By Ylan Q. Mui
Washington Post
September 30, 2006                         [back to top]

Wal-Mart Stores Inc. yesterday launched a voter registration drive aimed at its 1.3 million U.S. employees in what it describes as the largest such effort by a private company. The kickoff was held in Iowa, a key battleground in the upcoming midterm elections. Workers at Wal-Mart's roughly 3,800 other facilities across the country also received registration forms yesterday. Although the world's largest retailer said it does not want to influence how its workers vote, David Tovar, director of media relations, said the drive was prompted by recent criticism of the company by politicians.

Wal-Mart workers "read the newspapers and see the headlines, just like you and I do," Tovar said. "They recognize there were some elected officials that were saying some things that didn't really represent the company. They wanted to have an opportunity to have their voice heard."

Wal-Mart is working with Democratic strategist Charles Baker of the law firm DLA Piper and Republican strategist Terry Nelson, founder of Crosslink Strategy, on what it has dubbed the Voter Education Program. The company has prepaid postage for voter registration forms in Iowa and several other states. It is also allowing workers whose shifts do not give them three hours to visit the polls to take paid time off to vote. Before the elections in 2004, they received two hours of unpaid time off.

Wal-Mart sent letters to 18,000 Iowa employees in August criticizing Sens. Evan Bayh of Indiana and Joseph R. Biden Jr. of Delaware and Govs. Tom Vilsack of Iowa and Bill Richardson of New Mexico -- all Democrats -- for participating in a bus tour arranged by Wake Up Wal-Mart, which is funded by the United Food and Commercial Workers International Union. Similar letters were sent to workers in New Hampshire, South Carolina and Nevada.

The bus tour was designed to attract new members to Wake Up Wal-Mart and draw attention to the company's health benefits package.

Labor groups have accused the retailer of blocking employee attempts at unionizing. They also assert that Wal-Mart runs small companies out of business, depresses wages and does not provide adequate health coverage for its employees.

Wal-Mart Watch, which is backed by the Service Employees International Union, said it supports the retailer's voter drive but was still critical of its political efforts.

"Wal-Mart's employees realize that the company's lobbyists don't represent their personal interests," spokesman Nu Wexler said.

Some activist groups questioned the retailer's motives, citing Wal-Mart's policy of banning voter registration drives conducted by outside parties from its stores.

"If Wal-Mart is truly interested in promoting a just democracy, then customers and employees should be included in registration activities," said Edward A. Hailes Jr., senior attorney with Advancement Project, a national civil rights group organization that works on voting issues.

In the spring, volunteers with Project Vote and the Association of Community Organizations for Reform Now, a nonprofit group that has been critical of Wal-Mart, attempted to set up voting drives at several Florida stores, said Brian Mellor, the elections counsel for Project Vote. He said they were quickly asked to leave.

Tovar said the company's blanket policy bans such drives because it disrupts customers' shopping experience but that it has made exceptions for some nonpartisan groups.

[back to top]

Wal-Mart Next Year Only To Offer New Employees Lower-Premium Health Plans With Higher Deductibles

MediLexicon
29 Sep 2006                   [back to top]

Wal-Mart Stores will stop offering new employees traditional low-deductible health plans beginning Jan. 1, 2007, and instead will offer new hires high-deductible plans with lower premiums, the Washington Post reports. Under the revised health care plan, employees will be able to purchase a plan that has a monthly premium of $11 and a $1,000 deductible or a plan with a $17 premium and a $3,000 deductible. Under the changes, the lowest monthly cost for an employee and his or her spouse would be $38 with a $6,000 deductible (Mui/Joyce, Washington Post, 9/27). One of the plans will allow workers to contribute to a health savings account. Current employees still will be able to renew their lower-deductible health plans, according to the company (AP/Chicago Sun-Times, 9/27). Wal-Mart spokesperson Dan Fogleman on Tuesday said that a review of the company's health benefit plans showed that most employees opted for a package with a monthly premium of between $70 and $100 with a $350 deductible, though more than half of employees did not pay that much. Fogleman said, "We've done the math on this, and we have a pretty good understanding of what this is going to mean. Most associates are going to come out better on this." Fogleman added that Wal-Mart provides health benefits to about 47% of its workforce. However, the plan changes are "sparking fresh criticism over whether the giant retailer is providing adequate coverage to its workers," the Post reports. Wake-Up Wal-Mart, a union-backed group, said the changes will force many Wal-Mart employees to seek public health coverage. Paul Blank, campaign director for the group, said, "Wal-Mart is cruelly hurting its employees, cutting health care options and shifting costs on to the American taxpayer." Paul Fronstin, director of health research and education at the Employee Benefit Research Institute, said the changes appear to be "pretty standard." Fronstin said, "There is always shifting going on, and it tends to be modest at best" (Washington Post, 9/27).

