[back to top]

Second Look: Wal-Mart

Businessweek
OCT. 24                               [back to top]  

Shares of Wal-Mart Stores Inc. declined a bit on Tuesday, a day after hitting a new 52-week high when the world's biggest retailer said it would slow expansion and capital spending plans.

Wal-Mart shed 3 cents at $51.25 on the New York Stock Exchange. On Monday shares rose 3.9 percent to close at $51.28 after touching a new high of $52.15.

The retailer's plans to throttle back on spending and expansion contrast with the aggressive growth strategy of recent years.

Analysts were generally supportive of Wal-Mart's moves, aimed at restoring sales and earnings growth and boosted its stagnant stock. "Management's capital expenditures guidance was even better than our expectation," Goldman Sachs analyst Adrianne Shapira wrote in a client note. "In our opinion, management's focus on 'returns-based growth' should help drive multiple expansion."

Bear Stearns also said Wal-Mart's decision to curb square footage growth was positive. "More specifically, we are encouraged by management's new capital allocation mindset, which aims to improve capital efficiency," analyst Christine Augustine wrote.

Bank of America said slowing square-footage growth would raise free cash flow, which in turn makes more likely a higher dividend payout or increased share buybacks, both of which Wal-Mart has not done in more than a year, analyst David Strasser wrote. A lower rate of expansion will also improve same-store sales -- sales in stores open at least one year -- Strasser added.

Copyright 2006, by The Associated Press. All rights reserved.

[back to top]

Wal-Mart to slow down on new store openings

Nigel Wright
Earthtimes.org
2006-10-24                              [back to top]

NEW YORK: Wal-Mart Stores Inc. intends to cut down the pace of new store openings and reduce the rise in capital spending in 2007.

While the world's largest retailer said it is committed to expansion, the new strategy is seen by analysts as a move by the company to bring back its focus on improving the dwindling sales and increasing profitability at its existing 6,700 stores worldwide.

Expectedly, the announcement pushed the company's shares by $1.91, or 3.9 per cent, to $51.28.

The company had been on an expansion spree, having enhanced its retail space at the rate of 8 per cent a year. This rate is expected to come down to 7.5 per cent in the next fiscal running through 31 January. It said it plans to open 305 to 330 stores in the U.S. in fiscal 2008 compared to 332 with 340 in fiscal 2007 and 340 in 2006. Its international operation, Wal-Mart International, which is present in 13 countries in Latin America, Asia and Europe, will open between 320 and 330 stores next year after 270 to 275 this year.

Wal-Mart has been facing a slowdown in sales at stores open at least a year, or same-store sales, In September, same-store U.S. sales were up 1.3 per cent against 6.7 per cent reported by rival Target.

The company now plans to remodel some 1,800 of its supercenters -- a combination of grocery and discount stores. These stores will be redesigned to incorporate wider aisles, faux wood floors, improved restrooms and trendier merchandise in electronics, apparel and home furnishings.

The firm is also planning to cut down prices on items like toys and generic drugs to draw more customer traffic. It added 14 states to a program that offers some generic drugs for $4. Under the program, introduced in September, prices on 314 prescriptions have been cut.

Wal-Mart's chief financial officer Tom Schoewe said he was looking to significantly lower the company's year-over-year growth rate of capital expenditures, to a range of 2 per cent to 4 per cent in fiscal 2008 from the current year's range of 15 per cent to 20per cent.

Wal-Mart intends to build two new regional distribution centers and two new full grocery distribution centers during the next fiscal year. Combined, these distribution centers are expected to add more than 4 million square feet of distribution space in the U.S.

Schoewe said the company is considering changing the method used in deciding when to buy back it shares. The company may resume its buyback program.

© 2006 earthtimes.org. All Rights Reserved.

[back to top]

Wal-Mart won't comment on Trust-Mart reports

Reuters                             [back to top]

CHICAGO, Oct 24 (Reuters) - The head of Wal-Mart Stores Inc.'s <WMT.N> international business answered one burning question before it was even asked at an analyst meeting on Tuesday -- he declined to comment on reports that the retailer was buying Trust-Mart's China stores.

"Clearly you know our position on acquisitions," said Mike Duke, Wal-Mart's vice chairman, before taking questions from analysts. "We could not make any comment today about any acquisitions, including an acquisition that might be named Trust-Mart."

Sources said last week that Wal-Mart was planning to buy Trust-Mart, a closely held Taiwan company with 100 supercenters in China, for $1 billion, which would more than double its presence in the world's most populous country.

© Reuters 2006. All rights reserved.

[back to top]

Wal-Mart to issue credit card in China

US retail giant Wal-Mart will issue a co-branded credit card with the US-based multinational company General Electric later this week, a company official has said.

AFP
Tuesday, October 24, 2006 (EST)                    [back to top]

BEIJING (AFP) - "We will launch the GE Wal-Mart card this Friday, which will be offered in southern China," Huang Jianling, a Shenzhen-based Wal-Mart spokeswoman, told AFP.

"It's a dual-currency card, that can be used inside China and abroad."

A separate Wal-Mart credit card issued in September by China's Bank of Communications is already in service for northern China, she added.

Wal-Mart, which competes with Carrefour SA and other global retailers in China, operates 66 stores in 34 cities around the nation.

According to a Wall Street Journal report last week, the retail behemoth is set to buy a Chinese hypermarket group for about one billion dollars in a deal that would make it the leading chain in China.

Citing people familiar with the transaction, the business daily said the US giant had agreed to purchase the Chinese hypermarkets of Taiwanese-owned group Trust-Mart.

If approved by Chinese regulators, the deal would take Wal-Mart pass its French rival Carrefour in the number of hypermarkets in China. Carrefour had also tried to buy Trust-Mart, according to the newspaper.

The US company refused to confirm the report. "We don't comment on market speculation," a Wal-Mart spokeswoman told AFP.

Wal-Mart said in March it planned to open another 20 stores here this year. Carrefour has about 80 hypermarkets in the booming Asian country.

©AFP

[back to top]

Wal-Mart to chop capital spending, ease U.S. expansion Growth potential overseas, analysts say

MARINA STRAUSS
GlobeNMail                         [back to top]

Wal-Mart Stores Inc. will limit its new-store growth in its core U.S. market next year while accelerating the pace of adding new stores in places outside of the United States.

And the world's largest retailer said yesterday it will severely cut back spending overall as it tries to bring its costs in line with a slowdown in its sales and profit growth.

In Canada, Wal-Mart will add about 28 to 30 new stores, about the same number as in the previous few years, spokesman Andrew Pelletier said. The stores will be both the conventional outlets and new supercentres, which carry a full array of groceries, he said, without providing a breakdown. It opened its first two supercentres in Ontario last week, both of which are expansions of existing stores.

The increasing focus on expanding in foreign markets underlines the slowing pace of growth in the United States, and the potentially bigger opportunities farther afield, said retail analyst Don Povilaitis at Standard & Poor's in Toronto. "Longer term, they feel there's more opportunity in these areas that remain untapped," he said. Go to the Business section Asia, India and South America are the new frontiers for Wal-Mart, the world's largest retailer, he said.

Still, Wal-Mart has struggled in some foreign markets, including Britain, and retreated recently from Germany and South Korea.

In the past, Wal-Mart has been a juggernaut in the United States, adding stores faster than other retailers. Now, with the latest shift, "this tells us they've come to realize they have to succeed internationally, given their scale," Mr. Povilaitis said.

"They really have certain key markets where they have to penetrate to make a meaningful contribution to their operating income and cash flow."

Wal-Mart chief financial officer Tom Schoewe told analysts that the company will pare new-store growth in the United States to 7.5 per cent next year from an average 8 per cent in recent years. It expects its international space to rise about 10 per cent and the U.S. space to increase about 7 per cent.

It means that the retailer will build about 600 stores next year, with half in the U.S. Most of them will be the massive supercentres.

Mr. Schoewe also said the company will "significantly" lower its year-over-year capital spending to a range of 2 to 4 per cent next year, from the current year's range of 15 to 20 per cent.

"Our long-term goal is to continue to have our capital expenditures grow at a rate equal to or less than sales growth," he said.

In Canada, which has 279 stores, Wal-Mart will probably target not much more than 300 stores in all, Mr. Povilaitis predicted. It's difficult to generate sufficient returns "as you add more stores on a pretty limited population base," he said. The outlets start to cannibalize sales at nearby stores.

Wal-Mart shares rose $1.91 (U.S.) to close at $51.28 on the New York Stock Exchange

[back to top]

Wal-Mart to Roll Back Its Growth

Associated Press
October 23, 2006                 [back to top]

Wal-Mart Stores Inc. will slow the pace of new store openings next year in what analysts called a nod to Wall Street calls for greater focus on rekindling faltering sales and earnings growth at its existing 6,700 stores worldwide. Wal-Mart also told analysts Monday, the first day of its two-day investor meeting, that it would reduce the rise in capital spending next year, helped by a flattening in inflation of construction and land costs and by opening fewer new stores.

Wal-Mart said it remains committed to expansion. But analysts said the change was a step toward meeting Wall Street expectations that Wal-Mart, after years of rapid growth, now focus on improving sales and profitability at existing stores to revive a dormant share price.

The share price has hovered mostly below $50 since early 2001, and for five years failed to match 2001 highs over $60.

"It's somewhat of a shift. Is it a major earthquake shift? No. But it's the start of a shift where they could indeed move to capitalize on what has already been built," said retail analyst Don Gher from Coldstream Capital Management, which manages about $1 billion in assets, including Wal-Mart shares.

Fund manager Patricia Edwards said even a small move was a welcome step in the right direction.

"They need to focus on building the business they have instead of starting new ones," said Edwards, a portfolio manager and retail analyst at Wentworth Hauser & Violich, which manages $8.2 billion in assets and holds 51,000 Wal-Mart shares.

Bentonville, Ark.-based Wal-Mart has been expanding its retail space at 8 percent per year, but that number will be 7.5 percent next fiscal year, the company said. Its fiscal year runs through Jan. 31.

Wal-Mart expects to open 305 to 330 U.S. stores in fiscal 2008, which starts Feb. 1, compared to 332 to 340 this year. Wal-Mart International, operating in 13 countries in Latin America, Asia and Europe, will open between 320 and 330 new stores next year after 270 to 275 this year.

Wal-Mart remains committed to growth, but real estate projects "are now being subjected to a more rigorous prioritization process," Wal-Mart Vice Chairman John Menzer told analysts.

Wal-Mart sales at stores open at least a year, known as same-store sales, have been trailing those at smaller rivals such as Target Corp. Last month, same-store U.S. sales were up 1.3 percent at Wal-Mart and 6.7 percent at Target.

In response, Wal-Mart is remodeling about 1,800 of its roughly 2,000 Supercenters, which combine a discount store with a full grocery section, to make them more appealing by adding amenities such as wider aisles, faux wood floors, cleaner restrooms and trendier merchandise in electronics, apparel and home furnishings.

September sales were affected in part by disruption from those remodeling efforts, said Eduardo Castro-Wright, head of the Wal-Mart's U.S. stores.

Castro-Wright told analysts that same-store sales so far this month were running about 1 percent higher, saying remodeling and slower sales of women's apparel kept the number down.

Castro-Wright said the temporary disruptions were worthwhile because remodeled stores showed higher sales than before. The company plans to have 1,200 stores remodeled before the holiday shopping season starts next month and the other 600 next year.

Castro-Wright also noted he's confident that declining gasoline prices soon will lift sales, noting that consumers don't immediately react to a change in gasoline prices. He noted that Wal-Mart's customers didn't curtail their spending immediately following big jumps in gasoline prices.

[back to top]

On the Shelf: How Broad Coalition Stymied Wal-Mart's Bid to Own a Bank

By Bernard Wysocki Jr.
The Wall Street Journal
October 23, 2006                                   [back to top]

WASHINGTON -- When Wal-Mart Stores Inc. applied 15 months ago to get a banking license, it looked like a slam dunk. The retailing giant applied for an industrial-bank charter in Utah -- the same type of permit the state had already given to many companies including Volkswagen AG, Pitney Bowes Inc. and even another big retailer, Target Corp. The Federal Deposit Insurance Corp., which insures deposits at banks, had blessed similar applications with nary a protest letter. To allay fears that it would compete with small banks, Wal-Mart promised not to open retail branches, saying it would use its bank to process card transactions.

Today, Wal-Mart's banking bid is on life support. The FDIC in July issued an unprecedented six-month moratorium on all applications for these specialized banks, freezing Wal-Mart's effort. Utah, which also must approve the application, has stayed mum. Powerful members of Congress are lining up to pass laws that would block Wal-Mart, or any nonfinancial company, from getting into the U.S. banking business.

That's bad news for the world's biggest retailer, which is already facing slowing growth in the U.S. and has stumbled in several overseas forays. It also affects 11 other companies that have applied for the type of permit Wal-Mart is seeking, including Home Depot Inc., DaimlerChrysler AG and Ford Motor Credit, part of Ford Motor Co.

Wal-Mart's effort to open a bank has galvanized a broad coalition of opponents: large banks, small banks, the Federal Reserve, unions, grocers, real-estate agents and congressmen of both parties. Some in the coalition are mainly interested in dealing a blow to Wal-Mart. Others are worried about the trend of allowing commercial companies into banking, which they fear could undermine the soundness of the financial system. That argument has been around for years, but it generated little political heat until Wal-Mart came along -- illustrating the power of the company's name to transform stalemated policy debates.

Wal-Mart believes its intentions are being twisted by its foes. People who claim Wal-Mart intends to open branches and compete with hometown banks for deposits "are simply misinformed or just wrong," says a spokesman. The Bentonville, Ark., company also says its bank, by focusing on processing credit- and debit-card transactions, would cut costs and lead to savings for consumers. Currently Wal-Mart must pay fees to other banks to process transactions.

Despite overhauling its lobbying efforts in Washington, Wal-Mart continues to make rookie mistakes. It retained a headhunter to look for a senior financial executive, fueling fears that its banking ambitions were broader than it said. Wal-Mart says it was seeking someone for an employee-mortgage program. It initially asked to be exempt from the Community Reinvestment Act, which forces banks to reinvest in communities where it does business. That angered some Democrats. More recently, Wal-Mart's Mexican unit applied for a license to conduct retail banking there, again raising doubts among critics, although Wal-Mart notes that the Mexican bank couldn't open branches in the U.S.

"You can say that Wal-Mart is actually tone-deaf," says Diane Casey-Landry, president of America's Community Bankers, a trade group that has changed position on Wal-Mart over the past year and currently opposes its bank bid.

Wal-Mart has been trying to get into banking since the late 1990s. It was thwarted in attempts to buy a savings-and-loan in Oklahoma and a bank in California. Since 1999 it has faced opposition to its banking ambitions from the United Food and Commercial Workers International Union, which has long sought to organize Wal-Mart workers, and the Independent Community Bankers of America. The two later joined with trade associations of grocers and convenience stores under the umbrella of the Sound Banking Coalition.

The unions have been active in battling Wal-Mart on a broad front, accusing it of underpaying workers and failing to buy American. That has turned the company into a lightning rod on national issues such as trade with China and the rising number of people without health insurance. Wal-Mart's defenders say that because of its size and prominence it is often criticized for doing the same things that smaller companies do without criticism.

Early last year, Wal-Mart started afresh by deciding to apply for a Utah charter to open an "industrial loan corporation." Despite the odd name, industrial loan corporations, or ILCs, are similar to regular banks. They can offer most of the same products and services nationwide, including consumer and business loans, mortgages and credit cards. They can take deposits. Under current law, they can set up new bank branches in 22 states.

ILCs began as niche financial players in the early 1900s, offering consumer credit to low-income workers. In recent years, ILCs, also called industrial banks, have proliferated in a few states, particularly Utah and California, and their assets have soared to about $155 billion. That is because they offer a way for nonfinancial companies such as Volkswagen and General Motors Corp. to own a bank without being subject to regulation as a bank holding company. These companies often use a bank to complement their main business: Home Depot, for example, wants an industrial bank to make home-improvement loans. Some of the biggest Utah-chartered ILCs are controlled by financial institutions that aren't banks, such as Merrill Lynch & Co.

Utah politicians consider industrial banks an engine of growth, providing more than 1,000 jobs and tax revenue. The state accounts for more than half of the nation's 61 ILCs. Utah's usury laws are more favorable to banks than laws elsewhere.

Former Sen. Jake Garn, a Utah Republican, helped create the modern ILC niche and said in April at an FDIC hearing that he asked Wal-Mart executives not to apply in his state. "I was afraid it would affect the whole industry," Mr. Garn said. "And it's even worse than I thought it would be . . . . They're causing exactly the trouble I thought they would."

Long before Wal-Mart's Utah application, the growth of ILCs worried some in Washington including the longtime chairman of the Federal Reserve, Alan Greenspan. They felt that problems at an ILC's parent company could spill over into the bank, and they feared that regulators lacked a way to examine the parent's soundness.

Wal-Mart disagrees. In a 50-page document submitted to the FDIC last week, the company said "ILC risks are no greater than other banks' risks" and contended that "no evidence supports differential treatment of 'commercial' affiliations."

Opponents of industrial banks at first thought Target's application for a Utah charter in early 2004 could revive interest in the issue, but "there didn't seem to be much alarm," says Camden Fine, president of the Independent Community Bankers of America. Target's application sailed through Utah regulators and the FDIC. The retailer has since used its Utah ILC to create the Target Business Card, a credit card that small businesses and others can use at Target stores.

