Wal-Mart Stores Inc. executives spent much of this fall explaining - if not apologizing for - the company's poor sales results. What company executives prefer not to talk about publicly, except to acknowledge that it's there, is the relentless political campaign wellfunded critics are waging against the world's largest retailer. It differs little in tone from presidential, gubernatorial and congressional campaigns, and the players on both sides are seasoned veterans of those battles. The question no one inside or outside the company has definitively answered is: How much, if at all, has the assault trimmed Wal-Mart's sales? Wal-Mart has stuck with strictly business explanations for its disappointing results, even as its political opponents have increased their attacks with television commercials featuring Wal-Mart workers. "We have no specific way of measuring it, but we have no information, anecdotal or otherwise, that it's impacting our sales," spokesman Mona Williams said in a recent interview. Wal-Mart's critics are sure they have. "I think we're clearly a factor," said Chris Kofinis, spokesman for WakeUpWalMart. com, a group funded by the United Food and Commercial Workers International Union. "The greatest measure of success is, this has become a serious debate in this country," he said. Two likely Democratic presidential contenders in 2008 already have joined the Wal-Mart fray. Sen. Barack Obama of Illinois and former Sen. John Edwards of North Carolina, the party's 2004 vice presidential nominee, participated in a national conference call last month arranged by WakeUpWalMart. com.
"Whether you're a Republican or a Democrat, you're going to have to answer the Wal-Mart question," Kofinis said.
In November, Bentonville-based Wal-Mart posted its first monthly same-store sales decline in more than a decade, while rival Target Corp. achieved a 5. 9 percent increase. Other retailers also reported significant gains.
WakeUpWalMart and Wal-Mart Watch are pressuring the company to improve workers' pay, health insurance and working conditions.
The media campaign is a departure from the traditional union approach of organizing workers to negotiate those issues. The unions contend the effort is worthwhile, even if it doesn't lead to union representation at Wal-Mart's U. S. stores.
"We can't have the No. 2 company in the world driving down wages and benefits," Kofinis said. (ExxonMobil was the top company in the 2006 Fortune 500 list, released in April. )
To a lesser degree, Wal-Mart is under fire from conservative groups for its financial support of gay rights organizations, hiring quotas for minorities and women and the company's environmental initiatives.
The American Family Association criticized the company over the gay rights issue but called off a two-day, post-Thanksgiving boycott after Wal-Mart issued a broad statement about avoiding controversial political issues.
And this month, the conservative-leaning National Legal and Policy Center issued a report criticizing the company's environmental and hiring policies.
"This is going to be part of an ongoing campaign to keep the spotlight on Wal-Mart's controversial giving for liberal causes," said John Carlisle, the organization's policy director.
THE MARGINAL CONSUMER
Patricia Edwards was shopping early on Black Friday, the traditional kickoff of the Christmas shopping season when heavy sales push many retailers' ledgers from red ink to black for the year. Such shopping goes with the job for Edwards, the retail analyst at Wentworth, Hauser & Violich in Seattle. She chose Target, but asked shoppers if they also would be shopping at Wal-Mart. Four of the 15 or 20 shoppers said no, they would rather pay more elsewhere. "Now, this is the 'left coast.' The state as a whole leans very Democratic," Edwards said. But it's also an urban area, she noted, which Wal-Mart says is where it must expand in the United States after saturating its natural base of rural communities, small cities and suburbs. So, what if Wal-Mart's critics could sway 5 percent, maybe 7 percent, of shoppers away from the retailing giant ? "That's the marginal consumer," Edwards said. "It's on people's minds, very definitely." Mark Hunter is more reserved in his estimate of the critics' impact. "I believe it has taken 1 or 2 percent off. They are never going to admit that," said Hunter, president of TheSalesHunter. com, an Omaha-based consulting firm. He attributes Wal-Mart's poor results to moving upscale in electronics and apparel while remodeling stores. "Nobody makes that many changes in one season," he said. A 2004 report ‹ prior to the launch of the two groups most critical of Wal-Mart ‹ found 2 percent to 8 percent of the store's customers stopped shopping there due to "negative press they have heard." McKinsey & Co. prepared the report for Wal-Mart. The company has not commissioned a follow-up report on shoppers, Williams said. But she noted that in a recent survey of more than 800, 000 company employees, 80 percent said they would recommend Wal-Mart employment to a friend. Nu Wexler, spokesman for Wal-Mart Watch, said the McKinsey report is evidence that the company needs to change its ways. "Wal-Mart's own consultants tell them that shoppers are becoming more socially conscious, and Wal-Mart's bad press has had some effect on their recent poor performance," he said. A Wall Street Journal / NBC poll in September found that 45 percent of respondents had very or somewhat positive feelings about Wal-Mart, while 31 percent had very or somewhat negative feelings. The comparative numbers for Target were 51 percent and 10 percent. Though the impact of the campaign hasn't been quantified, some investors are nervous. William C. Thompson Jr., the New York comptroller in charge of the employee retirement system, is pushing Wal-Mart to explain its workplace policies. The retirement system holds about $ 138 million worth of Wal-Mart stock. In a shareholder resolution he filed Dec. 8, Thompson seeks a report on "negative social and reputational impacts" of workplace practices that have led to class-action lawsuits and increasing political pressure.
