Wal-Mart must
come clean, image experts say
By ANNE D'INNOCENZIO
[back to top]
Associated Press
HoustonChronicle.com
March 31, 2005, 9:46PM
When Wal-Mart Stores holds its
first-ever media conference in Arkansas next week, image consultants say
the company needs to spell out how it is dealing with controversial
issues that continue to dog it, from gender discrimination to
wage-and-hour violations.
"They need to persuade people they are
bigger than people's attitudes toward them," said Clarke Caywood,
professor of public relations at Northwestern University.
Wal-Mart has a lot at stake. Its fast
growth was fueled by the perception it had the cheapest prices. But now
that formula is in trouble as critics charge that it takes advantage of
employees and hampers competition.
It has had very public legal problems,
paying a fine to settle federal charges that underage workers operated
dangerous machinery, and agreeing to pay $11 million to settle charges
that its cleaning contractors used illegal immigrants. And it faces
opposition to some of its store openings. Such controversy comes as the
discounter struggles with higher expenses and slower growth.
Throngs of customers keep shopping at
its stores, but image experts say that could change.
"Any retailer has to be cautious about
consumers' opinions of their business ethics and practices," said Howard
Rubenstein of Rubenstein Associates, a public relations firm.
Image also matters for investors, who
have seen Wal-Mart's stock go nowhere the last two years as shares of
rival Target have steadily risen.
Wal-Mart officials declined to be
specific about what they will say to the 50 journalists expected to be
at the conference.
"This is clearly by Wal-Mart's own
admission a damage control tour," said Christy Setzer, a spokeswoman at
the AFL-CIO, whose United Food and Commercial Workers Union is trying to
organize workers at some Wal-Mart stores.
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Consultants
Wal-Mart Needs Soul-Searching
By ANNE D'INNOCENZIO
[back to top]
The Associated Press
Thursday, March 31, 2005; 4:52 PM
NEW YORK - When Wal-Mart Stores Inc.
holds its first-ever media conference in Arkansas next week, image
consultants say the company needs to spell out how it is dealing with
controversial issues that continue to dog it, from gender discrimination
to wage-and-hour violations.
"They need to persuade people they are
bigger than people's attitudes toward them," said Clarke Caywood,
professor of public relations at Northwestern University in Evanston,
Ill.
What's important is for the world's
largest retailer to provide specifics about how it will execute better
business practices, Caywood and other image experts say.
Wal-Mart has a lot at stake. The
company's fast growth was fueled by its perception that it had the
cheapest prices around. But now that formula is in trouble as critics
charge that the retailer takes advantage of its employees and hampers
competition.
It has had very public legal problems,
paying a fine to settle federal charges that underage workers operated
dangerous machinery, and agreeing to pay $11 million to settle charges
that its cleaning contractors used illegal immigrants. And it also faces
very vocal opposition to some of its store openings. Such controversy
comes as the discounter struggles with higher expenses and slower
growth.
Despite Wal-Mart's negative image,
throngs of customers keep shopping at its stores, but that could change,
image experts said.
"Any retailer has to be cautious about
consumers' opinions of their business ethics and practices," said Howard
Rubenstein, president of Rubenstein Associates, a New York-based public
relations firm.
Wal-Mart's image also matters for
investors, who have seen Wal-Mart's stock go nowhere the last two years
as shares of rival Target Corp. have steadily risen.
"They should reveal what went wrong
... and outline in layman's language so that the public would understand
this is a true apology," Rubenstein said. If it doesn't, "their business
may prosper, but when you run into this buzzsaw, you are courting
trouble."
Wal-Mart's officials declined to be
specific about what they will say to the approximate 50 journalists
expected to gather at the conference.
The goal, according to Gus Whitcomb, a
Wal-Mart spokesman, is to "try to help journalists understand our
business, how we do business, and about us as people." He added that he
sees this as more of "an educational opportunity," than a newsmaking
event.
Still, while plenty of public
relations experts applaud the rare two-day media event, there are also
risks. Wal-Mart, faced with a dozens of lawsuits, has to be careful what
it says and what it promises because it may not be able to deliver
later.