 [back to top]

Wal-Mart to Trim Options for Health Coverage

By Kris Hudson
Wall Street Journal
September 29, 2006                         [back to top]

Wal-Mart Stores Inc. next year will curtail options it offers newly hired workers for health-care coverage, promoting a low-premium, high-deductible plan. The retailer anticipates its "Value Plan" will let employees with few health-care needs save money through low premiums. Critics, however, argue the shift allows Wal-Mart to cut its costs for health-care benefits and discourage unhealthy people from seeking work at its stores.

Wal-Mart introduced the Value Plan early this year. It allows employees to pay premiums as low as $11 a month in some areas in exchange for a relatively high deductible of $1,000. It also allows a given employee three visits to the doctor and three prescriptions for generic drugs a year before the deductible kicks in. It imposes no lifetime cap on coverage.

On Jan. 1, the Value Plan will become the primary of three options available for Wal-Mart's new hires. Another is a health-savings-account plan that gives employees a tax-free option to set aside part of their own pay with supplements from Wal-Mart of as much as $2,400 a year for use in paying medical expenses. In 16 states, Wal-Mart also provides coverage through health-maintenance organizations.

Employees hired this year and earlier can continue to get their coverage from the retailer's standard plans. Those plans require higher premiums than the Value Plan, but they offer much lower deductibles. However, Wal-Mart will increase premiums on those plans next year by an average of 8%. That compares with an average increase of 7.7% in premiums for U.S. employer-sponsored plans in the past year, according to the Henry J. Kaiser Family Foundation.

In the U.S., Wal-Mart employs more than 1.3 million store-level workers, of which roughly 46% are enrolled in its health-care plans. The Bentonville, Ark., company has been dogged for years by critics' allegations that it provides inadequate health-care benefits.

Documents outlining the impending health-benefit changes were obtained and distributed to the media by anti-Wal-Mart group WakeUpWalMart.com. The group pointed out additional price increases in Wal-Mart's health-care coverage for next year: In addition to the Value Plan's $1,000 deductible, the new plan establishes separate deductibles of $1,000 for inpatient hospital stays, $500 for each outpatient surgical visit and $300 for pharmacy purchases.

 [back to top]

Wal-Mart counters critics with voter registration

Reuters
Fri Sep 29, 2006                    [back to top]

WEST DES MOINES, Iowa, Sept 29 (Reuters) - Long criticized by union groups and some U.S. Democrats for not providing employees with adequate pay or benefits, Wal-Mart on Friday gave workers something else: voter registration cards.

The retailing giant kicked off a voter registration drive in Iowa -- the state which hosts the first contest in the presidential campaign -- and said it would give election information to all of its 1.3 million employees before the Nov. 7 midterm vote.

About 30 Wal-Mart employees, most clad in bright blue vests with the phrase "How may I help you?" printed in white on their backs, were given registration forms after being led in morning cheers at the West Des Moines Wal-Mart.

"It doesn't really cross my mind to go register to vote," said 23-year-old Mike Leng, one of the Wal-Mart employees who received the registration kit. "(This is) an opportunity to voice my opinion."

While the retailer said it would not push employees to support a particular party, Wal-Mart media relations director David Tovar said some employees had been upset by a union-led campaign against the company and wanted to counter the attacks.