Wal-Mart tried to forestall opposition to its Utah application. In February 2005, executives paid a visit to Mr. Fine's community-bank group, which fears that if the retailer were given an opening in banking, it would eventually go head-to-head with small banks and crush them.

Over pastries, the Wal-Mart delegation proposed a deal: If the bankers' group didn't oppose Wal-Mart's application for a Utah banking charter, the company would promise Congress in writing "never to get into retail banking," recalls Mr. Fine.

"If you file, we will oppose," Mr. Fine says he responded. He added that he simply didn't buy Wal-Mart's pledges. "As we say in Missouri, I was born at night but not last night," says Mr. Fine, a longtime banker in Jefferson City. Wal-Mart confirms the meeting took place and says it was also part of an effort to recruit more banks as tenants in Wal-Mart stores.

Pretty quickly, the bankers came to believe their suspicions were justified. Despite Wal-Mart's rhetoric that its banking ambitions were narrow, the company was circulating, via an executive-search firm, a job opening for a senior business-development executive in financial services. The search firm's email said the executive would have "direct contact with Lee Scott, the Chmn./CEO of Wal-Mart." The email quickly circulated through the banking industry. Wal-Mart says it was seeking an executive to manage a program that offers mortgages to store employees.

By late last year, Mr. Fine drew in a powerful ally: the American Bankers Association, which represents both large and small banks. On Nov. 7, 2005, Ed Yingling, the association's president, sent a "CEO alert" to 4,000 members vowing to fight for a law to bar nonfinancial firms, including Wal-Mart, from owning a bank. Wal-Mart's "reach and influence would be significant," Mr. Yingling wrote. "Now is the time to act."

Mr. Greenspan chimed in two months later, in one of his last official acts as Fed chairman. He wrote a long letter to Congress strongly opposing industrial banks owned by nonfinancial companies. He said these banks leave the financial system exposed to risk because financial regulators don't have oversight over the parent company. The FDIC, which regulates industrial banks, said before the current brouhaha that it had all the tools it needed to supervise these entities. Some scholars noted that Mr. Greenspan was defending the supervisory turf of the Fed, which oversees bank holding companies. At the time Wal-Mart filed its Utah application in July 2005, the chairman of the FDIC was Donald Powell, who said publicly that Wal-Mart's application ought to be treated like any other. But in November 2005, Mr. Powell left the FDIC to help coordinate the cleanup of the Gulf Coast in the aftermath of Hurricane Katrina. The new temporary chairman -- a Democrat and former aide to Sen. Paul Sarbanes, a foe of commercial companies owning ILCs -- agreed to public hearings on the issue.

The hearings gave the Sound Banking Coalition -- the collection of Wal-Mart opponents -- a chance to roll out a big gun, former Rep. Thomas Bliley. He was co-author of landmark 1999 legislation that overturned the Depression-era Glass-Steagall Act and allowed banks, brokerages and insurance companies to enter each others' businesses. Mr. Bliley is now a lobbyist for the coalition. He argues that his legislation left a loophole by continuing to allow commercial companies to own industrial banks.

"This is not just about Wal-Mart," Mr. Bliley testified. "A showdown over fundamental principles of banking policy has been in the making for at least 20 years." He said Wal-Mart didn't measure up on many of the criteria used by the FDIC to judge applications, such as the needs of local communities and the "general character and fitness" of the applicant's management.

Meanwhile, liberal politicians on Capitol Hill took notice of Wal-Mart's desire to have its bank be exempt from the Community Reinvestment Act. "By seeking a CRA exemption, Wal-Mart reinforces its indifference to the economic health of local communities," Rep. Stephanie Tubbs-Jones, a Democrat from Ohio, wrote in early March to the FDIC. Under fire, Wal-Mart amended its application prior to the public hearings and said it would observe the act within Utah.

Unions used the hearings to retail a laundry list of Wal-Mart's perceived "character" flaws. "The largest gender-discrimination case in the nation's history, child-labor-law violations, paying fines to allow undocumented workers within their stores overnight, the list goes on and on," said Michael Wilson, international vice president of the UFCW union.

During a May "fly-in," 300 community bankers called on their individual members of Congress and urged them to press the FDIC for a moratorium that would delay Wal-Mart's application. Other groups worked Capitol Hill making the same case, and 98 members of Congress signed a June 8 letter to the FDIC asking for a moratorium.

They got it the next month, shortly after a new chairman, Sheila Bair, took over at the FDIC. Ms. Bair, a former Treasury Department official and professor at the University of Massachusetts Amherst's management school, says the moratorium made sense because "it's a very complex issue, from a legal standpoint, a policy standpoint, and a safety and soundness standpoint."

"I was like a giddy kid," says Mr. Fine about the news. "I thought the odds were very long."

It's uncertain what will happen after the moratorium expires in late January. Ms. Bair says she "wants to make decisions." The FDIC could issue a flat yes or no to Wal-Mart, or it could approve insurance for a narrow banking charter packed with restrictions. It could also extend the moratorium and wait for Congress to take up the issue. Wal-Mart says it is "committed to work constructively with the FDIC . . . to move forward with our application."

Rep. Barney Frank, a Massachusetts Democrat, has co-sponsored a bill with Republican Paul Gillmor of Ohio that would knock out Wal-Mart and other commercial companies from owning ILC banks, although existing owners could keep theirs. Mr. Frank hopes Congress will take up the legislation early next year but it faces a hurdle in Utah's Sen. Robert Bennett, a powerful member of the banking committee. Sen. Bennett says he has told Wal-Mart executives there is no "legal or moral reason" why the company ought to be denied a Utah ILC charter.

[back to top]

CORRECTED - Wal-Mart aims to resume stock buybacks

Reuters
Mon Oct 23, 2006                       [back to top]

Corrects to say when ratio "rose above" 40 percent instead of "rose about" 40 percent in second to last paragraph.

CHICAGO, Oct 23 (Reuters) - Wal-Mart Stores Inc. <WMT.N> said on Monday it wants to change the method used to decide when to buy back its shares as it looks to resume stock repurchases following a more than year-long hiatus.

Tom Schoewe, chief financial officer for the world's biggest retailer, said the company was meeting with debt ratings agencies to make sure such a change would not affect its "AA" rating.

Wal-Mart has not bought back any stock since the first half of the last fiscal year, which ended in January, because its debt load was heavier than it would like following several acquisitions.

The retailer aims for a debt-to-capital ratio of 40 percent, and in the past would not repurchase its shares when the debt ratio rose above that level. As of July 31, the end of its second quarter, that figure stood at 41.8 percent.

Instead of using debt-to-capital, Wal-Mart now wants to look at cash generated by the business versus debt. Under that measure, Wal-Mart would be able to repurchase stock even when its debt-to-capital ratio rose above 40 percent, Schoewe said.

Wal-Mart's stock rose $1.36, or 2.75 percent, to $50.73 in early-afternoon New York Stock Exchange trading. The stock soared on Monday after Wal-Mart said it would slow down U.S expansion and capital spending to boost return on investment.

© Reuters 2006. All rights reserved.

[back to top]

Wal-Mart creates team to drive store productivity

India Daily
Oct. 23, 2006                [back to top]

Wal-Mart Stores Inc. told analysts Monday that it is delving into a project to drive sales volumes in stores while enhancing customer service. At its annual meeting with analysts, which was Webcast, Wal-Mart said it expects the results will lead to better layouts at new stores. The world's largest retailer has long been criticized for clogged lines at the check out. Shares of Wal-Mart were higher by 3.4% to $51.04.

[back to top]

Wal-Mart tries to slow down

Associated Press
Monday, October 23, 2006                             [back to top]

BENTONVILLE, ARK. — Wal-Mart Stores Inc. says it will sharply reduce the growth in its capital spending next year and expand its retail space at a slightly lower pace as the world's largest retailer works to bring costs into line with a slowdown in its sales and earnings growth.

Its shares rose more than four per cent early Monday.

Wal-Mart chief financial officer Tom Schoewe said the company will see its capital spending grow between two per cent and four per cent in fiscal 2008. That is down from the 15 and 20 per cent growth in spending on capital improvements this year.

“We plan to decrease the rate of growth in capital expenditures considerably, as compared to our expected sales growth for Wal-Mart's next fiscal year,” Mr. Schoewe said. The company expects to build fewer new U.S. stores in the coming year and use cost controls to keep domestic capital spending flat.

Bentonville-based Wal-Mart has been expanding its retail space at eight per cent per year, but that number will be 7.5 per cent next fiscal year, the company said.

Still, Wal-Mart expects to add more than 600 new stores in the U.S. and abroad next fiscal year, not counting any acquisitions, the company said.

“We are still very committed to growth, but our real estate projects are now being subjected to a more rigorous prioritization process,” Wal-Mart vice-chairman John Menzer said. “This store selection process will enable the company to drive higher returns by focusing on locations that make the most efficient use of capital.”

Mr. Schoewe said that over the past three years, the company's capital expenditure growth has been higher than growth in square footage and sales. He said international growth, as measured by square footage, will be about 10 per cent and, in the U.S., about seven per cent.

“Our long-term goal is to continue to have our capital expenditures grow at a rate equal to or less than sales growth,” he added. “Additionally, over time, we expect our new capital efficiency model to reduce the impact of cannibalization.”

Wal-Mart has seen its sales at stores open at least a year, known as same-store sales, hurt by opening so many new stores that the new stores took customers away from existing stores.

The company said it plans to open between 265 and 270 new Supercenters, five to 10 discount stores, 15 to 20 Neighborhood Market grocery stores and 20 to 30 Sam's Club warehouse stores. Total new U.S. stores will be 305 to 330 and another 320 to 330 will be added in the company's international division.

Total new stores will number 625 to 660.

Wal-Mart plans to expand or relocate 145 Wal-Mart stores and 15 Sam's Clubs. Another 30 international division properties will be expanded or relocated.

Wal-Mart is also planning to open four domestic distribution centres, two of which will be for groceries. The centres will add a total of four million square feet.

“Increased productivity in the company's distribution centres means fewer centres will need to be built,” Mr. Schoewe said.

Wal-Mart shares rose $2.15, or 4.4 per cent, to $51.52 in morning trading on the New York Stock Exchange.

[back to top]

Wal-Mart Expands Prescription Drug Discount Program To 14 More States

mediLexicon
22 Oct 2006                          [back to top]

Wal-Mart Stores on Thursday likely will announce the expansion of a generic prescription drug discount program introduced last month in Florida to additional states, the Newark Star-Ledger reports (May, Newark Star-Ledger, 10/19). Wal-Mart last month announced that the program -- under which some company pharmacies would sell 30-day prescriptions of certain generic medications for $4 -- would initially include 65 Wal-Mart, Sam's Club and Neighborhood Market pharmacies in the Tampa, Fla., area and would expand statewide in early 2007 and possibly to other states in the future. Earlier this month, Wal-Mart expanded the program statewide in Florida (Kaiser Daily Health Policy Report, 10/6). According to the AP/Arizona Daily Star, Wal-Mart likely will expand the program to Alaska, Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont (Kabel, AP/Arizona Daily Star, 10/19). Wal-Mart said that the program has received a strong customer response in Florida. Wal-Mart said that the number of prescriptions filled at company pharmacies in the Tampa area increased by 36,000 in the first 10 days of the program. In addition, Wal-Mart said that the generic medications included in the program account for almost 30% of the prescriptions filled at company pharmacies in Florida (Newark Star-Ledger, 10/19). A Wal-Mart spokesperson said that the company seeks to expand the program "as quickly as possible" (Guy, Chicago Sun-Times, 10/19). NPR's "Morning Edition" on Thursday reported on Wal-Mart's expansion of its low-cost prescription drug program. The segment includes comments from Gary Claxton, a vice president at the Kaiser Family Foundation and director of its Health Care Marketplace Project, and Bill Simon, executive vice president of the Wal-Mart professional services division (Silberner, "Morning Edition," NPR, 10/19).

[back to top]

China expansion will test Wal-Mart

By Mark Gilbert
Bloomberg
2006/10/22                                   [back to top]

Wal-Mart Stores Inc.'s plan to double its presence in China will test whether failed adventures in Germany and South Korea have persuaded the world's largest retailer to abandon corporate creationism in favor of Darwinism. Wal-Mart is considering paying about US$1 billion for Trust-Mart, a closely held chain of grocery and appliance stores, a person familiar with the proposal told Bloomberg News this week. A report published this month by the University of Pennsylvania's Wharton School of Business and Boston Consulting Group Inc. suggests Wal-Mart risks throwing good money after bad if its selling strategies fail to evolve to suit local preferences.

China ranks as the fifth-most-attractive opportunity out of the 30 countries on consulting firm AT Kearney Inc.'s 2006 Global Retail Development Index, down one place from 2005. India, Russia, Vietnam and Ukraine topped the list.

Some 400 million of China's 1.3 billion people live in urban areas, where income growth is about 10 percent per annum compared with just 1 percent in rural areas. The Wharton/BCG report estimates there are 25 million to 30 million middle-class households with annual income of US$4,300 to US$8,700, and 8 million affluent homes earning at least US$11,600 per year.

Gross domestic product in China grew 10.4 percent in the third quarter, compared with 11.3 percent in the second quarter and 10.3 percent in the first three months of the year. Retail sales are growing at an annual pace of almost 14 percent.

"Because international retailers are fueling this growth, market saturation is also on the rise," AT Kearney said in its 2006 report on retailing in emerging markets. "More than 40 foreign retailers have entered the market to date."

In May, Wal-Mart abandoned its South Korea business after shoppers shunned its gloomy, no-frills warehouse stores that emphasized bulk frozen foods over the fresh produce favored by Koreans. At the time of its exit, the company had just 3.8 percent of the country's US$30 billion-per-year discount market.

Two months later, Wal-Mart sold its 85 stores in Germany to Metro AG after underestimating the loyalty of shoppers to their local retailers, including privately owned Aldi Group and Lidl. Clashes with German workers over labor policies sparked strikes, contributing to US$1 billion of losses in Wal-Mart's eight years in the country.

Wal-Mart's ambitions to expand its Seiyu Ltd. business in Japan were thwarted earlier this month when Aeon Co. won exclusive rights to acquire the supermarket company Daiei Inc.

Wal-Mart, based in Bentonville, Arkansas, aims to generate a third of its sales and earnings from the company's international division, up from about a fifth currently. It operates 66 stores in 34 Chinese cities, employing about 36,000 people. Acquiring Trust-Mart would add more than 30,000 employees selling about 20,000 items from at least 100 stores in 20 Chinese provinces.

In the next five years, most of the growth in retail sales will come from China's smaller cities, which are typically harder for overseas companies to crack than larger, more-cosmopolitan population centers, the Wharton/BCG report says.

"With global strategies, global products and global go-to- market, it becomes very difficult," writes Deepak Advani, chief marketing officer of Lenovo Group Ltd., the world's third-largest personal-computer maker. "You need to develop products that appeal to them, speak to them with messaging that is relevant to them. You need channels that are more accessible to them -- like storefronts, which are very popular in China."

As it expands, the U.S. company risks falling into the crack between the market for basic consumer goods, dominated by local stores, and the luxury segment of global brands that already have acceptance among Chinese buyers.

"They don't spend money on products their friends and neighbors can't see," writes Hubert Hsu, the Hong Kong-based head of Boston Consulting Group's unit for Asia-Pacific consumer goods and retail. "They may not be willing to pay premium prices for brands like Windex window cleaner or Kiwi shoe polish."

About 70 percent of retail goods are sold in the nation's "mom and pop" stores, according to the Wharton/BCG report. What's missing in China's retailing market, the report suggests, is the middle ground that Wal-Mart has targeted so successfully in its domestic market.

"It's important for companies to segment consumers and understand where they're willing to trade up and trade down," writes BCG's Hsu.

Among more-affluent consumers, China has 1.6 million households with US$500,000 or more of assets, and about 250 million worth US$100,000 to US$500,000. Much like anywhere else, the most successful brands are those deemed to enhance social standing. Unlike in many countries, however, conformity is important.

"The higher-order needs in China are still collective rather than individualistic," writes Harjot Singh, China planning director for Omnicom Group Inc.'s BBDO advertising agency. "Everyone in China wants to conform to standards in a way that gives them social acceptance. It's no longer a game about creating esteem, it's a game about creating popularity."

Wal-Mart needs its overseas expansion to succeed, after disappointing sales in its home market and the cost of shuttering the German operations contributed to its first profit decline in more than a decade in the second quarter. This week, it appointed a new head of its retail business in China.

Ed Chan will join in February from Dairy Farm International Holdings Ltd., where he was regional director for North Asia. Dairy Farm, which is based in Hong Kong and listed in Singapore, operates supermarkets, convenience stores and drugstores across Asia, including about 250 7-Eleven shops in China.

It's not hard to see why China appeals to Wal-Mart. The trick will be figuring out how to make Wal-Mart appeal to China. The company's failed overseas expeditions have been marked by an inability to adapt to local conditions; that one-size-fits-all approach will have to become more adaptable to its environment if Wal-Mart is to avoid another costly misadventure.