"This is clearly by Wal-Mart's own
admission a damage control tour," said Christy Setzer, a spokeswoman at
the AFL-CIO, whose United Food and Commercial Workers Union is trying to
organize workers at some Wal-Mart stores. "They are aware of a growing
chorus of community leaders, environmentalists and religious leaders,
who are saying that Wal-Mart's values are not our values. And they need
to respond to this. It is telling that they would rather spend millions
of dollars on PR efforts than to change their business practices."
Wal-Mart clearly has ramped up a
public relations campaign. In January, the company bought full-page ads
in more than 100 newspapers around the nation to spotlight its message
that it provides opportunity for advancement and that its stores provide
mainly full-time jobs that come with a broad benefits package. Over the
past year, it has hired big name public relations companies, including
Hill and Knowlton Inc., to bolster its public relations efforts.
Last June, at its annual shareholders'
meeting, Wal-Mart announced it was changing its policies on pay,
promotions and diversity.
But bad publicity appears to keep
piling up. Just last week, the company announced that Thomas M.
Coughlin, a high-profile Wal-Mart board member and former vice chairman
resigned after an internal probe turned up evidence of financial
improprieties of up to $500,000. Three Wal-Mart employees, including a
company officer, also resigned.
© 2005 The Associated Press
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Wal-Mart's Culture Of
Crime And Greed
Jonathan Tasini
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March 30, 2005
Thomas Coughlin, the Wal-Mart vice
chair who was recently dismissed for padding his expense account, is not
just a public relations problem for the retail behemoth. He's a product
of the Wal-Mart corporate culture. He's also not alone: Numerous other
execs have been dismissed recently for various corporate crimes.
Jonathan Tasini says that manipulation, greed and wrongdoing in the name
of profit are as much a part of the Wal-Mart business model as are those
low, low prices.
Jonathan Tasini is president of the
Economic Future Group and writes his "Working In America" columns for
TomPaine.com on an occasional basis. Tasini will be participating in an
April 6 nationally broadcast debate on the question “What's Good for
Wal-Mart is Good for America?” Details at http://www.economist.com/events/walmart/
.
The Beast of Bentonville (better known
as Wal-Mart) is grappling with a spate of management dismissals and
investigations over the past few months that appear rooted in internal
petty thievery. But rather than a few bad apples being rooted out, it’s
clear that crime, greed, wrongdoing, malfeasance and cronyism are deeply
embedded in the Wal-Mart business model. Indeed, Wal-Mart could not
survive without manipulating the system and breaking the law.
In case you didn’t catch it, Thomas
Coughlin—a former vice chair of the company and at one time a potential
future CEO candidate—was forced to resign from the board because of, as
the British Financial Times reported on its front page, an “alleged
unauthorized use of corporate-owned gift cards and personal
reimbursements that appear to have been obtained from the company
through the reporting of false information on third-party invoices and
company expense reports. The amount in controversy is estimated to be in
the range of $100,000 to $500,000.” Translation: the guy padded his
expense accounts.
In the current investigation, three
other employees, including a company officer, were also dismissed. And
back in December, three other executives and four employees were fired
for violating “unspecified” company rules. I would venture to guess that
those rules had nothing to do, for example, with treating workers badly
(that kind of conduct actually calls for a promotion at the Beast of
Bentonville, or at least a one-time visit to the company’s executive
washroom) but with other financial wrongdoing.
But why should this be surprising? The
culture of Wal-Mart encourages and condones misbehavior among its
leaders every day. Let me tick off just the highlights—or lowlights, as
the case may be.
Less than two weeks ago, the Beast
paid $11 million to settle charges that it used hundreds of illegal
immigrants to clean its stores. In February, those nice family-values
people from Bentonville agreed to pay a pathetic $135,000 and change to
settle charges of child labor violations. Think about it: a corporate
culture that tolerates endangering children. As an aside, when the child
labor deal was announced, I wrote that the level of the fine was
scandalous; the whole sweetheart deal is now under investigation by the
Department of Labor’s inspector general.