A bus trip drawing support from scores of big-name Democrats crisscrossed America this summer claiming Wal-Mart, the country's biggest private-sector employer, provides inadequate wages and health-care coverage while shipping new jobs overseas.

It was launched by the UFCW grocery workers union, which ended efforts to unionize the company last year.

Tovar said he believed Wal-Mart workers upset with the campaign could affect the result in key states at the midterm election, when control of Congress is at stake.

"In certain states where we have a lot of associates -- which is a lot of states -- we think Wal-Mart associates who are very passionate about the company can make a difference in some of these elections," Tovar said in an interview.

Some of the closest races of the midterm election are in Florida, where Wal-Mart has 100,000 employees, Ohio, where it has 50,000 and Pennsylvania, where it has 47,000 workers.

Still, Wal-Mart workers who received voter registration kits in West Des Moines were not universally enthusiastic about the prospect of casting a ballot in November.

Armin Auskic, 33, who fled war-ravaged Bosnia seven years ago and became a U.S. citizen in April 2005, has never voted.

"I don't like politics," he said.

© Reuters 2006. All rights reserved.

[back to top]

Wal-Mart in drive to persuade its 1.3m workers to vote

By Jonathan Birchall
Financial Times
Sept 29, 2006                                  [back to top]

Wal-Mart, the largest US retailer, on Friday launched a drive to encourage its 1.3m employees to register to vote, in the biggest operation of its kind ever by a US private employer.

The company has begun distributing voter registration packages – including postage-paid application forms – to more than 17,000 employees at its stores and warehouses in Iowa, with other states due to follow.

The company has framed the initiative as a public service effort, with Lee Scott, chief executive, saying on Friday Wal-Mart was "eager to see our associates take a more dynamic role in the electoral process".

But the registration drive also highlights Wal-Mart's increasing engagement in politics, at a time when its employment policies have been publicly criticised by some leading Democrats, including several potential candidates for the party's presidential nomination.

In August, Wal-Mart distributed a letter to its employees in Iowa and three other states, highlighting what it said were inaccuracies in criticism by Governor Tom Vilsack, as well as Senators Evan Bayh of Indiana and Joseph Biden of Delaware and New Mexico's governor Bill Richardson.

The letter encouraged employees to talk to "friends, neighbours and family about the good that Wal-Mart does". It also promised that the company would "keep you informed about what these political candidates are saying about your company while on the campaign trail".

Wal-Mart has also highlighted the significant number of its employees in both swing states.

In Ohio its 50,000 workers represent roughly 1 per cent of voters in the 2004 presidential election – enough to be a factor in the current Senate battle between Sherrod Brown – a Wal-Mart critic – and Mike DeWine, the Republican incumbent. Wal-Mart's political action committee is also one of the largest corporate donors to Mr DeWine's campaign.

Wal-Mart is the largest single corporate donor to the this year's congressional campaigns, having given $1.9m (€1.5m, £1.3m), with roughly two-thirds going to Republican candidates, according to the Center for Responsive Politics.

 [back to top]

Wal-Mart tracks shoppers and sales

by Will Hadfield
ComputerWeekly.com
Friday 29 September 2006                [back to top]

Wal-Mart is looking to deploy an IT system that tracks shoppers' progress around its stores and compares their movements to actual sales.

The world’s largest retailer could use the system to calculate “audience ratings” for the products on its shelves. Armed with this data, store planners would be able to assess the effectiveness of in-store promotions.

Wal-Mart hopes that the system will enable it to attract more advertising money to its in-store promotions. The system,called Prism, was developed by a consortium made up of retailers and large suppliers.

Infra-red beams are used to track shoppers’ movements around the store. Prism then correlates shoppers’ movements with actual sales data.

The Prism consortium is made up of Coca-cola, Kelloggs, Kroger, Procter & Gamble, Walgreens and Walt Disney.

It has undertaken a month-long pilot study in 10 US stores, and plans to attract more retailers and suppliers to the consortium.