[back to top]

Wal-Mart hits back at Democrats' criticism … by donating to them

By Toby Harnden
21/10/2006                                  [back to top]

Wal-Mart, the world's largest retailer, has become a central battleground in the American congressional elections, with Democrats accusing the company of exploiting poor workers and Republicans hailing it as a symbol of free market success.

America is almost evenly divided between the red states – Republican and mainly rural – and the blue – Democratic and urban. It is also split between those who regard Wal-Mart as the embodiment of corporate evil and those who view it as a force for good.

Now the company is trying to hedge its bets by donating large sums to the Democrats, who are expected to regain control of at least one house of Congress on November 7, and appointing a former nun and Balkans conflict mediator to direct its policies on wages and the environment.

advertisementTelevision plugs for Wal-Mart jostle with the political advertisements saturating local networks. "It all began with a big dream in a small town," one advert begins, over a picture of the first store, opened by Sam Walton in Rogers, Arkansas, in 1962.

"Last year alone, Wal-Mart created tens of thousands of new American jobs – many in areas where they're needed most."

Last month, the company launched a campaign to get its more than 1.3 million workers to register to vote. Although the company insists that it is not telling its employees how to vote, it has also sent out letters criticising senior Democrats.

The letter, to employees in Iowa, accused potential Democratic presidential contenders in 2008 of "misguided attacks" against the retailer's wages and benefits policies.

Wake Up Wal-Mart, a group set up by the United Food and Commercial Workers Union and one of several organisations lobbying against the company, hit back by announcing its own "voter registration" plan to highlight "Wal-Mart's continued support for a Right-wing agenda that is wrong for America".

Concentrating on key marginal seats, the campaign is designed to "stop the Bush-Wal-Mart Right-wing agenda".

Paul Blank, its director, said: "We're not going to sit by and watch a big, powerful corporation attacking candidates for standing up on behalf of workers."

Wal-Mart, which owns Asda, the second biggest supermarket chain in Britain, does not allow its employees to join a union. A recent Wall Street Journal/NBC poll found that 45 per cent of Americans viewed Wal-Mart favourably and 31 per cent unfavourably – making the retailer more popular than President George W Bush (42 per cent) but less so than Condoleezza Rice, his Secretary of State (55 per cent). "That's a big problem when you are selling to 90 per cent of Americans," said Mr Blank.

Wake Up Wal-Mart's adverts are unashamedly anti-Republican. "They pursued a policy of outright greed," one begins. "Shipped American jobs to communist China. Failed to provide affordable health care. Opposed a living wage for hard-working families."

It ends: "Wal-Mart: Good for George Bush. Bad for America."

[back to top]

Wal-Mart Dress Code Replaces Blue Vest With Polo Shirt

Dow Jones Newswires
October 20, 2006                         [back to top]

Wal-Mart employees' familiar blue vests emblazoned with "May I help you?" and the smiley face logo may become a thing of the past as the world's largest retailer tries to upgrade stores and attract more shoppers. Wal-Mart Stores Inc. (WMT) said Friday it will adopt a new dress code of blue polo shirts and khakis in about 1,400 stores in the Northeast and South. Nationally, it has over 3,600 discount stores and Supercenters, which combine a discount store with a full grocery section. It may expand the new dress code to the rest of the country based on reactions from customers and employees, Wal-Mart said in a statement.

It is the latest visible change at Wal-Mart, which is currently remodeling about 1,800 of its more than 2,100 Supercenters to make them more appealing to shoppers by adding wider aisles, faux-wood floors and clearer signage, as well as trendier products in areas including electronics, apparel and home furnishings.

The blue vests have been around for about 15 years, Wal-Mart said. The new dress code was quietly tested in about 160 stores throughout the country.

"Our (employees) in the test stores have told us they really prefer the new look because it reflects more pride and makes them feel like part of a team, and customers find it more contemporary and more professional," Pat Curran, executive vice president for Wal-Mart stores in the U.S, said in a statement.

The company said it will provide each employee with two dark blue polo shirts and reimburse them for one pair of pants or a skirt. It will also offer a Web site where employees can buy additional ones at cost, with shirts as low as $3 to $5 and pants for as low as $10 to $15. The blue vests were issued to employees at no cost.

Staff at Neighborhood Markets, Wal-Mart's 109-strong chain of smaller stores, will switch nationally from a green vest to dark green shirts and khaki slacks or skirts, the company said.

[back to top]

Edelman Reveals Two More Wal-Mart 'Flogs'

By Tom Siebert
MediaPostPublications
October 20, 2006                                 [back to top]

Public relations firm Edelman, which last week pledged to be more transparent in its involvement with client-related blogs, Thursday revealed it is behind two more 'flogs,' or fake blogs, created on behalf of Wal-Mart. Until the new disclosures, both blogs appeared to have been created and contributed to by independent supporters of the big box retailer, an Edelman client.

One blog appears on the home page of Working Families for Wal-Mart, the allegedly grassroots advocacy group formed by Edelman last December, which is "committed to fostering open and honest dialogue...that conveys the positive contributions of Wal-Mart to working families." The second blog is on WFWM's subsidiary site Paid Critics.

The Paid Critics blog is devoted to "exposing" links between unions and other vested interests that are "smearing Wal-Mart" through the media. Until yesterday, blog entries on both WFWM and Paid Critics were uncredited. Thursday, bylines were added to blog posts "in response to comments and emails."

Last week, the travel blog "Wal-Marting Across America" was shut down following revelations that it was the work of two writers paid by WFWM.

As a result of the new transparency, every entry on the blogs is now credited to one of three contributors: Miranda, Brian or Kate. A click on these single monikers reveals biographies of Edelman employees Miranda Gill, Brian McNeill and Kate Marshall, whose clients include Working Families for Wal-Mart, the sites say.

While noting that he was speaking in generalities and not to this specific situation, Dave Balter, president of the Boston word-of-mouth marketing firm BzzAgent, said: "Even if you're doing the right thing but you know you're going to deceive people, you have to do everything to make sure it's completely transparent, and any tactic that crosses that line you're doing a disservice to the brand [and] the consumer."

The spokesperson for WFWM, Edelman employee Donna Lewis-Johnson, said the company was now being completely transparent. She said WFWM is a client of Edelman separate from its Wal-Mart account, but could not confirm that WFWM pays Edelman for its work. She said Edelman's employees make up some but not all of the WFWM staff. She said that Wal-Mart accepts funding from Wal-Mart, but did not know how much.

In a May New York Times article about WFWM, a member of the group's steering committee, Martha Montoya, said she was not aware of any financing that group received outside of Wal-Mart.

A spokesperson for Wal-Mart referred all questions to WFWM.

One observer questioned whether once a flog becomes transparent, its original purpose is rendered moot.

"Once you make this kind of revelation, you need to question whether [the strategy] is even effective anymore," said Virginia Miracle, director of word-of-mouth marketing for Brains on Fire, in Greenville, SC. "This is a very difficult time. As the media has exploded, the ethical guidelines have not been growing at the same rate."

Another critic called the situation "ridiculous," and pointed out the innate contradiction and paradoxical dilemma Edelman is facing.

"Doesn't anybody at Edelman see the irony behind having their own paid critics writing Wal-Mart's Paid Critics blog?" asks Sean Carton, a blogger, author of eight books about technology and the Internet, and chief strategy officer for Baltimore interactive consultancy idfive. "This was a brilliant idea, in its way, but it was evil and they got caught. It was old media thinking in the new media world, and you can't get away with that [stuff] anymore."

[back to top]

Wal-Mart May Ditch the Blue Vest Look

By MARCUS KABEL
Associated Press
10.20.2006                                        [back to top]

Wal-Mart employees' familiar blue vests emblazoned with "May I help you?" and the smiley face logo may become a thing of the past as the world's largest retailer makes another visible change as part of its efforts to upgrade stores and attract more shoppers.

Wal-Mart Stores Inc. said Friday it will adopt a new dress code of blue polo shirts and khakis in about 1,400 stores in the Northeast and South. Nationally, it has over 3,600 discount stores and Supercenters, which combine a discount store with a full grocery section.

It may expand the new dress code to the rest of the country based on reactions from customers and employees, Wal-Mart said in a statement.

It is the latest visible change at Wal-Mart, which is currently remodeling about 1,800 of its more than 2,100 Supercenters to make them more appealing to shoppers by adding wider aisles, faux-wood floors and clearer signage as well as trendier products in areas including electronics, apparel and home furnishings.

The blue vests have been around for about 15 years, Wal-Mart said.

The new dress code was quietly tested in about 160 stores throughout the country.

"Our (employees) in the test stores have told us they really prefer the new look because it reflects more pride and makes them feel like part of a team, and customers find it more contemporary and more professional," Pat Curran, executive vice president for Wal-Mart stores in the U.S, said in a statement.

The new dress code will take effect in the coming weeks in Wal-Mart's Northeast and Southeast divisions, extending from Maine along the Atlantic and Gulf coasts to Louisiana.

The company said it will provide each employee with two dark blue polo shirts and reimburse them for one pair of pants or a skirt. It will also offer a Web site where employees can buy additional ones at cost, with shirts as low as $3 to $5 and pants for as low as $10 to $15. The blue vests were issued to employees at no cost.

Staff at Neighborhood Markets, Wal-Mart's 109-strong chain of smaller stores, will switch nationally from a green vest to dark green shirts and khaki slacks or skirts, the company said.

Copyright 2006 Associated Press. All rights reserved.

[back to top]

Wal-Mart, union explore workers' voting power

Associated Press
October 19, 2006                             [back to top]

The voting power of Wal-Mart's huge U.S. workforce has become the latest target in the retailer's battle with union critics. WakeUpWalMart.com, a group started last year by the United Food and Commercial Workers union to pressure Wal-Mart (WMT) to change, is announcing on Thursday a drive to reach Wal-Mart workers ahead of midterm elections next month.

The union campaign comes after Wal-Mart entered the political fray this summer with a letter to workers in Iowa naming politicians who had attacked the company. It says it will issue similar letters in the future.

Wal-Mart also launched a first companywide effort last month to get its more than 1.3 million workers to register to vote.

Neither side is endorsing any specific candidates, and both say they are being non-partisan.

WakeUpWalMart.com said it will start a media and on-the-ground campaign Monday in multiple states that will claim Wal-Mart backs "right-wing" policies that hurt workers.

Wal-Mart denied that claim. Spokesman Dave Tovar said its efforts to register voters and inform workers about what candidates are saying are non-partisan.

Wal-Mart said the letter sent to 18,000 Iowa employees was aimed at letting them know when their company was under attack by politicians. The letter named four Democrats who are potential 2008 Democratic presidential contenders: Sens. Evan Bayh of Indiana and Joseph Biden of Delaware, and Govs. Bill Richardson of New Mexico and Tom Vilsack of Iowa.

The union campaign will run for 15 days until the Nov. 7 midterm elections. It will be targeted at Wal-Mart workers and shoppers, said Chris Kofinis, spokesman for WakeUpWalMart.

Activists plan to hand out "voter education cards" to workers at 600 of Wal-Mart's roughly 4,000 U.S. stores. The cards have a picture of CEO Lee Scott next to a quote from an interview on CBS News in which he said, "I don't know specifically what a living wage is."

Scott went on in that interview to say Wal-Mart's average wage was over $10 an hour.

The cards urge Wal-Mart workers to back candidates who support higher wages, affordable health care and protecting American jobs. They do not name specific candidates.

The campaign plans to air two 30-second television ads in at least seven states, conduct more than 140,000 household visits in at least 10 states and hold store and community actions in more than 30 states.

Republicans received 71% of the $1.1 million that Wal-Mart's political action committee and employees contributed to federal candidates and parties in this election cycle, compared with 98% for Republicans in 1996, according to the Center for Responsive Politics.

[back to top]

Wal-Mart's meeting for analysts hits road

By Steve Painter
Arkansas Democrat-Gazette
October 19, 2006                                      [back to top]

Wal-Mart is taking its annual analysts' briefing to the analysts this year, hosting the event outside Northwest Arkansas for the first time. The official explanation: "Having the meeting in the New York area gives us additional options for programs and store tours," spokesman Mona Williams said in a statement Wednesday. An alternative explanation: "Their stock sucks, so they've got to do something to prop it up," said George Whalin, president of Retail Management Consultants in San Marcos, Calif."I'm sure that's why they're doing this. They've got to get those boys on Wall Street saying positive things about them," he said.

Wal-Mart's stock has dropped more than 10 percent over the past 2 1/2 years.According to an invitation sent to analysts, the New York area event Monday and Tuesday will include performances by The Eagles and Garth Brooks.

Typically, the analysts' meetings in Bentonville have attracted 200 to 300 people.

Though that's not nearly the crowd that the company's annual meeting attracts, the departure of the analysts' gathering is not welcome news to local businesses.

"The chamber and the CVB [Convention and Visitors Bureau] both love any event that brings people to the area," said Beth Stephens, senior vice president at the Rogers-Lowell Area Chamber of Commerce.

According to the invitation sent to analysts, the New York meeting will include visits to a Wal-Mart Supercenter and a Sam's Club, as well as sessions on public perception of the company, global procurement plans and a strategic overview.

Edward Weller, an analyst with ThinkEquity Partners in San Francisco, said moving the 13th annual meeting may signal a change in thinking at Wal-Mart's Bentonville headquarters. "Years ago, people might have said Wal-Mart is allergic to New York," he said.

But analysts who have made the trip to the headquarters of the world's largest retailer have found it worthwhile, he said. "The meeting is an extremely good one that gives people a chance to understand how a big, complicated company works as efficiently as it does," he said.

Wal-Mart first traded publicly in 1972. Its stock split 11 times as investors bid it higher, and founder Sam Walton did the hula on Wall Street in 1984, as he promised Wal-Mart workers, when the company hit a profit goal.

But the stock has suffered in recent years, despite strong earnings. Wal-Mart shares closed at $48.35, down 7 cents in trading Wednesday on the New York Stock Exchange. Shares have traded as low as $42.31 and as high as $50.87 over the past year.

[back to top]

Wal-Mart Workers Walk Out

By Pallavi Gogoi
OCTOBER 19, 2006                             [back to top]

After the retail giant tried to impose new policies, employees at one store in Florida staged a protest—and won a reprieve

For months, politicians and activists have been saying that the low prices at the world's largest retailer, Wal-Mart Stores (WMT), come at a tremendous cost to its low-paid employees. They point to lawsuits that contend the company discriminates against women and forces low-paid employees to work through lunch breaks and after their shifts, without extra compensation. Wal-Mart has also been boosting its political contributions to stop initiatives aimed at forcing the retailer to raise pay and benefits (see BusinessWeek.com, 9/28/06, "Wal-Mart Doesn't Discount Politicians").

Now, as Wal-Mart rolls out a new round of workplace restrictions, employees at a Wal-Mart Super Center in Hialeah Gardens, Fla., are taking matters into their own hands. On Oct. 16, workers on the morning shift walked out in protest against the new policies and rallied outside the store, shouting "We want justice" and criticizing the company's recent policies as "inhuman." Workers said the number of participants was about 200, or nearly all of the people on the shift.

It's the first time that Wal-Mart has faced a worker-led revolt of such scale, according to both employees and the company. Just as surprising, the company quickly said it would change at least one of the practices that had sparked the protest. Late in the day on Oct. 16, there was some disagreement over which of the new policies would be put on hold.

SCHEDULE CHANGES. The protest wasn't led by any union group. Rather, it was instigated by two department managers, Guillermo Vasquez and Rosie Larosa. The department managers were not affected directly by the changes, but they felt that the company had gone too far with certain new policies. Among them were moves to cut the hours of full-time employees from 40 hours a week to 32 hours, along with a corresponding cut in wages, and to compel workers to be available for shifts around the clock.

In addition, the shifts would be decided not by managers, but by a computer at company headquarters. Employees could find themselves working 7 a.m. to 4 p.m. one week and noon to 9 p.m. the next. "So workers cannot pick up their children after school everyday, and part-timers cannot keep another job because they can be called to work anytime," says Vasquez.

In addition to scheduling changes and reduction in hours, workers are now required to call an 800 number when they are sick. "If we are at an emergency room and spend the night in a hospital and cannot call the number, they won't respect that," says Larosa, who has worked at the store for six years. "It will be counted as an unexcused absence."

BANDING TOGETHER. Beginning last week, the two managers began talking with other employees, one at a time, getting their signatures in support of a protest. The demonstration may not have happened if not for the tight-knit nature of this predominantly Spanish-language community near Miami. At least 15 department managers joined the workers in speaking out against the new policies. "We are a Spanish-speaking community, some from Cuba, some from Venezuela and the Dominican Republic, and if something affects my brothers and sisters, it affects me," says Yahima Morales, who has been a department manager of health and beauty aids for four years at the store.

The employees drafted a protest letter that they have sent to executives at Wal-Mart headquarters in Bentonville, Ark., and also to Florida politicians, including Florida Governor Jeb Bush. "In the letter, we state that we want justice and that Wal-Mart should stop harassing us," says Vasquez. At least 400 store employees have signed the letter.

PARING THE PAYROLL. Wal-Mart spokesman David Tovar says his understanding is that the protest was prompted by the reduction in hours, which he says was simply a mistake. "The new schedules posted made it seem like some hours were reduced, but that was inaccurate and we have corrected it." Tovar wouldn't talk about the sick-leave issue, saying that he wasn't aware the topic was raised by the workers. As for the changes in shifts, he says: "Our schedules are set so that we have adequate staff during the busiest hours of the day."