Wal-Mart is facing the largest gender
discrimination lawsuit in history—involving 1.5 million women. I hear
the company is deeply engaged in talks to settle the case for obvious
reasons: it’s guilty as hell. The depositions in the lawsuit, detailed
in Liza Featherstone’s new book, Selling Women Short, make it crystal
clear that the company, as a matter of policy, consistently broke the
most basic laws of workplace equality.
Not enough? Workers have been
illegally fired for trying to form a union, and Wal-Mart spends millions
to thwart workers basic rights, giving its union-breaking staff priority
on resources (like corporate jets) over even higher-placed managers. In
2000, meat cutters at a Wal-Mart in Texas voted for the union—and
Wal-Mart promptly violated the law by shutting down the meat-cutting
department in the store and, for good measure, closing every other
meat-cutting department in 180 other stores, just to make sure they had
stamped out any smell of unionism. Even the National Labor Relations
Board—no friend of labor—saw through the company’s actions and charged
the Beast with illegal behavior.
And, to top it off, the Beast’s
business model could not operate without the connivance of the
authoritarian regime in China. You probably never heard of a guy named
Wang Jun, but he’s one of Wal-Mart’s main men in China. Aside from being
involved in a company called Poly Technology, which is the
weapons-trading arm of the People’s Liberation Army, Jun runs a Chinese
state-sponsored investment company and ensures that Wal-Mart’s wishes
are known and satisfied by those running the Communist Party. In China,
Wal-Mart has a ready supply of underage children and under-waged adults
to produce its products. The point here is that Wal-Mart is no
free-market miracle: Its profits are a result of an artificial
suppression of wages. Wal-Mart could not operate in a truly free
market—if such a thing even existed. Instead, Wal-Mart is in cahoots
with the Chinese government, raking in profits by condoning the
violation of basic international labor standards.
Greed is a theme with the Wal-Mart
family. The family, worth a combined $95 billion, has given a stingy one
percent of its wealth to charity. By comparison, Business Week, writing
about Bill and Melinda Gates in a November cover story on the country’s
philanthropists, observed that the Gates made “history this year by
giving their estimated $3 billion Microsoft Corp dividend to their
foundation. It’s one of the largest donations in history by a living
donor. To put it into perspective, that one gift is three times bigger
than the amount that America’s richest family, the descendants of
Wal-Mart Stores Inc founder Sam Walton, has given during their entire
lifetimes .” [Emphasis added]
The company’s reaction to this record
of law-breaking has been predictable: It’s just a public relations
problem—the standard response at a company that has built its image on
myths. CEO Lee Scott, backed by millions of dollars of advertising on
television and in print publications like The New York Review of Books ,
recently embarked on a public relations tour. Speaking in Los Angeles,
he told business leaders, “We’ve got nothing to apologize for.”
When you see all the law-breaking,
malfeasance and greed around you, and your corporate leader thumps his
chest in pride, a natural human reaction might be, “Where’s my taste
here? If my company routinely violates the law or runs right up to the
edge of the law at every opportunity to squeeze out more profits, what’s
a few hundred thousand dollars in inflated expenses, morally speaking?”
Coughlin and the other management
schlubs who have been shown the door are not anomalies. They are a
reflection of a culture stretching back to Sam Walton himself—a man who
was a classic bully, willing to trample on the little guy and make a
profit off of the poverty of millions of people. That’s the Wal-Mart
way.
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Wal-Mart hit by 21 House Democrats over ABC TV news sponsorship
By DEVLIN BARRETT
[back to top]
Associated Press Writer
March 29, 2005, 7:12 PM EST
WASHINGTON -- An ABC morning news
segment called "Only in America" should be sponsored by anyone but
Wal-Mart, according to 21 Democrats in Congress who complained Tuesday
about the company's relationship with it.
Rep. Anthony Weiner, D-N.Y., said
Wal-Mart Stores Inc.'s sponsorship of the news feature segment on "Good
Morning America" is an effort to make a false impression on viewers that
it supports American workers and products.
"To try to allow Wal-Mart to continue
to wrap itself in the American flag when it has been a company that has
been hostile to so many American values is troubling," said Weiner, who
is running for mayor of New York City this year. "More and more
Americans are asking about the price that we have to pay when Wal-Mart
comes into a community, treats workers poorly, violates immigration laws
and squashes small businesses."