[back to top]

Wal-Mart flexes DVD muscle over iTunes profits

A slice of Apple's pie

By MICHAEL LEARMONTH
Thurs., Sep. 28, 2006                        [back to top]

Apple and Wal-Mart are in discussions over an alliance that could allow the giant retailer to profit from iTunes video downloads, which have been a source of great tension between Hollywood and the retailer in recent months. A deal could take the form of a digital download "coupon" that would allow consumers to buy movies, TV shows or music on iTunes with Apple paying the retail giant a percentage of the proceeds, one industry insider said.

What's in it for Apple? Since studios (except for Disney, of course) have so far turned a cold shoulder to iTunes because of Wal-Mart's demands, the computer giant would then gain access to titles from every major.

Wal-Mart is one of the nation's biggest sellers of iPods.

Apple does sell gift cards through some other retailers such as Best Buy, Target and Amazon.com, but not at Wal-Mart.

Talks are in early stages and may not result in any deal.

But they do appear to mark a thawing of relations between allies Disney and Apple, which struck a download deal in August, and Wal-Mart.

The giant retailer warned Hollywood over the summer that it expects to be a major player in the evolution of the digital marketplace, and that studios mustn't undercut the price of DVDs in its stores with product sold on iTunes.

Wal-Mart didn't return calls and Apple declined to comment.

Disney so far is the sole studio in a deal with Apple, allowing Steve Jobs' company to buy new movie releases for about $3 less than the wholesale price charged to Wal-Mart.

Others studios balked, fearing to alienate their biggest customer.

Subsequently, Apple CEO Steve Jobs, who is also a board member and major shareholder of Disney, is said to have personally reached out to Wal-Mart CEO H. Lee Scott, who badly wants to get into the digital film biz.

Hollywood has been closely watching Disney's relationship with Wal-Mart in the wake of the deal. When Wal-Mart caught wind of talks between the studios and Apple, it threatened to cut its order of "High School Musical" over the summer.

Disney CEO Bob Iger did the deal with Jobs anyway, and the rest of Hollywood has been watching to see if and when the other shoe drops.

So far, to the surprise of many, it hasn't.

Instead of cutting orders and slashing shelf space, Wal-Mart has apparently ordered a healthy 49,000 copies of Pixar's "Cars." It will sell "Pirates of the Caribbean: Dead Man's Chest" for $12.99, meaning it will take a hefty loss on each DVD to drive foot traffic in stores.

Studio sources say the rest of the majors are very close to joining Disney in a deal with Apple but are holding off until the end of the key fourth quarter, when half of all DVD sales occur.

An alliance between Apple and Wal-Mart would demonstrate how all elements of the entertainment food chain are struggling to get ahead of the curve.

Studios are trying to calculate how much longer DVD sales -- 40% of which go through Wal-Mart -- will be a cornerstone of their business. So, too, is Wal-Mart.

The retailer is furthermore trying to figure out how to translate its enormous foot traffic into the digital biz that entertainment is becoming.

Tensions peaked over the summer as Wal-Mart movies and music veep David Porter paid a call to the studios as they talked with Apple's iTunes.

As late as July, three other studios were planning to join Disney in inking an iTunes pact that would allow the Apple service to buy new releases for $14.50 vs. the $17 the studios typically charge Wal-Mart for a new release.

Jobs, who personally made the sales pitch to the studios, insisted on passing a lower price on to consumers since the cost of producing and shipping a DVD was taken out of the equation.

Wal-Mart also made it clear to the studios that if they did a deal with iTunes, it expected the same terms for its own download business, which is under development.

"Porter came in and said if you're going to play this game, we want the same terms as iTunes," said a source who attended one of the meetings.

Wal-Mart's demand was enough to shatter a planned alliance among Fox, Universal and Lionsgate to join Disney in supplying films to iTunes.

Fox, which manages the DVD category for Wal-Mart, had a verbal agreement with Apple requiring that it be joined by two others.

U pulled out of the deal first, with the other non-Disney studios following suit.

Paramount balked at the idea of doing an iTunes deal early on, in large part because of DreamWorks Animation chief Jeffrey Katzenberg's close ties to Bentonville and the brewing management chaos at Viacom.