The scheduling changes, which have been rolled out in Wal-Mart stores around the country in recent weeks, are a sign that the retailer is acting on ideas outlined in an internal document that was leaked last year. In the memo, a Wal-Mart executive said it would find ways to rid its payroll of full-time and unhealthy employees who are more expensive for the company to retain.

Wal-Mart executives have recently told Wall Street analysts that the company wants to transform its workforce from 20% part-time to 40%. Recently, it was also reported that older employees in some stores who had back and leg problems were barred from using stools on which they had sat for years (see BusinessWeek.com, 8/14/06, "The Flip Side of Wal-Mart's Pay Hikes").

UNION MAYBE? The moves come as the company is struggling to keep its profits growing at the rapid rate that they have in the past. As it squeezes its workforce expenses and trims costs in all corners, it is also expanding overseas. On Oct. 16, The Wall Street Journal reported that Wal-Mart has agreed to spend $1 billion to acquire Trust-Mart, a closely held Taiwanese company that owns one of the largest food and department store chains in China.

What's next at the Hialeah Gardens store, where store managers have had to pitch in to keep the store open? Is this the first step to forming a union at the store? That's unlikely, given the fate of previous attempts to unionize store employees. When employees in Jonquière, Que., Canada, voted last year to unionize, Wal-Mart shut the store. Vasquez says the workers haven't really talked about their plans, beyond getting the company to change its practices. "At this point, we just want to be heard," he says.

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

[back to top]

TurnTheFrownUpsideDown.com

WakeUpWalMart.com Team                       [back to top]

This week something truly incredible happened.

When we first walked into the office Monday morning, everything seemed totally normal. We talked about our weekend. We talked about the baseball game. And, we went to go get coffee.

But, things were far from normal at a Wal-Mart store near Miami, Florida. At 9 a.m., over 200 employees of that store walked out (the first time in Wal-Mart's history) and protested Wal-Mart's unfair policies which cut their hours and wouldn't let them tend to a sick child.

These courageous workers not only got their hours restored, but demonstrated why it is so important for us to build public pressure on Wal-Mart to change into a responsible, moral employer.

Sadly, though, while Wal-Mart's own employees were protesting how bad conditions have become, Wal-Mart's executives in Bentonville were planning a full-scale attack on Democratic leaders who have called on Wal-Mart to treat its employees better.

Wal-Mart's planned attacks are a disgrace and, on behalf of those 200 employees in Florida and every hard-working American, we are not going to sit back and let Wal-Mart try and "Swift Boat" real leaders so that it can continue to mistreat its employees, eliminate health care options, ship American jobs overseas, oppose a living wage, and even lobby against strengthening America's national security.

Please check out our new TV ad and send it to at least 5 friends:

www.TurnTheFrownUpsideDown.com/features/video.html

Starting Monday, October 23rd, we are launching a major new voter education campaign because we think every American needs to know that when you shop at Wal-Mart you are helping George Bush and the right wing take America in the wrong direction.

Why?

Because, Wal-Mart has contributed 80% of its campaign money to George Bush and right-wing politicians, and Wal-Mart supports a political agenda that hurts hard-working families.

This isn't about whether you are a Democrat or a Republican. This is about whether or not you are going to allow a big, powerful corporation like Wal-Mart to use our democracy against the best interests of the American people.

Please check out our new TV ad and send it to at least 5 friends:

www.TurnTheFrownUpsideDown.com/features/video.html

While Wal-Mart's political agenda may be good for Wal-Mart's rich executives and George Bush, it is bad for hard-working families and America. But, this Election, with over 278,000 supporters, we have the power to stop Wal-Mart's right wing agenda and turn the frown upside down.

Go to www.TurnTheFrownUpsideDown.com to learn more.

Thank you for all that you do,

Paul, Chris, Jeremy, Buffy, Matt, Laura & Carlos
The WakeUpWalMart.com Team

[back to top]

Wal-Mart Cuts Prices To Attract Young And Old Alike

Scott Reeves,
Forbes
10.19.06                                     [back to top]

Updated share price information.

Call it the alpha and omega of marketing -- and a jab at Target.

Wal-Mart, the world's largest retailer, said on Thursday it is reducing prices on generic drugs in an effort to attract more senior citizens to its stores and also slashing prices on 100 toys and games in an effort to snare parents with kids.

Wal-Mart said its $4 flat fee for 30-day prescriptions of 314 generic drugs will be available in 14 additional states today, expanding a program launched in Tampa, Fla. in September and quickly expanded throughout the state.

Wal-Mart is the 800-pound gorilla of retailing, but it's being pressed by rival Target. In September, Wal-Mart said same-store sales increased 1.3% while Target, the nation's No. 2 retailer, reported a 6.7% increase.

The generic drug program has been expanded to include 1,264 Wal-Mart stores throughout Alaska, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont.

Drugs offered in the program include Fluoxetine, an antidepressant; Lisinopril, used to treat high blood pressure; and Atenolol, a beta blocker used to treat heart problems.

Target quickly followed Wal-Mart's program in Florida and plans to match Wal-Mart's prices on generic drugs in all states except Alaska and Vermont, where it doesn't operate.

Also on Thursday, Wal-Mart cut prices on more than 100 toys and games. Hot Wheels Radar Gun from Mattel was cut to $20 from $29.74; Amazing Allesen and Amazing Amanda dolls were cut to $69 each from $99 and Dora the Explorer Talking Kitchen was cut to $65 from $89.84.

"Wal-Mart is helping families get a head start in the holiday shopping game by presenting a one-stop destination to get what they need and want at the best prices," Scott McCall, Wal-Mart's vice president and divisional merchandizing manager, said in a prepared statement.

What's next for Wal-Mart -- food? Oh wait, Wal-Mart already sells more groceries than Kroger.

[back to top]

Wal-Mart expands $4 generics to 14 states

Consumer Driven Health Plans/ HSA
October 19, 2006                                              [back to top]

Tons of good PR, more high-margin pharmacy business and a truckload of new customers eyeing your rock-bottom prices on socks and light bulbs--what's not to like? Apparently happy with the progress of its $4 generic drug program in Florida, Wal-Mart is rolling the program out on a much larger scale, expanding it to 1,264 stores in Alaska, Arizona, Arkansas, Delaware, Illinois, Indiana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Texas and Vermont. Wal-Mart has dramatically sped up its timeline for the national rollout, which was scheduled to begin in early 2007. Wal-Mart stepped up the program from one Florida region to the entire state less than two weeks ago, a large expansion in and of itself. Since the rollout across Florida on October 6, customers there have filled have filled 88,234 generic prescriptions, the company said. As it has proceeded with its generics campaign, Target has matched it blow by blow, offering to meet Wal-Mart's generics pricing in markets where Wal-Mart is offering the $4 deal. I wonder if Target can keep this up if Wal-Mart pulls out all of the stops? Observers think the drugstore chains have more to worry about; CVS shares fell 8.4 percent when Wal-Mart's generics plan was originally announced.

[back to top]

Wal-Mart Limits Prepaid Cell Phones to 2

By BRUCE MEYERSON
Associated Press
10.19.2006                                    [back to top]

Wal-Mart Stores Inc. plans to limit each customer to two prepaid cell phones per purchase amid complaints that entrepreneurs are buying the subsidized handsets by the hundreds to resell at a profit, according to people familiar with the matter.

The new limit on the phones, effective last week, was disclosed to The Associated Press by persons at two national cell carriers. They spoke on condition of anonymity because Wal-Mart's policy hasn't been announced.

Wal-Mart declined to confirm the change from its prior limit of three prepaid phones per customer.

The phones in question, sold under brands including TracFone and GoPhone from Cingular Wireless, are priced as low as $20 and $30 per handset. The phones are called "prepaid" because users buy minutes of air time in advance for calls rather than signing up for a monthly plan with recurring charges.

Limits on their purchase aren't new among major retailers. But phone makers and service providers are pressing retailers to tighten restrictions, which can be easy to skirt by going to multiple cashiers or coming back at different times of day. Law enforcement, meanwhile, worries the anonymity of prepaid phones makes them appealing tools for criminal and terrorist activity.

Wireless service providers willingly lose money or make no profit on the devices in hopes that purchasers will make up for it by using the service, buying additional air time for calls. But there's no profit if the phones are never used for their intended purpose.

Those who buy in bulk at stores can double their investment by reselling the phones to entrepreneurs who deactivate a software lock on the devices. The phones can then be used on other cellular networks, often in Asia and Latin America, though sometimes in the United States.

Purchasing phones in bulk is not in itself illegal, and authorities haven't had much luck trying to prosecute those engaged in the trade. But wireless companies have sued them, alleging the reconfiguration and repackaging violate trademark and copyright protections.

The change in Wal-Mart's policy follows high-profile arrests two months ago in Ohio and Michigan of men who had purchased bulk quantities of the phones.

The Federal Bureau of Investigation and Department of Homeland Security issued bulletins earlier this year warning police to look out for bulk phone purchases. Authorities said they were worried the devices might be used as bomb detonators or that profits from their resale might fund a terrorist attack.

But in the Ohio and Michigan cases, early hints of possible terrorism links by authorities never resulted in related charges. The men arrested in Ohio pled no contest last month to a low-level charge of giving misleading information to police. In the Michigan case, a federal judge threw out charges of trafficking in counterfeited goods.

Copyright 2006 Associated Press. All rights reserved

[back to top]

Wal-Mart Expands Generic Drug Program

Brandweek
October 19, 2006                         [back to top] 

NEW YORK – Putting pressure on other retailers to follow suit, giant retailer Wal-Mart today expanded its program of offering its customers $4 generic prescriptions to 14 additional states, after its initial rollout in Florida last month.

The company, with 3,900 U.S. stores, said it will offer the discounted medications at 1,264 of its outlets.

“Since we began the program in September, we’ve been committed to bringing it to other states as soon as possible,” Wal-Mart president and CEO Lee Scott said in a statement. “Customers have told us again and again how valuable the $4 generic prescription program is. This program is making a real difference in the health of our customers and our communities.”

According to the company, the $4 generics program includes 314 generic prescriptions available for up to a 30-day supply at commonly prescribed dosages. Wal-Mart estimates that the list of $4 prescription medications represents nearly 25% of prescriptions that it currently dispenses in its pharmacies nationwide.

In response to the action, Walgreens issued a statement Thursday afternoon, which read in part: "Wal-Mart’s limited price promotion is in response to the increasing number of seniors choosing Walgreens for their pharmacy needs. Therefore, Walgreens will not match Wal-Mart’s promotion. Once consumers learn the fine print of Wal-Mart's program, they'll realize Walgreens offers the best value for pharmacy patients with its convenient locations, close-in parking and unique pharmacy services."

© 2006 VNU eMedia Inc. All rights reserved.

[back to top]

Wal-Mart wants to own China

By AP
October 18, 2006                          [back to top]

Wal-Mart Stores Inc. is bidding about US$1 billion for a chain of 100 hypermarkets in China in a deal that could vault it ahead of competitors to become the country's biggest food and department store network, reports said yesterday.

Wal-Mart plans to buy the hypermarkets from Trust-Mart, a Taiwanese company, the Wall Street Journal said, citing people familiar with the transaction.

The Financial Times, citing people close to the negotiations, said Wal-Mart had emerged as the leading bidder for the chain but said no agreement had been reached. The New York Times reported that Wal-Mart expects to close the purchase by the end of the year, but still needs government approval.

"We don't have any comment on any of this market speculation," said Jonathan Dong, a spokesman for Wal-Mart China.

[back to top]

Wal-Mart planning to acquire Trust-Mart

Sukhdeep
October 18, 2006                     [back to top]

Wal-Mart planning to acquire Trust-Mart

Wal-Mart Stores Inc. has announced their plans to acquire Chinese hypermarket chain Trust-Mart. The deal would be worth around USD 1 billion and would require approval from the regulatory bodies.

If the deal is approved, it would make Wal-Mart the top foreign player in China’s fragmented retail market.

Trust-Mart is a closely held Taiwan company with 100 supercenters in China. This deal would take Wal-Mart ahead of Carrefour SA in the country.

Wall Street Journal reported that Wal-Mart outbid Carrefour for this deal to become a major retailing player in china. Retail analyst Selina Sia with UBS spoke on this new development: “When Wal-Mart expands, supposedly they are going to enjoy better economies of scale. The market is still highly fragmented. None of the chains have a dominant power to take leadership, but there are more domestic firms than foreign ones.”

[back to top]

Lianhua & Wumart see pressure on Wal-Mart growth

ET Net News
2006/10/18                      [back to top]

Media report said Wal-Mart has agreed to buy Trust-Mart for about US$1bn. It said Wal-Mart will purchase 31 stores initially and gradually increase its holding. Citigroup assumed 1% net margin, the acquisition price would represent historical PER of 60x. Trust-Mart, founded in 1997, is a Taiwanese-invested hypermarket chain operating in mainland China. Total number of stores was 105 as of end-2005 in 30+ cities in South China, East China, North China and West China, with gross sales of Rmb13.2bn. It was ranked the ninth-largest FMCG retailer in 2005 and third-largest overseas invested hypermarket by sales. The investment house expected Lianhua (980) and Wumart (8277) to come under pressure operationally. "The generally adopted model of charging various fees on suppliers and negative working capital could also be challenged as Wal-Mart China expands its influence", noted Citigroup. (KL)

[back to top]

Wal-Mart's sourcing from India to hit USD 600 mn

ZeeNews                        [back to top]

Bangalore, Oct 18: Wal-Mart Stores Inc, one of world's largest organised retail chains, on Wednesday said its sourcing of goods from India would be worth over 600 million dollars by the year-end, around 50 per cent more than in 2005.

The chain's global procurement division announced the projected figures in a press release, saying major categories of goods procured from India include home textiles, apparel, fine jewellery and household items that are supplied to the company's stores around the world.

Wal-Mart has bought a substantial amount of Indian-made goods through importers, the release said.

The company announced the appointment of Rajnish Kapur as general manager of Wal-Mart's Global Sourcing India Private Ltd to oversee the company's sourcing from India, Nepal and Sri Lanka.

"Wal-Mart's position as one of the leading buyers of Indian products is a position carefully earned over the years through close partnership with our suppliers," Kapur said in the release.

The Indian sourcing division, which began its activities in 2001 with the opening of its Bangalore office, directly sourced goods worth over 400 million dollars from Indian suppliers in 2005. The Indian office now serves as the hub for sourcing merchandise from the region for Wal-Mart stores across the world.

[back to top]

Corporate blogging: Wal-Mart's fumbles

Big companies are blogging, for better (Sun CEO's geeky but candid blog) or worse ('Wal-Marting across America'), Fortune's Marc Gunther reports.

By Marc Gunther
Fortune
October 18 2006                 [back to top]

NEW YORK (Fortune) -- Blogging tends to be personal, social, lively and irreverent. Does that sound like a big corporation to you?

It doesn't to me either, but "corporate blogging" is no longer an oxymoron--or a rarity. According to a running tally of big-company blogs, more than three dozen of the FORTUNE 500 companies now produce blogs, for better or worse.

The video site will keep its identity after its $1.65 billion sale to Google is complete, its CEO insists, but 'a lot [needs] to be figured out. (Read the column.)

For better? Check out the writings of the world's best known CEO blogger, Jonathan Schwartz of Sun Microsystems (Charts). Sure, there's geek-speak. "Thumper (sorry, the x4500) is built atop a 2 socket Galaxy server, it leverages Solaris/ZFS...and has 24 terabytes of serial ATA disk inside," he wrote recently.

But Schwartz also offers straight talk: "Most people in the world will first experience the internet on their handset." And regular readers get a sense both of the issues facing Sun and the life of a tech company CEO. One of Schwartz's postings began like this: "I had lunch with Tony Blair today. (And yes, I have been waiting all afternoon to type that.)"

For worse? A blog praising Wal-Mart (Charts) called "Wal-Marting Across America," ostensibly created by a man and a woman traveling the country in an RV and staying in Wal-Mart parking lots, turned out to be underwritten by Working Families for Wal-Mart, a company-sponsored group organized by the Edelman public relations firm. Not cool.

This week, Richard Edelman, president and CEO of the firm, apologized on his own blog: "I want to acknowledge our error in failing to be transparent about the identity of the two bloggers from the outset. This is 100% our responsibility and our error; not the client's."

The lesson's clear. The best corporate blogs are open, honest and authentic, according to Debbie Weil, a former journalist and Internet marketing consultant who is author of "The Corporate Blogging Book" (Penguin, 2006).

"Packaged, filtered, controlled conversations are out," Weil says. "Open, two-way, less-than-perfect communications with your customers and employees are in." Weil, who blogs about business blogs at www.debbieweil.com, says corporate bloggers need to write with a human voice, post often, be transparent and enter into dialog with readers.

It turns out that there's no one way of doing a corporate blog. A few are written by CEOs like Schwartz or high-ranking executives like vice chairman Bob Lutz of General Motors (Charts), who gets help from other senior execs at GM. Others are so-called group blogs, like Poliblog, a new entry in which Verizon (Charts) executives discuss technology and telecommunications policy.

Still others range far afield: Wells Fargo (Charts) operates a blog called "Guided By History" which is all about natural disasters and addresses such questions as: "How do you prepare for drought?"