In their letter, lawmakers from 10
states urged ABC News to cancel immediately Wal-Mart's sponsorship of
the "Only in America" series, which profiles Americans.
"This segment _ a segment meant to
highlight hardworking and strong-willed Americans _ is wrong and
misleading to the viewer," the lawmakers wrote.
ABC vice president Jeffrey Schneider
said the network had no plans to cancel Wal-Mart's sponsorship, adding
the company allowed "absolutely no overlap" between the advertising on
ABC News and its editorial content.
"What's kind of ironic about this
particular campaign against ABC News is that ABC News has done some of
the most aggressive reporting about Wal-Mart," Schneider said.
Wal-Mart spokesman Dan Fogleman
defended the sponsorship as an appropriate advertising choice for the
Bentonville, Ark., company, which spent roughly $137.5 billion last year
with U.S.-based suppliers and whose customers included an estimated 90
percent of the American population.
"It's frustrating that these
individuals did not contact us to seek out the facts about our company,"
he said.
Wal-Mart, the world's largest company,
has been a big target for a host of accusations about how it treats its
workers.
The company recently paid a fine to
settle federal allegations that underage workers operated dangerous
machinery and agreed to pay $11 million to settle federal allegations
that its cleaning contractors used illegal immigrants.
It is appealing a judge's decision to
certify class status for up to 1.6 million women who claim they were
victims of gender-based discrimination at the company.
The lawmakers who signed the letter
are Weiner, Carolyn McCarthy, Brian Higgins and Maurice Hinchey, of New
York; Sherrod Brown, Tim Ryan, Dennis Kucinich and Ted Strickland, of
Ohio; Tom Lantos, George Miller, Linda Sanchez and Barbara Lee, of
California; Bill Pascrell and Frank Pallone, of New Jersey; Lane Evans
and Janice Schakowsky, of Illinois; Michael Capuano, of Massachusetts;
Julia Carson, of Indiana; Raul Grijalva, of Arizona; Peter DeFazio, of
Oregon; and Neil Abercrombie, of Hawaii.
Copyright 2005 Newsday Inc.
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Wal-Mart pitches
green design for Vancouver
CTV.ca News Staff
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The retail discount chain Wal-Mart,
already a Goliath across North America, is fighting for a piece of turf
in one of Canada's largest cities.
Vancouver City Hall first said that
Wal-Mart was not environmentally friendly enough for the city, and sent
the world's largest retailer back to the drawing board.
Wal-Mart already has stores in nearby
North Vancouver, Burnaby, Surrey, Langley, and Abbotsford.
In order to satisfy city hall,
Wal-Mart hired architect Peter Busby to come up with a new plan.
Busby's architecture firm is a leader
on the world stage in sustainable development. His office is located in
Vancouver's Yaletown district, and according to their website, his goal
is "to inspire others to produce buildings which are not only beautiful
but contribute to the health of our environment."
After spending two years on his
design, Busby says, "there's nothing like this in North America." His
"green" design will allow the Wal-Mart store to use one-third of the
energy it takes to run a regular store. Windmills generate power and
underground wells will heat and cool the building. Skylights will
replace lamps in the store.
"There will be no lights on during the
daytime all year. That saves a lot of energy." Despite the design
changes, city councillor Anne Roberts still doesn't want a Wal-Mart in
Vancouver. "A Wal-Mart flies smack in the face of what we've been trying
to do."
Wal-Mart has applied to build on a
vacant lot on Marine Drive, in the southeast part of Vancouver. This
area has been approved for "big box" store development.
CTV's Todd Battis says that the city
is worried about the 6,000 cars expected to drive to and from the store
each day. Exhaust from the traffic would create a pollution problem, and
would also add to traffic congestion inside Vancouver.
Roberts says: "This city wants to be a
city of neighborhoods; to get away from the car."
Canadian Tire has also proposed to
build on an adjacent lot next to where Wal-Mart is planning to build.