With no back catalog and a stream of kid-oriented pictures, DreamWorks Animation is extremely reliant on Wal-Mart, which accounts for close to 50% of its DVD sales.

Unlike the recording biz, which watched its sales plummet due to downloads, the DVD business is still relatively healthy and remains a predictable source of profit for the studios.

But both the studios and retailers such as Wal-Mart are watching closely for signs of a dropoff; no one wants to be caught flat-footed.

At some point, however, studios know they will have to undergo a transition as the homevid market transforms from the production, sales and marketing of a packaged good --the DVD -- into the sale of a digital product, perhaps in the form of a subscription business.

But studios don't want to hand digital sales over to Apple in the way that the record labels did a few years ago -- a move that took away much of their power to set pricing in the marketplace.

Wal-Mart, meanwhile, has some angst about a falloff in DVD sales as well. Customers who throw a disc in their shopping carts spend an average of $75 per trip to the store -- far more than those who don't pick up a DVD.

[back to top]

Koç Holding denies reports on sale of Migros to Wal-Mart

turkishdailynews.com
Thursday, September 28, 2006                   [back to top]

ISTANBUL Koç Holding denied Tuesday's media reports claiming that Koç Holding, owner of retail chain Migros, was negotiating with Wal-Mart for the sale of Migros shares.

Media reports on the sale of Migros shares to Wal-Mart were refuted in a Koç Group statement sent to the Istanbul Stock Exchange (IMKB) on Wednesday. “Media reports on plans to sell shares of Migros to Wal-Mart are not true. Consequently, we are not in search of a financial consultant for such an operation,” said the statement.

Referans business daily reported on Tuesday that the Koç Group planned to sell Migros to Wal-Mart. It was reported that Wal-Mart and Koç had negotiated over the sale of Migros about one-and-a-half years ago, when Wal-Mart representatives had indicated they would be ready to buy Migros if the retail chain expanded further.

Now that Migros has purchased and incorporated another retail chain, Tansaş, last year, Migros' sale turnover in the first six months this year reached YTL 2 billion. The current market value of Migros is estimated to be around $1.5 billion.

© 2005 Dogan Daily News Inc.

Wal-Mart finds more violations at foreign plants

The Associated Press
September 28, 2006                [back to top]

Wal-Mart Stores has reported finding a higher rate of severe violations at foreign factories last year as it stepped up inspections for labor and environmental standards in more than 60 countries where it buys clothes, toys, shoes and other products.

"In 2005, we audited more factories than any other company in the world, performing more than 13,600 initial and follow-up audits of 7,200 supplier factories," the report said.

Twenty-three factories were cut off from Wal-Mart's business for repeated violations, a sharp decline from 1,200 in 2004. But Wal-Mart partly attributed the decrease to changes in its auditing rules and said that it expected the number to increase again this year. The findings are in the company's "2005 Report on Ethical Sourcing," which Wal- Mart posted on its Web site last week, said a spokeswoman, Beth Keck.

Union-backed critics said the results showed that Wal-Mart's pledges to use inspections to improve conditions at foreign factories in Asia, Central America and elsewhere were ringing hollow.

"Wal-Mart is ignoring the crux of the problem, which is that they are paying their suppliers too little to meet even minimal standards," said Nu Wexler, a spokesman for Wal-Mart Watch.

Inspectors found moderate to severe violations at 89 percent of factories, up from 79 percent in 2004. Wexler said that finding was an indictment of Wal- Mart's ethics program.

The report said that 80 percent of inspections were announced in advance. Wal-Mart said the worsened showing was due to more vigorous inspections, including more surprise visits, and stricter standards.

Wal-Mart says it uses the findings to encourage factory owners to improve conditions. If violations are found, inspectors give a list to the owners and return for an another audit.

Repeated violations, as well as grave problems like using underage or prison labor, can lead to being barred from selling to Wal-Mart for up to one year.

Wal-Mart is also the target of a U.S. lawsuit seeking class-action status for factory workers in Bangladesh, China, Indonesia, Nicaragua and Swaziland.