Not surprisingly, technology companies led the way into business blogging. IBM (Charts) and Microsoft (Charts) unleashed thousands of bloggers, many who write for small, specialized audiences. But Robert Scoble of Microsoft broke out of the pack to become a minor celebrity, attracting millions of readers and a contract to write a book about blogs called "Naked Conversations" (Wiley, 2006).

The Economist said of Scoble: "He has succeeded where small armies of more conventional public-relations types have been failing abjectly for years; he has made Microsoft, with its history of monopolistic bullying, appear marginally but noticeably less evil to the outside world."

Good business blogs put a face on impersonal institutions. Dell's bloggers wrote extensively about the recall of lithium ion batteries, providing lots of useful information as well as a feel for what it's like to deal with a massive customer service problem. (They explained that phone lines were overloaded but that Dell's battery-recall Web site had handled 15.4 million visitors.)

McDonald's blog, called Open for Discussion, is written by Bob Langert, a vice president for social responsibility, who writes about obesity, negotiating with Greenpeace and why Mickey D's gave out Hummer toys in its Happy Meals. In an unpredictable blog called Nuts About Southwest, a pilot writes about how he spots thunderstorms on radar and a flight attendant describes the joys of staying over in San Diego.

There are, of course, risks to corporate blogging. Dell's site was originally called "one-2-one" until a reader pointed out a porn site of the same name; it's now called "Direct2Dell." Boeing's blog looked like a PR operation when it all but ignored the news that the company's CEO, Harry Stonecipher, was forced to resign after having an affair with a subordinate.

Still, as companies learn how to use blogs well, we can expect to see many more of them. "If you don't talk with your employees and your customers in a way that lets them in on things, you're missing out on the game," says Edelman.

[back to top]

Florida Wal-Mart Workers Stage Protest

By Steven Greenhouse
New York Times
October 17, 2006                          [back to top]

In a rare demonstration, more than 100 Wal-Mart employees rallied yesterday at a store in Hialeah Gardens, Fla., a Miami suburb. They were protesting a new policy on employee absences as well as efforts at the store to cut workers' hours. Henry Gonzalez, the garden department manager at the store, said, ''People were unhappy that they were going to cut all of our hours, and some people in my department were even being cut back to just six hours a week. How is someone supposed to pay the bills on that?''

Officials at Wal-Mart headquarters said the protest, which lasted for more than an hour, was spurred largely by the store manager's plan to reduce payroll by cutting most workers' hours to 35 hours a week from 40. During the protest many workers chanted, ''Forty hours, forty hours.''

Wal-Mart officials said the top manager at the store had violated company policy by reducing hours across the board, instead of doing it the usual way by reducing hours here and there to take into account the needs of particular departments and shifts.

David Tovar, a Wal-Mart spokesman, said the company had corrected the store manager's mistake and had restored the workers to their former number of hours. ''We have taken appropriate action to make sure this doesn't happen again,'' he said.

The demonstration occurred as Wal-Mart Stores, the nation's largest retailer, has adopted several policies that are upsetting many workers, like wage caps, the use of more part-time workers and scheduling more employees to work nights and weekends. Wal-Mart has also introduced a new policy on absences that calls for disciplining employees with numerous unexcused days off.

''We continue to focus on improving the customer shopping experience by staffing our employees appropriately,'' Mr. Tovar said. In a letter to the manager, employees complained about schedule changes.

''They are also telling us, the associates, that our schedules will be drastically changed,'' the employees, known as associates at Wal-Mart, wrote. ''We will no longer have fixed/consistent days off. But the bigger problem is that our hours won't be consistent either. This is extremely unjust because there is no consistency whatsoever in our schedules.''

Wal-Mart says it gives workers three weeks' notice of their schedule to help them plan ahead.

Chris Kofinis, a spokesman for Wake Up Wal-Mart, a union-backed group that is pressuring the retailer to improve its pay, said his group had no role in organizing yesterday's protest. ''This demonstration resulted from a snowballing of concerns about all the new policies that Wal-Mart is forcing on its workers to try to increase profits,'' Mr. Kofinis said.

The employees' letter voiced concern about the company's month-old policy on absences and sicknesses. Under it, employees must first call a toll-free number at Wal-Mart's headquarters in Arkansas before being transferred to the employee's store to tell managers about the absence.

Under the policy, workers with three unexcused absences in a six-month period are admonished by a manager, while those with seven unexcused absences over six months face dismissal.

One of the protesters, Dionisia Salazar, who works in the deli at the store, said many workers were unhappy with the policy. ''If the school calls and says, 'Your son is sick,' if you have to leave to pick him up, that will be an unexcused absence,'' she said. ''I'm very worried about that.''

John Simley, another Wal-Mart spokesman, said workers had misunderstood the policy. He said it helped workers because calling a toll-free number at headquarters would help ensure that company officials knew employees tried to inform managers of their absence.

Andrea Zarate contributed reporting from Hialeah Gardens, Fla.

[back to top]

Future of Health Care or Quick Fix? Wal-Mart's Clinics Could Change the Nature of Medical Visits

By Terry Moran
and Charles Herman
ABC News
October 17, 2006                            [back to top] 

Oct. 17, 2006 - - The Wal-Mart Supercenter store in Fayetteville, Ark., looks like almost any other outlet from this retailer in America. There's the produce (Wal-Mart is one of the nation's biggest grocers now), and, of course, consumer electronics, apparel, an automotive center and a pharmacy, a bank and a health clinic. That's right. A health clinic. It's what many experts believe might play a crucial role in the future of health care in America: store-based, in-and-out, flat-fee, no-appointment-necessary medical clinics.

Sandy Branson is one of the nurse-practitioners at the RediClinic in the Wal-Mart in Fayetteville. She has worked here for a few months, seeing anywhere from a dozen to 20 patients a day.

Branson treats a strictly limited number of ailments. Only patients whose symptoms match a specific list at the RediClinic get treated. She usually sends her patients home fast and happy. Visits last 15 minutes on average.

Tina Johnson came in to get four immunization shots for her 5-year-old son, Carston. She told ABC News her visit went much more quickly than those she and her son have had in a pediatrician's office.

It's a reaction Branson said she hears a lot as patients tell her, "'We're so glad you're here,' 'this is so great … getting in and out,'" Branson said. "I hear it all the time, probably every patient I've seen since August."

'Get Well' Visit It's a pretty simple idea and here's how it works: Wal-Mart leases space to clinics that treat patients for a flat fee.

Let's say you're feeling ill and are feverish, achy and your nose is stuffed up. When you arrive at the clinic, you're checked in and you pay a flat fee of $45 upfront for a "Get Well" visit. Tim Green was not feeling well the day ABC News was in Fayetteville. He thought he had strep throat and wanted to be examined by a health care professional.

"I've been under the weather the last couple of days, and I decided to try to be seen," Green said. "I called my doctor and wasn't able to be seen. … This was the next number on my list."

So he went to the Wal-Mart clinic where Branson checked him out. Following a carefully designed set of protocols spelled out in the clinic's proprietary computer program, coupled with her own training and experience, Branson diagnosed a sinus infection and wrote Green a prescription.

There's another reason that Green, a salesman at the local Dillard's department store, went to Wal-Mart instead of a doctor's office: He has no medical insurance.

"Definitely for people with no insurance … they should come here because of the fact that it's cheap and you are going to get great service," Green told ABC News.

Right now, very few patients in America have ever seen a clinic like the one where Branson works. But that's going to change, and fast.

Today there are roughly a couple hundred store-based clinics like this one operating nationwide -- most in major retail chains like Wal-Mart, Target, CVS, Kroger, and most are located in the Midwest and the South.

But the dozen companies battling to control this emerging market said they have plans for expanding that number to several thousand in the next couple of years.

"When you put the convenience together with the affordability, and then you match that with high-quality routine health care, that's why this is such an appealing concept that I think will grow very rapidly," said Web Golinkin, CEO of RediClinic.

But, Golinkin admitted, his clinics didn't make money last year and probably wouldn't this year. "We'd expect a clinic would take 12-18 months to get the cash flow to break even," he said.

One Fix, but Not the Whole Solution There are still a lot of questions about how these store-based clinics will fit into the big and troubled picture of American health care.

"This isn't the answer," said Mark Smith, who runs the California HealthCare Foundation, an influential think tank. "It is maybe an answer to one set of problems we have."

Smith says these consumer-driven, store-based clinics will end up tackling only the easiest health care problems -- ear infections, strep throat and the like. But even that could make a difference.

"If we can't agree to take care of the cheap, simple stuff cheaply and simply, there's no way we'll be able to afford to take care of the expensive, complicated stuff," Smith said.

Others, like Alan Garber, director of the Stanford University Center for Health Policy, may support the general idea of in-store clinics but worry about the way these clinics could affect the rest of the health care system.

"One of the fears that I am sure many doctors' offices have is that the doctors will be left with the complicated patients who may not bring in much revenue but take an extraordinary amount of time," Garber said.

Some doctors have already come out against the concept of retail-based health care. In particular, the American Academy of Pediatrics announced that it opposes the use of the retail-based clinics. The group worries about the "continuity of care," the gathering of information about a patient over multiple visits and across multiple health care providers.

"I'm concerned that some things are going to be missed," said Dr. Denice Cora-Bramble, a pediatrician and the executive director of Community Pediatric Health at the Children's National Medical Center in Washington, D.C. "It's understanding what are some of the other issues in the life of a child that impact that particular encounter."

Side Effect for Wal-Mart: Extra Revenue? And then there's the Wal-Mart factor. Wal-Mart is a retail giant -- the world's biggest. Each week 130 million consumers shop there. And neither Wal-Mart nor any of the other big chains in this business are setting up these clinics for charity's sake. "Retailers are getting into this because I believe they benefit from anything that brings the customer into the store," Garber said. "It's probably viewed as a great revenue source."

ABC News asked Bill Simon, Wal-Mart's executive vice president in charge of these operations, about the profit motive at play with the in-store health clinics.

"It's an opportunity for us to do what we do best in a segment of the economy that needs a little dose of Sam Walton's business philosophy," Simon said. "How do we straight-line from the health care provider to the patient rather than provide all the twists and turns that occur in the health care system today."

There's one way big retailers will hold down costs, by strictly limiting what the clinics do. No MRIs with their high-maintenance costs are done in these clinics. There are also strict limits on the kinds of ailments nurse practitioners like Sandy Branson are allowed to treat.

But for all the potential limits and concerns, it's clear many patients -- or customers here at Wal-Mart and at other stores -- are ready for the revolution to begin.

[back to top]

Working Things Out With a Giant Customer

By Ann Zimmerman
Wall Street Journal
October 17, 2006                               [back to top]

Romano Pontes, a longtime apparel supplier to Wal-Mart Stores Inc., vividly remembers the advice the company's legendary founder Sam Walton imparted to him the only time they met. "'If you believe in a point, scream it as loud as you can to whomever will listen to you,'" Mr. Pontes recalls of the 1992 meeting to discuss how to improve the discount retailer's apparel offerings.

This spring, Mr. Pontes put Sam Walton's advice to the test and risked losing Wal-Mart, his biggest and most lucrative client, in the process.

Small Business editor Gwendolyn Bounds2 talks about some key strategies for a small business to stand up to a retail behemoth like Wal-Mart.Mr. Ponte and a Wal-Mart buyer had a disagreement over a shipment of apparel that wasn't selling. The buyer insisted that Mr. Ponte take the garments back, which would mean sustaining a financial hit in the short run. But the alternative was to refuse and potentially take a much bigger financial hit in the long run -- the loss of a big account.

Making a Case

With Mr. Walton's words still echoing in his head, Mr. Pontes says he decided to fight for what he thought was right. He thinks small-business owners who work with big corporations frequently are afraid to stick up for themselves, fearing they will ruin the relationship. He says that not giving in doesn't have to kill a business relationship. It can even strengthen it.

"You have to speak your mind, but you have to say it nicely," says Mr. Pontes, 46 years old. "I never said, 'I want to sue you.' I just made my case."

Mr. Pontes's company, Global Vision Inc., is one of 61,000 U.S. suppliers to Wal-Mart, which is known in the industry for being a tough taskmaster. The company says it doesn't know how many supplier relationships end each year and how many new vendors they bring on board.

Each supplier has a different vendor agreement with Wal-Mart, according to company spokeswoman Amy Wyatt. Some contracts may specify that unsold products will be returned. It depends on the type of product and supplier.

Shouldn't vendors always have agreements like that in writing?

"Not always," says Ms. Wyatt. "We believe it's best to have an open and transparent relationship with our vendors and have the ability to work things out. Situations are not always clear cut."

What is clear is that many small suppliers to retail behemoths don't think they can fight back for fear they will lose the account. Mr. Pontes's strategy was to take his case as high up the chain of command as possible and to make sure Wal-Mart knew there were competitors that were interested in the same goods he was providing to Wal-Mart.

Mr. Pontes makes his living buying excess inventory of name-brand clothing and accessories -- Ray Ban sunglasses, Polo Ralph Lauren shirts, Calvin Klein jeans -- made by U.S. manufacturers. He, in turn, sells them to discount retailers based in Latin America, Europe and Asia.

Branded manufacturers, he says, want to unload their excess product, but risk diluting their brand equity if they sell it to discounters in the U.S. Overseas retailers are hungry for hot American labels at low prices but don't have direct contacts for them. Mr. Pontes says he offers both a solution.

About 30% of the time he gets manufacturers to make special orders for a particular retailer, a way for the manufacturer to use excess fabric.

Mr. Pontes's disagreement with Wal-Mart began last fall, when a buyer for the company's Sam's Club 9 outlets in Puerto Rico called Mr. Pontes with a request. She wanted about 4,000 Ocean Pacific cargo pants in a special cut. Mr. Pontes delivered the order, but within a few months the buyer said they weren't selling well. Mr. Pontes says he told them he would try to resell the clothes to stores in another nearby country, but before he could do so, he adds, Wal-Mart shipped the merchandise back to his La Jolla, Calif., warehouse and deducted the purchase price from what it owed his company.

Wal-Mart disputes this, saying Mr. Pontes agreed to take the pants back, according to Ms. Wyatt.

This was the first time in Global Vision's 20-year relationship with Wal-Mart, Mr. Pontes says, that he was asked to take back his wares. The accompanying paperwork, he adds, claimed the reason for its return was that the merchandise was defective.

Not in Contract

Although Global Vision's contract with companies doesn't spell out the policy for merchandise that doesn't sell, Mr. Pontes says he had an unspoken agreement that "we would work things out."

In the past, for instance, the retailer might mark the product down to sell it more quickly. In return, Mr. Pontes would sell the company's next order at a discount to partially offset the retailer's loss or diminished profit from the earlier order. But first, he would always try to find another buyer, frequently in another country.

Wal-Mart declines to discuss the specifics of Global Vision's contract, but Ms. Wyatt says that, in general, "if a customer is not responding to a certain product, as a rule we go back to the suppliers and determine a course of action to get it out of inventory. Sometimes it goes back to the supplier, sometimes we take the loss."

Had Mr. Pontes taken the order back, he would only have lost about $12,000 -- a small amount, he admits, for a company that has about $15 million in revenue a year and six employees. But Mr. Pontes says he didn't want to set a dangerous precedent. "It was the principle," he adds.

To straighten out the situation, Mr. Pontes says, he started with two members of the buying team, who claimed Mr. Pontes had authorized the goods to be returned. Neither side would relent, so Mr. Pontes then made his case to a senior executive in the finance department in Wal-Mart's Bentonville, Ark., headquarters. This time, Mr. Pontes said that he would produce documentation that the merchandise wasn't defective and challenged the company to prove that it was.

Mr. Pontes says he also strongly hinted that he wasn't going to deliver Sam's Club's next order for its Puerto Rico stores and then contacted his warehouse employees and told them to stop shipment of pending Wal-Mart orders to stores in about three or four countries.

A conference call was set up between Mr. Pontes and a general-merchandise manager. But two hours before the scheduled call, Mr. Pontes says he canceled and sent an email instead, claiming he had stopped shipments on Wal-Mart orders to locations around the world. He added that other buyers in Puerto Rico were interested in buying Wal-Mart's 1,296-piece order of T-shirts and board shorts by Quicksilver, a trendy teen brand.

Less than two hours later, Wal-Mart emailed back, saying it would pay for the original Ocean Pacific order and wanted it shipped back to Puerto Rico.

Business Partners

Wal-Mart says it was committed to working with Mr. Pontes and finding a "viable" solution to the problem. "Our suppliers are our business partners and we benefit from an open and transparent relationship with our suppliers," Ms. Wyatt says. "Whether they are small businesses or multinational corporations, they have the ability to use what we call our open-door policy. And they can do it all the way to the CEO."

Says Mr. Pontes: "You have to have courage and guts, elevate it as high as you can. If you leave it at the buyer's level, they'll bury you. I went four levels higher than whoever is in charge of our accounting."

"I was proud of myself," Mr. Pontes adds. "I did not destroy the relationship. In fact, they want me to sell them more. I just landed a big account with Sam's for Mexico."

[back to top]

Wal-Mart Shops for China's Trust

By Brian Bremner
BusinessWeek
OCTOBER 17, 2006                                    [back to top]

The U.S. big box already has 60-plus stores in China, but in acquiring Taiwan's Trust-Mart would outstrip even French rival Carrefour

There have been plenty of lost-in-translation moments for Wal-Mart (WMT) overseas this year. The $300 billion-plus retailing colossus sold off loss-making operations in South Korea and Germany in 2006, and has bled more than $1 billion from its Japanese operation since taking a stake in Japanese retailer Seiyu back in 2002 (see BusinessWeek.com, 9/13/06, "Japan: Wal-Mart's Looking for a Partner—Again").