However, Canadian Tire hasn't received the same level of opposition
Wal-Mart has from the City of Vancouver.
Wal-Mart is one of the largest
employers in the world, with more than one million employees. But it's
faced some labour issues in recent times. In Quebec, Wal-Mart is
shutting down the first store to unionize in North America this May.
Busby remains optimistic that his
environmentally friendly design will not only save Wal-Mart money but
could influence future Wal-Mart outlets for the better.
"They're a very thrifty company. If
this proves to be cheaper to run, who knows, maybe they'll change their
approach to lots of different stores."
Wal-Mart will find out this May if
their environmental changes are enough for the Vancouver City Council.
But Vancouver won't be the only major city to keep Wal-Mart out; New
York City doesn't have a Wal-Mart either.
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Director's Ouster A Blow to Wal-Mart Legal Woes Already Weigh on
Retailer
By Michael Barbaro
[back to top]
Washington Post Staff Writer
Tuesday, March 29, 2005; Page E04
The ouster of a Wal-Mart board member
after the alleged misuse of company funds will hurt the chain's image at
a time when it is already smarting from several high-profile legal
disputes and is trying to rebut its fiercest critics, according to an
analyst who tracks the retailer.
The chain's chief executive, H. Lee
Scott Jr., "has his hands full with issues that percolated under his
tenure," said Bernard Sosnick, a retail analyst at Oppenheimer & Co. "It
might take a while for Wal-Mart to burnish its somewhat tarnished"
reputation.
Wal-Mart this month agreed to pay $11
million to settle federal allegations that illegal immigrants were used
to clean its stores. And it still faces a class-action lawsuit, filed on
behalf of 1.6 million current and former female employees, claiming
gender discrimination.
Scott is expected to address the
conduct of the former board member, Thomas M. Coughlin, today in a
telecast that will be broadcast to Wal-Mart's 1.2 million U.S.
employees. In that appearance, Scott "will encourage associates to
always have the courage to come forward if they suspect wrongdoing,"
said company spokeswoman Mona Williams.
Coughlin, who was the No. 2 executive
at the company until last December, was asked to step down from the
board after a disagreement over the results of internal investigation
into alleged financial improprieties that totaled $100,000 to $500,000,
the company said Friday.
A six-week investigation prompted the
company to fire three employees, including a company officer, Wal-Mart
said. The probe focused on the alleged unauthorized use of corporate
gift cards and suspect expense reports.
The company declined to offer more
details and has turned the case over to the U.S. attorney for the
Western District of Arkansas.
The significance of Coughlin's ouster
stems from his commanding position within the company. As vice chairman
of Wal-Mart Stores Inc., he was responsible for Wal-Mart, Sam's Club and
Walmart.com. He was "presumably a guardian" of Wal-Mart founder Sam
Walton's legacy, Sosnick wrote in a research note. "Any involvement in
improprieties would indicate the ethos of the founder is waning."
Coughlin did not return a phone
message yesterday.
Coughlin, who came to Wal-Mart in 1978
as a vice president of security, rose quickly through the company's
ranks and, two decades later, was considered a strong candidate to
succeed David Glass as chief executive -- a job that instead went to
Scott in 1998.
Robert Slater, author of "The Wal-Mart
Decade," said Coughlin had a reputation "for being blunt and
tough-minded."
"Almost all of Sam Walton's successors
exuded a calmness, almost a gentleness; Tom Coughlin was different,"
Slater wrote. "He was big and brash and looked like an aging NFL
football tackle."
When he learned of a manager who
failed to spend enough time on the sales floor, Coughlin simply locked
him out of his office, according to Slater.
Coughlin was popular among employees.
Julie Pierce, a former Wal-Mart store manager, said Coughlin personally
responded to her e-mails after she was fired from a store in Louisiana
-- and helped her win back the job.
"The man was there for us," Pierce
said.
Jon Lehman, another former Wal-Mart
manager, said he was "shocked" to learn Coughlin was under
investigation. "He was this larger-than-life figure" within the company,
Lehman said, "who just seemed beyond reproach."
In an e-mail to employees over the
weekend, Scott said he anticipated "strong reaction to this news and
that is understandable."