NOT CONVINCED
Other analysts are more skeptical about the political fallout of the anti-Wal-Mart political campaign. "The snowstorm in the Midwest [earlier this month ] will have a bigger impact," said Peter Fader, professor of marketing at the Wharton School of Business at the University of Pennsylvania. He's wary, as well, about poll respondents who say they avoid Wal-Mart. "It's one thing for people to say it and even feel it, but they'll still be running into the store 'just this once' to get something," he said. Analyst Mark Rein contends Wal-Mart's woes have more to do with the financial fortunes of its core customer base and the company's own explanations about store remodeling and "cannibalization" ‹ opening new stores that siphon customers from existing stores. His firm, St. Louis-based Maritz Research, polled consumers and found that 36 percent intend to spend less on Christmas presents this year. Most cited tight budgets, greater debt and high gasoline prices, said Rein, director of strategic consulting. He suspects many of those people are Wal-Mart regulars. Rein doesn't believe politics play much of a role.
"If you've gotten used to spending 25 percent less on groceries at Wal-Mart, is media buzz going to make you go somewhere else ? I doubt it," he said. "It's entirely more likely that the impact of the store remodeling and cannibalization is being played out." Charlie Moro, founder and president of CFS Consulting Group LLC in Bowie, Md., calls the political attacks on Wal-Mart "just background noise" that won't chip away at the company's customer base. New marketing strategies are seldom 100 percent successful immediately, he said. "They'll fine-tune their strategies," he said. "I think you need to go through a cycle and see what's working, what's not working. Their track record has always been pretty good."
POLITICAL MISSTEPS
Wal-Mart hasn't ignored the increasingly harsh rhetoric aimed at the nation's largest private employer. Beginning last year, when it hired global public relations firm Edelman, Wal-Mart has responded to the attacks with seasoned political veterans. And earlier this year, it added Edelman Vice Chairman Leslie Dach, a former adviser to President Bill Clinton and Vice President Al Gore, to the Wal-Mart payroll as executive vice president of corporate affairs and government relations.
Three million dollars worth of company stock helped seal the deal.
Others Wal-Mart has called on have advised former President Ronald Reagan and 2004 Democratic nominee John Kerry.
Among the most controversial was Terry Nelson, political director for President Bush's 2004 campaign. He resigned as a consultant to Wal-Mart after a firestorm of protest over a negative TV commercial he created in a Tennessee U. S. Senate race that critics considered racist.
Democrat Harold Ford, the target of the ad, would have been the first black senator from Tennessee since Reconstruction.
Other missteps: A couple "Wal-Marting Across America" and writing about it on a Web log were being paid by the company; and Andrew Young, former civil rights leader, Democratic politician and U. N. ambassador, quit as head of Working Families for Wal-Mart after alleging in an interview that Jewish, Korean and Arab shop-owners overcharge customers.
"These were individual bumps in the road, but we dealt with them and have seen no longterm impact," Wal-Mart's Williams said.
From the Wal-Mart critics ' side, Kofinis worked in the unsuccessful Democratic presidential bid of retired Army Gen. Wesley Clark in 2004 and Paul Blank, campaign director for WakeUp-WalMart, was political director for Howard Dean's 2004 effort in the same race.
Jim Jordan, Kerry's 2004 campaign manager, and Terry Holt, a spokesman for the 2004 Bush campaign, both work for Wal-Mart Watch.
Wexler, the Wal-Mart Watch spokesman, said planning is already under way for ensuring that Wal-Mart is an issue in the 2008 presidential election.
Kofinis said Wal-Mart is simply too big to be ignored.
"This is not about destroying Wal-Mart. This is about Wal-Mart realizing that it has to do better," he said. "You can't divorce the future of this country from the values and practices of Wal-Mart."
SUPPORT OUR
SPONSORS
Conscious Consumers Starting to Shun Wal-Mart
-
By Steve Painter
Arkansas Democrat-Gazette, December 17, 2006
Straight to the Source