These setbacks aside, Wal-Mart shows no signs of letting up in its efforts to take its unique brand of retailing abroad. On Oct. 16, The Wall Street Journal Online reported that Wal-Mart has agreed to acquire Taiwanese retailer Trust-Mart in a bid to expand its retailing footprint on mainland China. If so, the deal would set the stage for a bruising battle in a critical market with France's Carrefour (CRERF), which also reportedly bid for Trust-Mart and has more than 70 hypermarket retail outlets in nearly 30 Chinese cities.

Carrefour's China sales last year were about $2.2 billion, nearly twice Wal-Mart's. Analysts say Carrefour has been more nimble than Wal-Mart at adapting its stores to Chinese tastes—for example, by styling its fish and produce departments after traditional Chinese street markets, with salespeople beckoning customers to step up for a closer look. "Local adaptation has always been Carrefour's strong point overseas," Carrefour CEO José Luis Duran told BusinessWeek in a recent interview.

Yet Wal-Mart, the fabled and controversial U.S. retailer, founded in 1962 by Sam Walton, is already a big international player. It operates some 2,745 stores outside the U.S. and is particularly well entrenched in Mexico, Canada, Brazil, Central America, and Britain. About 20% of its revenues are from overseas.

LEARNING THE ROPES. Wal-Mart entered the Chinese market about a decade ago, and now operates more than 66 of its stores in 34 or so cities. It invested about $215 million in China during that period, and has established 20,000 supply partnerships to supply those stores and its retail outlets back in the U.S. and elsewhere. Wal-Mart says it exports (directly and via third-party suppliers) about $18 billion worth of goods from China every year.

Yet while Wal-Mart has excelled in developing low-cost sourcing relationships in China, it still has some work to do to truly click with Chinese consumers. "Knowing how to source and negotiate for low prices requires a very different skill set than selling to the Chinese consumer," says Shaun Rein, founder of Shanghai-based China Market Research Group.

Rein and others think a takeover of Trust-Mart would give Wal-Mart better insights into the mindsets of Chinese consumers as well as better access to choice retail locations. Wal-Mart is expected initially to take control of 30 stores and overtake Carrefour in the hypermarket arena in terms of outlets.

CROSS-SELLING PROBLEMS. If Wal-Mart can integrate Trust-Mart more seamlessly than it has executed other foreign acquisitions, this could be money well spent. McKinsey principals and retail specialists Wai-Chan Chan and Richard Cheung estimate that retail sales in China could hit $760 billion by 2008, and have been growing about $80 billion a year thanks to the mainland's white-hot economy and growing consumer wealth.

The trick will be making the economics of big-store retailing work in China's less developed urban markets. The retailing concept works well in major cities such as Shanghai, says McKinsey's Chan, where people tend to buy more high-margin general merchandise rather than thin-margin food products. "The challenge in a second-tier city is that people will go in for food and not so much general merchandise," he says.

On top of that, Chinese consumers are likely to stay loyal to mainland specialty retailers that excel at service and product expertise, according to Shanghai-based Interbrand China managing director Frank Chen. "They will go to hypermarkets for everyday purchases," and specialty retailers for certain purchases that require more expertise and after-sales service, he figures.

MISSION CRITICAL. In the giant outlet space, in which retailers offer everything from consumer electronics to groceries, Wal-Mart and Carrefour could do well. However, big domestic specialty retailers such as the home appliance chain Gome will also continue to thrive.

This much is clear: Wal-Mart must succeed in a fast-track market such as China to offset slower sales growth back in the U.S. Wal-Mart CEO H. Lee Scott would like to see overseas revenues reach about one-third of total sales from some 20% now. Getting the Chinese market right after the recent setbacks abroad is critical for the U.S. retailer.

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

[back to top]

Wal-Mart to Buy Grocer-Retail Chain in China

Deal Would Bolster Position In Crucial Overseas Market After Missteps Elsewhere

By KATE LINEBAUGH
Wall Street Journal
October 17, 2006                                [back to top]

BEIJING -- Wal-Mart Stores Inc. agreed to acquire a general-merchandise chain in China for about $1 billion, according to people familiar with the transaction, in a deal that could give the world's largest retailer the biggest food and department store network in China.

The deal for the Chinese hypermarkets of Trust-Mart, a closely held Taiwan company, comes as foreign retailers look to tap China's fast-expanding economy, large population and increasing middle class. It also follows Wal-Mart's recent exit from Germany and South Korea.

If it is approved by Chinese regulators, the transaction would vault Wal-Mart past its archrival, Carrefour SA of France, in number of hypermarkets in China. Wal-Mart beat out Carrefour for the Trust-Mart purchase, according to people involved in the deal. Hypermarkets are giant stores that sell a wide range of general merchandise and food.

While Wal-Mart has struggled in some overseas markets, it can't afford missteps in China. Its U.S. business gains are slowing, and costs are rising, forcing the company to look elsewhere for expansion. (See related article.) The company has said it plans to add 18 to 20 stores in China this year. It currently has 66 stores in China, including 61 hypermarkets.

The transaction is structured to occur in phases. The Bentonville, Ark., company will acquire 31 stores initially, according to a person involved in the transaction. And then, over the next three years, Wal-Mart will acquire the remainder of Trust-Mart's 100 stores as each outlet meets various criteria, including compliance with fire codes. Details of the payment weren't disclosed.

A staggered purchase would follow Wal-Mart's practice of buying minority stakes in foreign retailers, and then increasing its holdings to a majority over time. Earlier this year, the company increased its stake in Central American Retail Holding Co., a supermarket chain operating in Central America, to 51% after initially purchasing a third of the chain from Dutch food company Ahold NV last year. Similarly, Wal-Mart de Mexico started as a minority stake in retailer Cifra. In Japan, the company purchased a 6% stake in struggling supermarket retailer Seiyu in 2002 and two years later held a controlling share.

Wal-Mart's acquisition of Trust-Mart, which the companies agreed to more than a month ago, requires regulatory approval from China's Ministry of Commerce. Chinese government approval of acquisitions by foreign companies can be a lengthy and complex process. In this case, however, the company being acquired is already foreign-owned, so the deal may pass muster more readily.

Officials of Trust-Mart declined to comment. A Wal-Mart spokeswoman declined to comment.

A spokeswoman for Carrefour -- the world's second-largest retailer by sales, after Wal-Mart -- declined to comment on the deal or on Carrefour's interest in buying the Trust-Mart stores in China. The deal would be a setback for the Paris retailer. During the past 18 months, Carrefour has withdrawn from several foreign markets, including Korea and Japan, and is focusing resources on markets where it can play a dominant role.

By acquiring Trust-Mart, which Taiwanese investors founded in 1997, Wal-Mart will gain outlets in more than 20 Chinese provinces or districts and take on about 30,000 workers, according to information about Trust-Mart on its Web site.

The deal would mark a success in Wal-Mart's international business in a year that has been marred by notable retreats. In May, the company exited from South Korea. In July, it withdrew from Germany after eight years in the market, suffering from stiff competition from cut-rate retailers, strong unions and labor restrictions. The company sold its 85 stores to a rival, taking a $1 billion charge in the process.

Penetrating China's market has been challenging because it is highly fragmented with tight profit margins and dominant local players, and getting approvals to open new stores can be a slow process. So foreign companies have been on the hunt for acquisitions.

--Gary McWilliams in Houston, Juying Qin in Hong Kong and Cecilie Rohwedder in London contributed to this article.

[back to top]

PayPerPost tests your ethics, & Edelman’s fake blog for Wal-Mart

By Matt Marshall
VentureBeat
17th October 2006                              [back to top]

[1] PayPerPost is a Florida start-up that lets bloggers get paid for writing about products and other companies.

It has just got $3 million in funding from [2] Silicon Valley venture firm Draper Fisher Jurveston and others.

People have said this is a controversial company, because regular readers can get duped if bloggers don’t disclose they are getting paid.

Others have said that the real intent of the service is to help the advertisers paying for the blog posts to boost search result rankings for their companies (the more bloggers writing about their company, the more incoming links the company is likely to get, and thus the higher it will go in results).

We talked with Josh Stein, venture capitalist with DFJ, who led the deal, and he’s steadfast in his belief that the company is doing a “good, valuable” service. He concedes it’s controversial: “Like many things, if you look at the most cynical interpretation of it, you could see how it could be a source for bad.”

But he said that some companies feel so much pressure to get more users — no matter how many users they may already have — that they’ll want to generate publicity for their new products. And they should have the right to pay someone to write about them. Bloggers, Stein said, have to decide what sort of disclosures they want to make with their readers about this, and whether it fits with their ethics. But the market should decide that, not PayPerPost. “The blogger knows better than we do what their social contract is with their reader base.”

The ethics question arose today in the Blogosphere, when it emerged that public relations firm was writing a [3] fake blog on behalf of Wal-Mart (UDPATE: Although see comments below about dispute on this):

In case you missed the story, a blog ostensibly authored by a couple traveling across America in their RV and spending nights parked in WalMart parking lots turned out to be a fake blog, the brainchild of WalMart’s PR counselors at Edelman. While fake blogs (and other fake social media) are nothing new, it’s dismaying to see it emerge from Edelman, which has some of the smarter new-media people on its staff (Phil Gomes, Michael Wiley, Steve Rubel and more), and which touts itself as the PR firm that truly gets social media. This is the third time (as Todd Defren noted in his post) that Edelman has botched the whole social media thing on WalMart’s behalf…

DFJ’s Stein said PayPerPost is about to release some tools that give bloggers a variety of disclosure policies to put on their blogs if they use PayPerPost. These can be badges on their blog that say the blogger is paid for some posts, but doesn’t disclose which ones, or it can say the blogger discloses when any post is paid for, and so on.

PayPerPost launched three months ago, and Stein says the response has been “dramatic.” Even before the publicity emerged this month after DFJ invested, the company had made $100,000 in revenue. Every day, ten or fifteen new advertisers arrive at the site, looking for more bloggers to pay, he said.

Notably, what got Stein excited about PayPerPost, he said, is his recollection of his own scorn for search engine Overture, when it launched. That site was for paid results only, and he remembered thinking all the same thoughts that PayPerPost is getting criticized for: “I thought it was the sleaziest, dumbest idea I’d ever heard of.” Of course, Overture went on to become a popular company, when Google borrowed many of its aspects, and the model was refined. “I told myself, ‘I’m not going to make the same mistake again,’” he said.

Techcrunch first wrote [4] about the company here.

[back to top]

For Sale: Toads and Eels

A Wal-Mart analyst assesses the retail giant’s plans to expand into China.

By Jessica Bennett
Newsweek
Oct. 17, 2006                          [back to top] 

Wal-Mart’s expansion into every nook and cranny of the United States has long been the stuff of corporate legend. Now the $300 billion retail empire is setting its sights on China, where the corporation has reportedly offered more than $1 billion to acquire Trust-Mart, the nation’s second-largest hypermarket chain. If the deal goes through, the purchase of Trust-Mart, which is privately owned by Taiwanese entrepreneurs, would represent one of the discount seller’s largest acquisitions in recent years. However, Wal-Mart’s previous foreign ventures have had mixed success: it’s done well in countries like Mexico, but has pulled out of its operations in South Korea and Germany.

What’s the reasoning behind Wal-Mart’s latest retail maneuver, and what can it gain from buying out a local company? NEWSWEEK’s Jessica Bennett spoke with Charles Fishman, author of “The Wal-Mart Effect” (Penguin) about the corporation’s international ventures. Excerpts:

NEWSWEEK: Put this billion-dollar purchase into perspective for us, in relation to Wal-Mart's global size and reach. Charles Fishman: The money Wal-Mart is spending is not significant compared to the size of the company. What’s important about this is that with a single stroke, Wal-Mart is going to more than double its presence in China ... They’re getting a widespread store network [and] a lot of local knowledge with a single deal. That’s what’s significant.

Does this put Wal-Mart a step ahead of its competitors? The retail market in China is really interesting because it’s very deeply bifurcated. Eighty percent of what people buy in China is not bought in what we’d consider to be typical stores. It’s bought in open-air markets or local shops. And of the remaining 20 percent or so that we’d recognize as typical retail stores, only a tiny bit of that is foreign—about 10 percent. So most of the grocery-store kind of retail remains in China remains in the hands of Chinese companies, and yet there’s this kind of mad race to tap the blossoming Chinese retail market by Wal-Mart, [France's] Carrefour and [Britain's] Tesco … This really gives Wal-Mart a big step forward in the world of foreign retail, it gives them an access to a supply chain, [and] it will really help them get established outside of the big cities in China.

How big could this deal be in terms of scope and revenue? Wal-Mart has about $1.2 billion in sales in China right now, out of $315 billion. So China is one third of one percent of Wal-Mart’s sales. But China is a place where Wal-Mart could do exactly what it has done in the United States in half the time. China could easily accommodate 1,000 or 2,000 stores given the size of the population, and there’s a real hunger for the kind of retail that Wal-Mart and its colleagues in the global retail world are delivering in China.

But Wal-Mart has pulled out of international markets like Germany and South Korea. Why hasn't their model always translated well overseas? Wal-Mart has a really interesting either homerun or strike out experience internationally. In Germany, there were three things that got in Wal-Mart’s way. One was the [strong] labor unions in Germany. [Another was that] there are much stronger laws about retail in Germany that also limit Wal-Mart’s competitive advantage. … [Lastly,] there's a low-cost competitor already out there in Germany—so Wal-Mart just had a tough time finding a niche. As for South Korea, South Korean consumers are much less focused on price, and much more focused on quality and what they’re buying. That’s not been Wal-Mart’s strength, selling to quality. Wal-Mart’s strength has been price, so they never quite figured out South Korea.

Where has Wal-Mart seen the most success overseas? In Mexico they went from nothing to the largest retailer in the country in 10 years. The Mexican market was maturing and blossoming and there was a real hunger for the next level of retail. I think at some point there becomes a real frustration with what’s available at small stores, or with having to ride the bus to get to a hypermart.

But why China? To them, China looks like Mexico—a place where capitalism is really taking hold, where there’s a real entrepreneurial spirit, where there’s a strong hunger for consumer goods that’s not yet well-satisfied, and also, real interest in a good deal.

How is the plan in China different from what has been executed in Mexico? They’re been pretty successful in China while also being pretty cautious. Ten years after opening in Mexico they had 600, 700 stores, something like that. Ten years after opening in China they have 66 stores. So they’ve moved a little bit slower but they’ve announced in fact that they’ve picked up the pace.

Do you think the company can successfully absorb Trust-Mart? They should be able to. One thing they’ve done that’s pretty smart is that all the store managers of Wal-Mart stores in China are Chinese nationals, so they’re clearly thinking long-term in China in that they’re trying to develop real expertise in the Wal-Mart way in the country—presuming that they’re going to grow in the country and they’re going to need local talent to power that growth.

What’s happening in the U.S. market that’s driving Wal-Mart’s international ambitions? Right now in the United States, 62 percent of Americans live within five miles of a Wal-Mart, and 94 percent of Americans live within 15 miles. So if you want to shop at Wal-Mart, you can ... The kind of merchandise Wal-Mart sells means that if you’re not cracking new geographic territory and you’re not finding new lines of business, it’s hard to grow dramatically.

What’s different about the market in China? The economy in China is booming, and retail spending in China is growing at 15 percent a year—three times what it’s growing out here. It may grow at 15 percent a year for the next 20 years just because of the maturation of the middle class there. And the country is essentially underserved by this kind of mature retail salesmanship, so it’s a wide-open territory. If Wal-Mart’s going to continue to grow and thrive based on growth, it’s got to grow outside the United States.

How will they handle the unions in China given their difficulties with labor in Europe? The idea that there are labor unions in China is kind of silly. There are labor union organizations but they don’t have collective-bargaining rights. That is to say, they aren’t permitted to sit down at a table and hash out a labor agreement with Wal-Mart management and then go on strike if they don’t get what they want. The words are the same, labor unions, but they are not comparable to U.S. labor unions … It’s not going to interfere with their way of doing business.

Are they likely to keep the Trust-Mart name or rebrand it as Wal-Mart? My bet would be that they’d migrate that over to Wal-Mart.

Will China change the culture of Wal-Mart or will it be the other way around? I don’t know that China will have that much impact on the way Wal-Mart does business in, say, Birmingham, Ala. I think what’s been pretty impressive is how carefully Wal-Mart has adapted to what Chinese consumers want, which is something they’ve struggled with in some other places. You know, you can buy live toads in the Wal-Marts in China. You can buy live eels, live fish—they’re all for sale, because those are an important part of the Chinese diet and people like to pick them themselves. So they’ve done well at adapting, from what I gather, to the range of Chinese goods, while also bringing a range of the global brands of consumer goods to areas of China where they would otherwise been either very, very expensive or unavailable. So it’s an interesting mix in terms of those kind of cultural things.

What’s next for Wal-Mart? Can they continue to grow without China? Wal-Mart still opens one new supercenter on every business day of the week in this country. But they know that Americans are kind of taking a breath. So they’re thinking about the future, and clearly, in this case, the future is China.