Williams said that Wal-Mart initiated
the investigation on its own and that the incident "underscores the
strength of the Wal-Mart culture and the fact that our standards of
integrity apply to everyone with no exception."
Jeff Stinson, an analyst at FTN
Midwest Securities Corp., agreed. Wal-Mart "is bigger than one person,"
he said. "The Coughlin situation shows how seriously the company takes
its ethics."
© 2005 The Washington Post Company
[back to top]
Wal-Mart marches closer to Columbus' center Convenience stores up next?
Kathy Showalter
[back to top]
Business First
March 25, 2005 print edition
Wal-Mart Stores Inc. has forged its
Central Ohio retail network by putting up discount stores and Sam's Club
warehouses in the suburbs that encircle Columbus.
Now it's ready to move in on the
city's urban core.
Executives from the Bentonville,
Ark.-based retailer met with area lawmakers in mid-March to talk about
the company's development plans. And though they didn't reveal a
timetable for building inner-city stores and its Neighborhood Market
convenience stores, the executives did plant some seeds.
"They indicated they may come to us
with some possible development (projects) closer to the central city,"
said Columbus Councilwoman Mary Ellen O'Shaughnessy, "but they were no
more specific than that."
But that's exactly what Wal-Mart plans
to do. Keith Morris, manager of community affairs for the world's
largest retailer, pointed to other communities - including Baltimore,
Philadelphia and Chicago - as examples of what's in store for Columbus.
"We started in Cincinnati on the
outskirts," Morris said. "Now we have stores that are up and running
inside the (Interstate 275) loop, and more under construction."
Columbus picture And it's just
starting in Columbus:
Wal-Mart will build a
180,000-square-foot Supercenter at the Carriage Place Shopping Center on
Bethel and Sawmill roads in the city. It will tear down the plaza's
anchor spaces, once filled by a Big Bear supermarket and Drug Emporium,
and replace them with a single Wal-Mart store. Wal-Mart plans to build a
Supercenter store on East Main Street in Whitehall. The company also is
negotiating for property on East Broad Street at Rose Hill Drive, east
of a Lucent Technologies Inc. research building. There it would build a
Supercenter a short walk from two retail plazas. Morris, who estimated
that all three new stores could be open in the next 18 months,
attributed the expansion to Wal-Mart's success in Central Ohio.
"We open one store (and see) where the
customers are coming from," he said. "How successful that store is
determines where or when we'll open our next (Supercenter). Each time a
store does well and it draws customers from a broader radius than it was
originally intended, it opens the door for more stores."
Wal-Mart operates 14 stores in
Franklin and surrounding counties, plus four Sam's Club stores. It has
none of the 40,000-square-foot Neighborhood Market stores in the area.
Retail analyst Burt Flickinger,
managing director of New York-based Strategic Resource Group, a
consulting firm, said there is a pattern to the giant retailer's
expansion.
"Neighborhood Markets come right after
Wal-Mart rings the outer-urban and inner-urban areas," Flickinger said.
The nearest Neighborhood Market stores
are in northern Kentucky, outside of Cincinnati, and in Indianapolis.
Flickinger likened Wal-Mart's strategy
to one used to win wars. Wal-Mart, he said, conquers the countryside
first, the outer suburban areas next and then moves in on
near-inner-city neighborhoods.
"That's a long-accepted military
strategy that's been successful by all the countries that have won wars
over the last 50 years," Flickinger said. "It's been a successful
strategy for Wal-Mart."
But Wal-Mart's needs are changing in
the process. For its 200,000-square-foot Supercenter stores, the company
typically seeks at least 14 acres. But finding large parcels is
difficult in dense urban neighborhoods, so Wal-Mart is experimenting
with store sizes. Sometimes the urban stores are divided, with its
lawn-and-garden operations across the street, or the stores are
two-story designs.
A 99,000-square-foot Supercenter,
which Wal-Mart is testing in Florida and Texas, can get by on a 5-acre
site, Flickinger said.
Regardless, the effect on inner-city
retail is much the same as it is in the suburbs.
"Unionized stores end up | 