In 2005, Wal-Mart's inspectors reported "high-risk" violations at 52 percent of those factories, compared with 36 percent in 2004.

Medium-risk violations were reported at 37 percent of plants, down from 43 percent the year before. Only 10 percent of factories were found to have no violations or only minor ones, compared with 21 percent in 2004.

"Several consistently found serious violations at the factory level include problems with payment of overtime compensation, coaching of workers for worker interviews, and the use of double-books to hide the true numbers of hours worked or wages/benefits paid," the report said.

Wal-Mart said that it gave companies a chance by wiping their pre-2005 records clean.

Wal-Mart Stores has reported finding a higher rate of severe violations at foreign factories last year as it stepped up inspections for labor and environmental standards in more than 60 countries where it buys clothes, toys, shoes and other products.

"In 2005, we audited more factories than any other company in the world, performing more than 13,600 initial and follow-up audits of 7,200 supplier factories," the report said.

Twenty-three factories were cut off from Wal-Mart's business for repeated violations, a sharp decline from 1,200 in 2004. But Wal-Mart partly attributed the decrease to changes in its auditing rules and said that it expected the number to increase again this year. The findings are in the company's "2005 Report on Ethical Sourcing," which Wal- Mart posted on its Web site last week, said a spokeswoman, Beth Keck.

Union-backed critics said the results showed that Wal-Mart's pledges to use inspections to improve conditions at foreign factories in Asia, Central America and elsewhere were ringing hollow.

"Wal-Mart is ignoring the crux of the problem, which is that they are paying their suppliers too little to meet even minimal standards," said Nu Wexler, a spokesman for Wal-Mart Watch.

Inspectors found moderate to severe violations at 89 percent of factories, up from 79 percent in 2004. Wexler said that finding was an indictment of Wal- Mart's ethics program.

The report said that 80 percent of inspections were announced in advance. Wal-Mart said the worsened showing was due to more vigorous inspections, including more surprise visits, and stricter standards.

Wal-Mart says it uses the findings to encourage factory owners to improve conditions. If violations are found, inspectors give a list to the owners and return for an another audit.

Repeated violations, as well as grave problems like using underage or prison labor, can lead to being barred from selling to Wal-Mart for up to one year.

Wal-Mart is also the target of a U.S. lawsuit seeking class-action status for factory workers in Bangladesh, China, Indonesia, Nicaragua and Swaziland.

In 2005, Wal-Mart's inspectors reported "high-risk" violations at 52 percent of those factories, compared with 36 percent in 2004.

Medium-risk violations were reported at 37 percent of plants, down from 43 percent the year before. Only 10 percent of factories were found to have no violations or only minor ones, compared with 21 percent in 2004.

"Several consistently found serious violations at the factory level include problems with payment of overtime compensation, coaching of workers for worker interviews, and the use of double-books to hide the true numbers of hours worked or wages/benefits paid," the report said.

Wal-Mart said that it gave companies a chance by wiping their pre-2005 records clean.

[back to top]

Wal-Mart to install shopper ratings device

By Doug Cameron
Chicago Financial Times
Sept 28, 2006                                [back to top]

Wal-Mart may look at revamping its store lay-outs using a new electronic system to measure customer traffic and generate television-style "audience ratings" for products on its shelves.

The world's largest retailer said the new system, unveiled in Chicago on Wednesday, could also boost operational efficiency and trigger a shift in marketing expenditure among competing media at a time when the industry continues to grapple with the impact of the internet on traditional channels such as television and magazines.

"I do think a lot of marketing resources are up for grabs," said Stephen Quinn, Wal-Mart's senior vice-president marketing, following the launch of the Prism system, developed over the past year by a consortium of retailers and consumer goods manufacturers including Procter & Gamble, Coca-Cola and 3M. Mr Quinn told the FT that the system could trigger "a big change in our business model" by providing information on consumer behaviour, allowing it to redesign stores, alter product displays and improve customer flows.