Correction: The original text of this article incorrectly stated that Wal-Mart had pulled out of its operations in Brazil and Japan. Wal-Mart says it is still operating in these two countries.

[back to top]

Wal-Mart to buy Chinese chain for $1 billion

By Tony Munroe
and Jerker Hellstrom
Tuesday October 17                 [back to top]

HONG KONG/SHANGHAI (Reuters) - Wal-Mart Stores Inc. has agreed to buy a Chinese hypermarket chain for about $1 billion to become the top foreign player in China's fragmented retail market, a source familiar with the situation said on Tuesday.

If approved by Chinese regulators, the deal to buy Trust-Mart, a closely held Taiwan company with 100 supercenters in China, would push Wal-Mart past Carrefour SA for the most supercenters in China, Asia's second-biggest retail market.

Spokespeople with Wal-Mart, the world's largest retailer, and Trust-Mart declined to comment on Tuesday.

Supercenters, also known as hypermarkets, are giant stores that sell a wide range of general food and merchandise. Wal-Mart beat Carrefour out in bidding for the Trust-Mart stores, the Wall Street Journal reported on Monday, citing sources.

Trust-Mart posted 2005 sales of about 13.2 billion yuan ($1.67 billion) at its Chinese hypermarkets, according to the China Chain Store and Franchise Association, well above Wal-Mart's 9.9 billion yuan in its Chinese stores.

By comparison, Carrefour had 2005 sales of 17.4 billion yuan at its Chinese hypermarkets while Germany's Metro recorded sales of 7.5 billion yuan, the data showed.

But China's retail market -- worth about $500 billion according to research firm Euromonitor -- is still dominated by Chinese chains, analysts said, with the foreigners lagging far behind industry leader Bailian Group Co. Ltd., which was created in 2003 through a merger of four major retail firms.

"When Wal-Mart expands, supposedly they are going to enjoy better economies of scale," said retail analyst Selina Sia with UBS in Hong Kong.

"The market is still highly fragmented. None of the chains have a dominant power to take leadership, but there are more domestic firms than foreign ones."

The top 100 retailers in China account for only 10 percent of the sector, accounting firm Ernst & Young said in a recent report.

INTERNATIONAL EXPANSION

Established in 1997, Trust-Mart employs more than 30,000 people at its hypermarkets in more than 20 provinces across China, and says it offers nearly 20,000 different products.

"Acquisition is the game. If you can buy 'x' number of stores in one scoop ... then you have increased size to help you cut down on the cost of supply. It's just the right thing to do," said Jack Huang, chair of the Greater China Practice of international law firm Jones Day, who closely tracks M&A trends in China.

"This acquisition will also open the door for more to be done by Wal-Mart, by Carrefour and their other competition," he said.

International expansion has become increasingly important for Wal-Mart as its U.S. sales growth slows. Its U.S. discount stores posted 7.9 percent sales growth for September, while the international business turned in a strong 32 percent gain.

Wal-Mart's international operations have endured some high-profile setbacks this year, however, as the retailer pulled out of South Korea and Germany.

The retail giant said in July it was selling its underperforming German stores to Metro, the country's leading retail chain, just after it in May announced the divestment of its loss-making South Korean stores to Shinsegae Co. Ltd. .

Wal-Mart has made no secret of its ambitions in China. The retailer has said that its operations there could be as big as its U.S. business in 20 years. Wal-Mart currently has more than 3,700 U.S. stores, but only about 60 in China.

By comparison, Carrefour had 78 stores in 2005 while Metro has 27 outlets, the China chain store association's data showed.

In March, Wal-Mart said it planned to hire some 150,000 people in China over the next five years -- five times the number it currently employs -- as it prepares for a major store expansion.

Shares of Wal-Mart closed on Monday down 14 cents, or 0.29 percent, at $48.32. Carrefour shares opened slightly lower on Tuesday, edging down 0.5 percent to 49.80 euros at GMT 0710, versus a 0.23 percent decline in the DJ Stoxx European Retail Index .

($1=7.91 yuan)

(Additional reporting by Emily Kaiser & Brad Dorfman in Chicago and Richard Dobson in Taipei)

[back to top]

Market Cheers Wal-Mart in China Talks

By Kim Clark
Posted 10/17/06                        [back to top]

News reports that Wal-Mart Stores Inc. is in talks to buy a big box competitor in China were cheered by Wall Street analysts but also met with some cautions from China experts.

Wal-Mart is reportedly in negotiations to buy Trust-Mart, owner of about 100 supercenters in China. Wal-Mart, which already has 66 of its own stores in China, declined to comment on the reports.

Alec Young, equity strategist for Standard & Poor's, said today that Wal-Mart's domestic sales seem to have hit a plateau and that its best hope for sales growth is now overseas. In September, for example, Wal-Mart reported that its stores open for at least a year eked out a 1.3 percent gain in revenue over last September. But Wal-Mart said its international operations' revenue was 32 percent higher than last September.

"The China market opportunity is too big to ignore," and the Trust-Mart purchase will pole-vault Wal-Mart ahead of its nearest competitor, Carrefour, Young believes.

But Marshall Meyer, a management professor and China expert at the University of Pennsylvania's Wharton business school, noted that Wal-Mart has stumbled in other foreign markets and faces tough home-grown competition in China. A Hong Kong-listed company called Wu-mart, for example, has grown far more rapidly and operates more than 500 superstores and convenience stores throughout the mainland.

Meyer says that the big box concept, which turned off customers in Germany, seems to be something of a winner in China. But other aspects of the Wal-Mart concept will have to be modified to succeed in China, he said. Wal-Mart, which has steadfastly fought unionization in the United States and Canada, has had to accept unionization of workers in China, he noted. And while Wal-Mart typically succeeds by squeezing supplier costs to the bone, that may be more difficult inside China, where poor transportation and internal tariffs have conspired to add extra costs to goods sold inside the country.

[back to top]

Wal-Mart Trumps Carrefour In China

Shu-Ching Jean Chen
10.17.06                                         [back to top]

Hong Kong - Wal-Mart Stores, the world's largest retailer, has raised the stakes in China by outbidding its competitor Carrefour of France for Trust-Mart, the top retailer in the country.

Winston Wong, the Taiwanese owner of Trust-Mart, is parting with his company for about $1 billion, giving Wal-Mart (nyse: WMT - news - people ) a chain of 100 hypermarkets, large department stores that sell everything from food to electronics.

The acquisition would give Wal-Mart the critical mass needed to challenge Carrefour in a fast-expanding market where it is lagging both in the number of stores and in profitability.

It also marks the second-most-important strategic move taken this year by Wal-Mart in China, after it broke with its anti-union tradition to allow China's official and sole labor organization to set up branches in all its 66 Chinese outlets earlier this month. Chinese union officials lauded the company, not known for its love of organized labor, as "a model for the promotion of a harmonial society."

Acquiring a market leader has been a proven strategy for success in China's complex regulatory environment and in the cutthroat mass-market retailing industry, where size is imperative for success.

Despite Trust-Mart's reputation for mediocre management, Wal-Mart would gain massive scale through the acquisition for it to more than double its retail presence. By purchasing an entire chain rather than opening new stores, Wal-Mart will be able to bypass cumbersome Chinese red tape: each city has its own requirements for new stores. As well, by purchasing existing stores, Wal-Mart avoids the complexities of land acquisition.

Wal-Mart needs to expand the number of outlets quickly in order to lower costs and capitalize on the growing affluence among China's urban customers before its rivals get a chance to establish themselves. Being No. 2 risks being doomed for failure, as Wal-Mart learned to its cost in South Korea when it sold its eight-year-old operation there to the domestic market leader, Shinsegae, in May.

"Growing by acquisition is a desirable approach for foreign operators like Wal-Mart," said Jack J.T. Huang, head of the greater China practice for the law firm Jones Day. The hypermarket business model, he said, works well in Asia, and the businesses that are successful must be cost effective. "They cannot be cost effective if they lack the economies of scale."

Carrefour gained a head start by arriving in China early and by rapid expansion in its early years. Even though Carrefour lags Trust-Mart by number of outlets, with 81 to date, it is the most efficient and profitable hypermarket operator in China, with nearly 12 billion yuan ($1.5 billion) revenue for the first six months of the year, compared with Trust-Mart's 7 billion ($885.4 million) and Wal-mart's 6.2 billion ($784.2 million), according to official statistics from the Ministry of Commerce.

Trust-Mart is advised by UBS. Wal-Mart relies on financial advice from Credit Suisse First Boston on the acquisition.

[back to top]

Wal-Mart Workers Protest Outside Fla. Store

By James Covert
Dow Jones Newswire
October 16, 2006                             [back to top]

NEW YORK -(Dow Jones)- In a rare display of open dissent by workers at Wal-Mart Stores Inc. (WMT), employees gathered outside a store in a Miami suburb Monday to protest recent changes in the company's labor practices. Chanting "We want 40 hours!" and "We want respect!" workers at a Wal-Mart supercenter in Hialeah, Fla., complained that the world's largest retailer has been cutting back on full-time hours, capping wages and forcing them to work increasingly irregular schedules while imposing stiffer penalties on workers who fail to show up for shifts.

The protests were sparked when a weekly work schedule was posted early Monday that reduced hours for some of the store's employees, Wal-Mart spokesman David Tovar said. The schedule was posted in error, he said, and managers met with workers late in the morning to explain that it was incorrect.

"It was a mistake and we have corrected it," Tovar said.

Workers interviewed by telephone Monday said about 150 to 200 employees had gathered outside the store at 2814 Hialeah Gardens at 9 a.m. The workers said that they weren't blocking entrances to the store and that it was operating Monday despite the protest.

"This company is not what it used to be anymore," said 27-year-old Yahima Morales, a department manager in health and beauty aids who has worked at the store for the past four years. "We've been working hard for this company, and there's no respect for us."

Rick Smith, executive director at the Florida-based Wal-Mart Workers Association, said he had no knowledge of the Monday rally in Hialeah. Over the past month, however, "activity has picked up dramatically," as the organization has been adding new members. A popular tactic in recent weeks has been for Wal-Mart workers to circulate petitions in support of co-workers whose hours are changed, Smith said.

"There's been much, much more upfront activity at the stores - not to the point of a big rally outside, but we kind of knew this was going to pop up somewhere," Smith said.

Spokesmen at two union-backed groups based in Washington - Wal-Mart Watch and WakeUpWalMart.com - also said they hadn't played any role in the Florida protest. Chris Kofinis, a spokesman for the latter organization, said that while he recently has helped stage political rallies across the U.S. to protest Wal-Mart's labor practices, he isn't aware of an instance where Wal-Mart workers organized a local protest on their own.

"We did not tell them to do this," Kofinis said. "They just called us to tell us about it, and what they were doing and why."

Workers at the Hialeah store said that they have been in contact with other stores nearby about staging protests at other locations but that many still fear for their jobs. Morales said irregular work hours are especially difficult for employees who have children, go to school, or who are elderly.

Wal-Mart has said that its new labor-scheduling policies are designed to better match work schedules with customer traffic and that it strives to post schedule changes weeks in advance. But workers say it frequently doesn't work out that way and complain that stricter rules have been imposed for missing shifts.

"One day you come in the morning, the next day at night, then it's a mixed shift, then it changes the next week again," said department manager Guillermo Vasquez. "You can't have a normal life."

On Saturday, The Wall Street Journal reported that Wal-Mart has enacted a new attendance policy that penalizes workers for multiple unexcused absences and requires them to call an 800 number whenever they get sick.

-By James Covert, Dow Jones Newswires

[back to top]

Watch Out Wal-Mart!

Mexican Progressives Target Wal-Mart After Its Involvement in the Presidential Election

by Ruben Garcia
and Andrea Buffa
CommonDreams.org
Monday, October 16, 2006                  [back to top]

As we enter the final weeks leading up to the US mid-term elections, interested parties are pulling out all the stops to make sure their candidates win. One such interested party is the corporation Wal-Mart, which newspapers just revealed plans to hand out election materials about certain candidates to its more than one million US employees.

But judging from what happened when Wal-Mart got involved in the recent presidential election in Mexico, the company may want to think twice. Since it was revealed that Wal-Mart's top shareholder illegally made campaign contributions that supported the right-wing candidate Felipe Calderon of the PAN, Wal-Mart has become the number one corporate target of progressive Mexican activists. In the last month alone, thousands of activists in Mexico City, Puebla, Guadalajara, Queretaro, and Xalapa have staged rowdy protests inside Wal-Mart super centers. Every weekend sees another city hop on the anti-Wal-Mart bandwagon.

It's not that there wasn't anti-Wal-Mart organizing in Mexico before. Local activists, business people, and academics tried and failed to prevent Wal-Mart from opening a store within site of Teotihuacan, the oldest archeological site in Mexico. They succeeded in stopping Wal-Mart from opening in the towns of Patzcuaro and Atizapan de Zaragoza, a suburb of Mexico City. Despite this, Wal-Mart has become the largest employer in Mexico, with 140,000 employees and some 850 "retail units."

Mexican progressives are concerned about the low wages that Wal-Mart pays its employees, the low prices it pays to its suppliers (for both agricultural and manufactured products), and the disregard Wal-Mart has for the cities and communities where it establishes its stores. But even worse, Mexicans have realized that just as it does in the US, Wal-Mart supports the politicians and policies that not only don't bring Mexican working people prosperity, but make the people poorer than they were before.

The recent escalation of anti-Wal-Mart activism was caused by Wal-Mart top stockholder Manuel Arango's financial contributions to a smear campaign against left-wing presidential candidate Andres Manuel Lopez Obrador of the PDR. Under Mexican electoral law, corporations are not supposed to fund campaigns supporting or opposing candidates, but this didn't stop a number of corporations from doing just that, through their corporate officers and shareholders. Lopez Obrador of the PDR, who ended up losing to Calderon in the hotly contested election, called for a boycott of corporations that illegally supported PAN's campaign. These included Coca Cola, Pepsi, Kimberly Clark, Televisa, and, of course, Wal-Mart. Wal-Mart is accused of not only giving money to the pro-PAN forces, but also distributing campaign literature to Wal-Mart of Mexico employees.

Because Wal-Mart is everywhere, it has become the main target of these anti-corporate protests. Every weekend in a different city, the PRD has organized thousands of people to enter Wal-Marts, fill up shopping carts, take them up to the registers as a group, and then begin chanting and raising a ruckus. The goal is to hurt the corporation in its pocketbook, because it has hurt Mexican progressives by supporting neo-liberal economic policies and the politicians who promote them.

These actions should give hope to anti-corporate globalization activists everywhere. Wal-Mart represents the worst face of corporate globalization, and the company is expanding throughout the world, especially in developing countries. But if Wal-Mart planned to use the model it developed in Mexico when it enters other markets, the recent protests may have thrown a monkey wrench into that plan. Now anti-Wal-Mart organizers in the United States have an ally on the other side of the border. The recent mobilization opens the possibility of a bi-national, if not international, campaign against Wal-Mart.

Ruben Garcia runs the Wal-Mart Mexico program at Global Exchange, www.globalexchange.org. Andrea Buffa is the Global Exchange campaigns director.

[back to top]

Blurry vision for Wal-Mart blog

BlogMA
October 16, 2006                       [back to top]

A photographer for the Washington Post found himself in hot water earlier this month, after it was disclosed that he had done some freelance work for Wal-Mart.

Jim Thresher shot photos for a pro-Wal-Mart blog during a cross-country trip. The paper has ordered him to remove the photos and to repay travel expenses covered by Working Families for Wal-Mart, a group that advocates for the chain and used the photos on its Web site, Editor & Publisher reported.

The incident caused both old and new media to shake their heads. Traditional media analysts focused on the ethics of a photographer working for a company that he may be required to cover, and many bloggers were outraged over the creation of a "fake" blog. Wal-Mart's PR firm, Edelman, also came in for its share of abuse.

[back to top]

Wal-Mart loses case for control of boycottwalmart.com

OUT-LAW News
16/10/2006                        [back to top]

The world's largest retailer Wal-Mart has failed in its attempt to gain control of the web address boycottwalmart.com. An arbitration panel has ruled that it was unlikely that visitors would be confused and think that it was a Wal-Mart site.

Domain name disputes are settled by the arbitration panel of the World Intellectual Property Organisation (WIPO). That body has ruled that Wal-Mart cannot have control of the disputed domain.

The domain is controlled by Traffic Yoon of South Korea, a company which put up no defence in the case. Wal-Mart argued that the domain name was "confusingly similar" to its own addresses, which is not permitted.

"Since [Wal-Mart's] mark is embedded in the disputed domain name, it is hard to say there is no similarity, but finding that the disputed domain name is similar to the Complainant’s marks is not sufficient," said the WIPO decision. "The critical question in this Panel’s view on this aspect of the Policy is whether the similarity is “confusing”."

"The Complainant has argued that formulating a domain name by adding a derogatory term to a trade mark always results in a domain name that must be seen as confusingly similar to the trade mark," said the panel. "A domain name which combines a disparaging or critical term with a trademark may well be confusingly similar to the trademark, but not always. This panel considers that confusing similarity will be established where those persons who are mostly likely to want to access a complainant’s website will be confused as to whether the complainant is the owner and operator of the website to which the disputed domain name resolves."

The panel ruled that Wal-Mart's case could not stand because nobody finding the website boycottwalmart.com would imagine that the site belonged to the retailer.

