BENTONVILLE, Ark. - Wal-Mart has become the poster child for many of the ills
confronting the American economy. Cheaper imports that undermine American manufacturing
jobs. The growing reliance on low-paying American retail service jobs to support
the middle class. Neighborhoods that fight tooth and nail to keep more traffic
from overcrowded streets.
Lee Scott, chief executive of Wal-Mart Stores Inc., says he's tired of his
company being the punching bag for critics trying to "hang on to a status
quo that doesn't exist in America today."
"The thing is, innovation and competition tend to change the status quo.
We were a small store once, too. We were able to innovate and use the economies
of scale and volume buying to deliver the value our customers needed and wanted,"
he said. "If it weren't Wal-Mart, it would have been someone else. I can
assure you that people who live paycheck to paycheck are thrilled when we come
In short, anybody who thought Wal-Mart's new multimillion-dollar PR campaign
to respond to its growing chorus of critics is going to be some charm offensive
should think again.
Forget the whistling smiley face of Wal-Mart's price rollback ads. Scott's
acerbic wit was the star attraction when the world's largest company kicked
off its first two-day crash course in Wal-Mart 101 here Tuesday. About 70 reporters
from Seattle to New York made the trip to hear Scott say he's not going to tolerate
critics "telling lies about us."
Wal-Mart's pay and benefits are competitive with those of other retailers,
he says. Otherwise, why would 5,000 to 8,000 people line up for 300 to 500 jobs
at a new supercenter? Free trade and a global economy are doing in American
manufacturing. Critics are picking on Wal-Mart because it's huge, but shoppers
are voting with their wallets.
"I wouldn't be surprised if they go after Target and Dollar General next,"
he said of the company's critics. "The unions didn't object to us until
we started putting supercenters in union markets."
The briefings are part of an escalating PR campaign being waged between Wal-Mart
and its critics, who plan to begin advertising. A coalition of groups ranging
from the AFL-CIO to antisprawl groups and the Sierra Club have joined forces
in an attempt to stymie the chain's torrid growth.
The world's largest retailer, Wal-Mart plans to become an even more pervasive
force. In its 43 years, the chain has grown far beyond its reputation as a death
knell for small-town merchants. With the advent of Wal-Mart Supercenters, which
combine a discount store with a supermarket, Wal-Mart quickly became the nation's
largest grocer. For every new supercenter, two traditional supermarkets close.
Wal-Mart commands 19 percent of U.S. retail food sales, and its market share
is forecast to hit 35 percent by 2007 as the chain adds 1,000 supercenters to
its collection of 1,700, according to Retail Forward, a Columbus, Ohio, retail
consultant. It's also the third-largest pharmacist, owns the nation's most popular
pet food brand and runs the nation's largest truck fleet.
The Tampa Bay area, where Wal-Mart surged from nothing to third place among
grocery retailers in five years, has become a hotbed of fierce zoning disputes
as Wal-Mart seeks to open 11 supercenters within three years.
Unions have been fighting the chain for years, but the fight became more charged
as Wal-Mart began moving into union stronghold markets in California, New York,
Chicago and Colorado last year. The Teamsters, Service Employees Union International
and the United Food and Commercial Workers are trying to force union elections,
but with no success.
Wal-Mart regards organized labor as an anathema to its business model. So it
has taken extraordinary steps to thwart the results of union elections.
"We recognize unions in Germany, where they are required by law,"
Scott said. "But we don't need them in the United States, where our employees
know they can take problems to their manager."
When meat-cutters in a Texas store voted for a union, the company eliminated
virtually all of the meat-cutter departments in supercenters. In California,
a strike shut down three of the biggest supermarket chains last year because
management demanded wage and benefit concessions to meet Wal-Mart's lower labor
Indeed, the groups have plenty of ammunition. The company recently reached
an out-of-court settlement on government charges that it hired contractors who
used undocumented immigrants as janitors, then locked some of them inside stores
at night to cut down on pilferage.
The company has been hit with the largest sexual discrimination class-action
lawsuit in history.
Its salaries are so low and its health insurance priced so high many employees
rely on government support from Medicaid for health care.
Meanwhile, several states and local governments have provided Wal-Mart with
an estimated $1-billion in subsidies for the jobs provided by its distribution
centers and, in a few cases, its stores.
Wal-Mart counters that 56 percent of its employees have company health insurance,
while 30 percent rely on their spouses'. Its average hourly worker is paid $10
an hour, which is well above the retail industry average.