"There are big gaps in the understanding of what drives [customers] to make their decision," he said. "Prism can be a major determinant of store lay-outs." The system uses infra-red beams to track shoppers' movements and correlate them with actual sales data, producing what its proponents claim is the first scientific metric for the effectiveness of in-store sales tools such as shelf location and promotional displays.

"Without the metric, the importance placed on in-store marketing is low," said Laura Desmond, chief executive for the Americas at Starcom MediaVest, a unit of Publicis, the French marketing and communications group. Ms Desmond declined to predict how in-store marketing spending could grow, but called Prism a "game changing" move to target consumers based on shopping habits rather than demographics.

"This is huge for our industry," added Jim Stengel, global marketing officer at P&G, which is viewed as both the largest and most influential advertiser in the world. Mr Stengel had castigated the advertising industry in a landmark 2004 speech for its lack of innovation, and yesterday des-cribed Prism as the type of advance he was seeking.

"The store is the moment of truth," he said. "We will now be able to measure consumer 'reach' with far better accuracy."

The Prism consortium plans to build on the results of a month-long pilot study in 10 US stores by recruiting more retailers and manufacturers. Peter Hoyt, executive director for the In-Store Marketing Institute, said it has started talks with companies such as Nielsen to roll out a ratings system in the future for products and stores based on the data collected by an expanded system.

Copyright The Financial Times Ltd. All rights reserved.

[back to top]

Wal-Mart Doesn't Discount Politicians

No rollback here: The No. 1 retailer has ramped up political contributions—especially at state and local levels

By Pallavi Gogoi
BusinessWeek.com
SEPTEMBER 28, 2006                [back to top]

California Governor Arnold Schwarzenegger has legions of close friends, collected over decades as a Hollywood box office draw and rising political star. Yet few may consider him as dear as Wal-Mart Stores (WMT ), which gave the Republican governor $22,300 on May 15, and earlier contributed $200,000 for initiatives Schwarzenegger had supported. In addition, the company has given $300,000 to the state GOP and additional funds to local politicians, making California the biggest recipient of Wal-Mart's political largesse.

California is just one of the places where local politicians are benefiting from Wal-Mart's growing interest in state affairs. Over the past four election cycles, the giant retailer has been steadily boosting its contributions to state and local politicians, just as such politicians have been taking on bigger roles in deciding key issues concerning the company's operations, from the local minimum wage and required health-care benefits to zoning for big-box retailers. Money has gone to everyone from Schwarzenegger and New York gubernatorial candidate Eliot Spitzer to Maryland Governor Robert Ehrlich and Illinois state Senate President Emil Jones Jr.

RAMPING UP. Wal-Mart gave a total of $326,875 in the 2000 election cycle, $431,017 in 2002, and $857,179 in 2004, according to research by The Institute on Money in State Politics, a nonpartisan, nonprofit research organization based in Helena, Mont. For the 2006 election cycle, the company has given $644,655 so far and seems to be on track to hit a record for political contributions.

"They've gone from zero to warp speed in political giving all across the board," says Bruce Freed, co-director of the Center for Political Accountability, a nonprofit group that tracks corporate political spending. The totals include only direct contributions to politicians and political parties. Adding in money for ballot initiatives and other local issues brings the total of Wal-Mart state giving so far this cycle to $1.25 million.

Wal-Mart says it's become necessary to step up its contributions. For two decades it largely shunned politics because company founder Sam Walton didn't believe such activities benefited his customers. In fact, Wal-Mart didn't hire any lobbyists or establish any political action committees until 1998.

NO LONGER ON SIDELINES. But that reticence, the company now says, has allowed critics to launch unilateral attacks and set the agenda on a number of issues. "For years we didn't participate—to our detriment," says company spokesman John Simley. "Now we're participating in the same political process as any citizen, in this case a corporate citizen."

Simley says contributions are now a carefully considered component of Wal-Mart's business strategy. "The process that we use to choose to whom we contribute has to do with the voting record and position of each official," he says. "We look at their records on anything that's relevant to our business, like trade, taxes, legislation related to pharmacy and grocery, and we also consider the magnitude of our presence in the districts they represent."