"This panel is of the view that members of the public wishing to find a website associated with the Complainant would not be confused as to whether the Complainant owned or operated the website at 'www.boycottwalmart.com'," said its decision. "It would be perfectly clear to anyone who recognized the Complainant’s trademarks that the disputed domain name would not resolve to a site used by the Complainant to promote its own goods or services."

"Accordingly, the Panel finds that 'boycottwalmart.com' is neither identical nor confusingly similar to the trademark “Wal-mart” nor any proven variants of that mark," it ruled.

Other decisions had ruled that the inclusion of a trademark in a name always made for confusing similarity or that the inclusion of a derogatory term such as 'boycott' always meant that the site could not be counted as being confusingly similar. Sole panellist Philip Argy said that neither approach should be taken and that cases should be judged on their own merits.

Argy's decision does provide some clarification but because precedents do not hold sway in the arbitration process it does not guarantee that other panels will follow the same rules.

© Pinsent Masons 2000 - 2006

[back to top]

Wal-Mart's Metro 7 and MyNetworkTV to Launch Partnership

Today Metro 7 Fashion Show to Kick Off Partnership During Mercedes-Benz Fashion Week at Smashbox Studios in Los Angeles, CA- On-Air, In-Store, Print and Online Outreach to Support December Debut of 'WATCH OVER ME' Drama Strip Starring Dayanara Torres

PRNewswire
Oct. 16                                  [back to top]

NEW YORK and LOS ANGELES -- Metro 7, Wal-Mart's exclusive fashion-forward women's apparel collection, has partnered with the new primetime broadcast network MyNetworkTV to help promote its upcoming drama series, WATCH OVER ME. The collaboration launches today during Metro 7's Los Angeles Fashion Week show, where the program's star and Metro 7 spokesmodel Dayanara Torres and cast members of MyNetworkTV's current dramas DESIRE and FASHION HOUSE will be in attendance.

The partnership with WATCH OVER ME includes wardrobing Torres' lead character of Julia Rivera, as well as other female characters on the show. The program will premiere at 9:00pm (Eastern/Pacific)/8:00pm (Central) on MyNetworkTV in early December.

WATCH OVER ME chronicles a classic love triangle between Julia; her fiance Michael Krieger (portrayed by Marc Menard), a successful businessman engaged in devious business practices; and ex-Special Forces operative Jack Porter (Todd Cahoon), who Michael has hired to protect them. 65 one-hour episodes of WATCH OVER ME, all in Hi-Definition, will air Monday through Friday over the span of 13 weeks. Recap episodes highlighting the previous week's storylines will air every Saturday. WATCH OVER ME also stars Casper Van Dien and Catherine Oxenberg.

Under the joint project, Metro 7 promotional spots featuring Torres will air during WATCH OVER ME on MyNetworkTV to encourage viewers to find out more about her Metro 7 wardrobe. Metro 7 signage in approximately 1,500 Wal-Mart stores nationwide also will be tagged with tune-in information promoting WATCH OVER ME and MyNetworkTV. Additionally, advertisements in national magazines Vogue and Lucky will include tune-in messaging.

"The Metro 7 customer has a youthful spirit, is hip, and very contemporary. She will clearly be part of the WATCH OVER ME audience. This partnership is a great way to reinforce Metro 7's fashion message to our existing customer as well as to introduce the brand to a whole new range of customers," said Karen Stuckey, Wal-Mart senior vice president/general merchandise manager, ladieswear.

Regarding the announcement, Bob Cook, president and COO, of Twentieth Television, stated, "This promotion with Metro 7 and Wal-Mart will provide MyNetworkTV and WATCH OVER ME with invaluable targeted exposure to consumers throughout the U.S. Having an international star in Dayanara Torres on board to collectively promote MyNetworkTV, WATCH OVER ME, Metro 7 and Wal-Mart greatly benefits all parties involved with this far reaching arrangement."

MyNetworkTV, broadcast television's only all Hi-Definition network, as well the only network with original programming 52 weeks a year, features Twentieth Television's new scripted primetime drama strips DESIRE and FASHION HOUSE, starring Bo Derek and Morgan Fairchild. The hour-long programs embrace a 65-episode story arc stripped Monday through Friday over the span of 13 weeks. Each Saturday, re-cap episodes highlighting the two programs' previous week's storylines air. DESIRE follows two close brothers on the run from the mafia who both fall in love with, and then passionately battle for, the same woman. FASHION HOUSE takes an in-depth look at the dreams, successes and tragedies found everyday in the fashion industry.

Metro 7 launched in October of 2005 with great success in the market, launching in 500 Wal-Mart doors in the U.S. and quickly growing to 1500 doors. The trend -- right line is designed to appeal to a more fashion forward customer, and uses luxurious fabrications and fashionable details. Price points range from $9.89 - $98.94. In addition to missy apparel, Metro 7 is available in plus sizes and also offers accessories including footwear, handbags, belts, and jewelry.

[back to top]

Wal-Mart Canada eyeing Canada's $1-billion-plus organic foods market

By: RITA TRICHUR
2006-10-15                                  [back to top]

TORONTO (CP) - Discount powerhouse Wal-Mart Canada (NYSE:WMT), which is opening its first Canadian super centres this fall, is preparing to shake up this country's billion-dollar organic grocery trade with the promise of sharper competition and lower prices.

But its move into that burgeoning market comes at a time when a rash of food scares has sparked skepticism among some consumers about the purported advantages of organic foods.

Wal-Mart has issued an open call to Canadian product suppliers - especially vendors of fresh food and eco-friendly wares - to help stock its existing 272 Canadian discount stores and seven planned Ontario super centres, which will carry a full range of fresh produce, meats and bakery items in addition to general merchandise.

There is a growing appetite for organic foods in Canada and Wal-Mart Canada plans to court hundreds of potential suppliers in Toronto next month, said Jim Thompson, senior vice-president of the retailer's merchandise division.

"We see this as a huge opportunity," Thompson said. "We're trying to get ahead of the curve here in Canada and address the relevant customers and what they are asking for."

Organic foods are grown without pesticides, fertilizer, hormones, antibiotics or biotechnology, and the sector is booming with growth estimated at between 15 and 20 per cent per year.

For its part, Wal-Mart is planning to offer a wide array of organic products including fresh produce, dairy, meats, frozen foods, snack foods, bread, chips and baby products.

"I think we can play a leadership role in Canada in growing the organic market," Thompson said.

"We sell for less, so we will be competitively priced on all organics, whether it is fresh produce or light bulbs."

To achieve this, Wal-Mart plans to use its massive buying scale to leverage down logistic, packaging and transportation costs with suppliers, while passing those savings on to consumers.

And with about one million Canadians shopping at a Wal-Mart store on any given day, the retailer certainly has the potential to revolutionize the sector through critical mass.

But despite their growing popularity, critics cite growing safety concerns about organic foods which are currently certified by a mishmash of authorities across Canada.

"There is no national standard for that type of food," said Bruce Cran, president of the Consumers' Association of Canada.

"And with what we've just been through with spinach, lettuce and carrot juice, it draws attention to the potential for a huge problem where we don't have any regulatory standards."

Canada imports between 80 to 90 per cent of the organic foods consumed domestically and the federal government is under increasing pressure to introduce national standards to regulate and certify products.

Last month, the Canadian Food Inspection Agency issued proposed regulations that are now up for discussion. The CFIA does not plan to certify those products itself, but would accredit and regulate existing bodies which would carry out the approval process.

Laura Telford, executive director of Canadian Organic Growers, said the deadly E. coli outbreak that affected California spinach was linked to a nearby cattle ranch - making it a case of water contamination from conventional agriculture rather than an organic issue.

"Many people who eat organic foods are sophisticated consumers, they can see throughout that," she said.

She conceded, however, that organic foods are generally just as susceptible to infection from bacteria and toxins like botulism as regular foods.

When asked if Wal-Mart is concerned about any long-term fallout from the recalls, Thompson said: "Wal-Mart has some of the highest product testing in retail. And all our products, whether it's organic or any type of product, is put through all kinds of testing before we'll take receipt of it."

[back to top]

Wal-Mart Adjusts Attendance Policy

By Kris Hudson
and Kris Maher
Wall Street Journal
October 14, 2006                                [back to top]

Critics Say Plan Is Designed To Pare Unhealthy Workers; 1-800 Number for Sick Days Wal-Mart Stores Inc. has enacted a new attendance policy that penalizes workers for multiple unexcused absences and requires them to call an 800 number whenever they get sick, changes critics say are part of a bigger effort to nudge out unhealthy and long-tenured employees.

Also on the labor front, a Pennsylvania jury on Friday awarded $78.4 million to thousands of Wal-Mart employees who claimed they were forced to work during rest breaks and off the clock.

Wal-Mart, of Bentonville, Ark., says the new attendance policy benefits employees by documenting their requests for time off instead of relying on harried store managers to remember each request. And it benefits shoppers by discouraging unexcused absenteeism. "It's not for tracking; it's really to ensure a more consistent application of our absentee policy," spokesman John Simley said.

The new policy instructs employees requesting time off for illness to call an 800 number to get a code and then relay that code to their store manager for approval of their absence. Previously, employees asked their store manager directly for such time off, employees say.

In addition, the new policy formalizes penalties for employees who fail to get their absences authorized or don't bother to call. Among them: Any employee with more than three unauthorized absences in a six-month span will be disciplined, and those with seven will be fired. Any employee who is absent three times during a six-month period and doesn't call the 800 number for any of the three times can be fired. And employees needing more than three consecutive sick days are encouraged to apply for an unpaid leave of absence or time off under the Family Medical Leave Act. Previously, store managers had more discretion regarding discipline for unexcused absences.

The policy change comes at a time when some of Wal-Mart's 1.3 million U.S. workers are riled by fears that the retailer wants to cut costs by attracting healthier employees and a greater percentage of part-time workers. Some employees and Wal-Mart critics decry the new policy as a way for Wal-Mart to discourage unhealthy employees by tracking sick-time use more closely, setting stricter guidelines for authorization and making the process of applying for sick leave more onerous.

"I guess they're just trying to see how many people they can get rid of," said Ramiro Gonzalez, a 49-year-old full-time worker in the produce section of a Wal-Mart in El Paso, Texas. "They're trying to make ways that you can mess it up so they can let you go, especially if you're a full-timer."

Wal-Mart's concerns about its soaring health-insurance costs came to light last year, when an internal memorandum authored by a top Wal-Mart official was leaked. The memo offered numerous suggestions for corralling benefits costs by luring healthier workers.

The new policy "just sends another terrible message that this company looks at its workers as a commodity," said Chris Kofinis, spokesman for Wal-Mart critic WakeUpWalMart.com.

From the employer perspective, automated telephone or Internet-based systems to track worker absences can protect employers against litigation related to providing adequate time off to workers under overlapping federal and state leave laws. "There are a lot of issues that surface when someone calls in sick," said Lisa Franke, a workplace analyst with CCH Inc., a Riverwoods, Ill., provider of employment-law information to companies. "It's really an administrative nightmare, so a lot of employers are outsourcing that to the experts and having them do the dirty work."

Unscheduled absences cost some large employers more than $1 million a year, according to a CCH survey of 323 human-resources executives last year. The survey found that unscheduled absenteeism cost employers $660 per employee per year on average last year, up from $610 the prior year.

In the Pennsylvania case, Wal-Mart was ordered by the jury to pay damages to nearly 187,000 current and former workers in that state. The class-action case had covered labor practices at Wal-Mart and Sam's Club stores from March 1998 through May 2006. In addition to the damages awarded by the jury, a state judge is expected to add $62 million in minimum damages required under state labor law, according to Michael Donovan, attorney for the plaintiffs in the case. That would bring total damages in the case to about $140.4 million, excluding an estimated $40 million in legal fees, he said. Wal-Mart attorney Neal Manne said he was confident the company would appeal the jury's decision.

---- Peter Loftus and James Covert contributed to this article.

[back to top]

Court fines Wal-Mart $78.47M

DSN Retailing Today
Friday, October 13, 2006                      [back to top]

A Pennsylvania jury today found that Wal-Mart must pay $78.47 million in damages to current and former Pennsylvania employees for unpaid rest breaks and hours worked beyond their regular shifts. On Thursday, the jury ruled in favor of two former Wal-Mart employees who filed the class action suit, saying the company violated state labor laws by forcing employees to work “off the clock.”

However, the jury found in Wal-Mart's favor on the charge that it denied workers meal breaks.

Wal-Mart said it disagrees with the verdict on the points on which the jury found against it and is planning to appeal.

"Many employees testified that they skipped, or cut short, their breaks by their own choice," the retailer said in a statement released today. "Wal-Mart strongly discourages this practice and should not be penalized when an employee chooses to do this on his or her own."

"The vast majority of the damages claimed by the plaintiffs in this case relate to events that occurred many years ago. Wal-Mart's systems have been improved over the years to help ensure that all associates receive their scheduled breaks," the statement continued.

Wal-Mart said it has installed automatic systems that help to make sure that associates receive their meal breaks and that they do not work off the clock. The chain noted that it has programmed the cash registers ito provide each cashier with advance notice before each meal period, and then to lock the user out before the break becomes overdue.

Wal-Mart also said it has programmed all electronic systems that require associate log-on so that they cannot be operated by an associate who has not clocked in.

"Wal-Mart associates are the lifeline of our company, and it is our policy to pay every associate for every hour worked," the company said. "Any manager who encourages or even tolerates off-the-clock work or any other wage-and-hour violations is subject to discipline up to and including termination.

"Wal-Mart is committed to treating its associates fairly and in accordance with the law," the statement continued. "The company has very clear policies on meal and rest breaks. In most instances, Wal-Mart's policies do more than is required by law."

[back to top]

Jury says Wal-Mart must pay workers at least US$78M  

Associated Press
Friday, October 13, 2006                     [back to top]

PHILADELPHIA -- Wal-Mart Stores Inc., the world's biggest retailer, must pay at least $78 million US for violating Pennsylvania state labor laws by forcing employees to work through rest breaks and off the clock, a jury said Friday.

Michael Donovan, a lawyer for the plaintiffs, had asked the jury for at least that amount for what he said were missed or shortened breaks, or time employees worked off the clock.

The class-action suit involves 187,000 current and former employees who worked at Wal-Mart and Sam's Clubs in Pennsylvania from March 1998 through May of this year. The Common Pleas Court jury found Thursday that Wal-Mart violated state labor laws.

Lead plaintiff Dolores Hummel, who worked at a Sam's Club in Reading from 1992-2002, charged in her suit that she had to work through breaks and after quitting time to meet work demands in the bakery. She said she worked eight to 12 unpaid hours a month, on average, to meet work demands.

"One of Wal-Mart's undisclosed secrets for its profitability is its creation and implementation of a system that encourages off-the-clock work for its hourly employees ..." Hummel said in her suit, which was filed in 2002.

The plaintiffs used electronic evidence, such as systems that show when employees are signed on to cash registers and other machines, to help win class certification during several days of hearings last year.

Wal-Mart had a corporate policy that gives hourly employees in Pennsylvania one paid 15-minute break during a shift of at least three hours and two such breaks, plus an unpaid 30-minute meal break, on a shift of at least six hours.

© Associated Press 2006

[back to top]

Jury says Wal-Mart mispaid employees

Big News Network.com
Friday 13th October, 2006                 [back to top]

A Philadelphia jury says Wal-Mart must ante up for improperly compensating its Pennsylvania employees for time worked.

Jurors had yet to decide just how much the giant retailer was to pay. Lawyers for the nearly 187,000 current and former Wal-Mart employees involved in the class-action suit say the tab could run as high as $157 million, the Philadelphia Inquirer reported.

The jury ended five weeks of testimony Thursday by finding that Wal-Mart, the state's largest private employer, knowingly benefited from the practice, the Inquirer said.

Wal-Mart was accused of forcing employees to work off the clock and not paying for all rest breaks as promised. Attorneys for Wal-Mart denied the allegations, saying pay was proper and the suit evolved from a small group of disgruntled employees.

[back to top]

Wal-Mart's Smarting Over Blog Flogging

By Holly Sanders
New York Post
October 13, 2006                            [back to top]

October 13, 2006 -- Wal-Mart - eager to burnish its reputation as a good corporate neighbor - has bumbled its way into a controversy involving a pair of paid bloggers that has given its critics more ammunition. The Wal-Marting Across America blog, which chronicles a cross-country RV trip by a couple stopping at Wal-Marts to interview upbeat employees and customers, first drew barbs for its cheery, uncritical tone.

Then it was attacked on the ethical front after it was disclosed the two bloggers driving across the country were Washington Post photographer James Thresher and galpal Laura St. Claire.

Thresher violated the newspaper's freelance policies in accepting money from Wal-Mart, and the uber-retailer is on the receiving end of charges that it went too far to change public opinion.

Paul Levinson, chairman of the media and communications department at Fordham University, said the company's tactics reflect a lack of Web savvy. "Wal-Mart can be so clumsy," Levinson said. "They recognize the benefits but don't understand what it takes to do it effectively."

Wal-Mart began reaching out to bloggers last year through several groups that it funds, raising questions about what online writers should disclose to their readers.

"Wal-Marting Across America" was paid for by Working Families for Wal-Mart, a group that claims 150,000 members and gets its funding from the company.

The blog drew immediate skepticism