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76. -new- Amazon vs. Wal-Mart in Online Groceries

Wharton Todaydebates who will win the dominant share of the online grocery market.
Wal-Mart is the nation’s prevailing grocer and has a huge distribution system, but Amazon currently dwarfs it online, with sales of $61 billion vs. Wal-Mart’s $7.7 billion.
The authors don’t hazard a guess, but just cite the strengths of each side. (7-10-13)

75.  All is Far from Well in Bentonville

Wal-Mart is a troubled company.  Its strategy gyrates.  Its stock has been stagnant.  New hands are brought forward every few years to right the ship, but they seem to be re-arranging the deck chairs. It recently has reported an uptick which apparently springs from better numbers at Sam’s.  But we keep rather close track of Sam’s, since we think it the key catalyst in the whole enterprise.  We suspect the vaunted improvement stems from gimmickry.  Prices of lots of goods are dramatically higher, sometimes as much as 40 or 50%.   Product variety is down.  Checkout times have gotten even longer.  Goods that would interest higher -end customers suddenly disappear from the shelves.   Produce quality is shabby quite often:  the bananas now are never as fresh; the avocados are often soft and quite pricey.  For a while, in other words, the numbers will look better because Sam’s is giving a lot less for a lot more.

It is hopeful that Wal-Mart as a whole has undertaken a number of green initiatives. But, simply, we will never believe the company has truly gotten green until it begins to put real trees in its parking lots, which today are, universally, boiling tarmacs. (05-25-11)

74. -new- Wal-Mart Expands into South Africa
Wal-Mart is expanding into Africa, having made a 4.2 billion offer for South African retailer MassMart, which sells general merchandise, electronic goods and food at its 290 stores. The deal also gives it a toehold in Nigeria, Ghana and Botswana.   This move cements a change in strategy at Wal-Mart, which is slowing its growth in the U.S. and in many developed countries such as Germany where the competition is giving it a rough time.  It has made quite a dent in Mexico, is going full bore in China, and is attacking other developing countries.  Its forays, oddly, put it in concert with China which is also making tracks in nations that are up and coming.  Of course, Wal-Mart is now at least half Chinese anyway, since it sources a huge percentage (apparently $27 billion in 2007) of its products there, despite its occasional Buy American campaigns. (10-26-10)

73. College On-Line
Wal-Mart has entered an alliance with American Public Education in West Virginia, “which runs two Web-based universities.”   “Wal-Mart committed to spending $50 million over the next three years in tuition and other assistance for employees who enroll. The company, started 19 years ago, has traditionally served military personnel.  It serves 70,000 students in 100 countries, but is best known for its military division which reaches 45,000 students.  Wal-Mart was after a low price, and APE charges $250 a credit hour, a price that has not changed in 10 years. This is significant in several ways.  Wal-Mart needs a more educated workforce if it is not eventually going to stagnate in slow growth American retail markets.  Traditional universities charge too much and provide too little for the stupendous amounts they are charging.  This will eventually put pressure on them to both improve their offerings and control their run-away costs. Wal-Mart, too, has a troubled workforce, as evidenced by the serious sex bias suits leveled against it and by other problems.  Intelligent ministration of health, education, and other benefit areas can make a difference.  It would eventually make sense for Wal-Mart to offer online courses to customers. (06-16-10)

72. Going to India

Wal-Mart is a fantastically interesting company.  It does so many things well, and a host of things that are an embarrassment to all of us. Its purchasing policies put a whole bunch of bad stuff in the hands of consumers, and its employment policies shrink lives.  If you talk to its people at the cash registers, you realize that the company is not spreading happiness.  On the other hand, it has put cheap products in poor communities whose denizens are often over-charged by local merchants. And, correctly, it is doing the same in a horde of up and coming nations where locals need low, low prices.

We are admiring of the fact that is spreading its wings in big, developing nations whose citizens are on the way upward.  China and Mexico are examples.  So is India.  Read carefully “Cultivating a Market in India,” New York Times, April 13, 2010, pp. B1 & B3.  “Two years ago after Wal-Mart came to India, it is trying to do to agriculture here what it has done to industries around the world: change business models by using its hyper-efficient practices to improve productivity and speed the flow of goods.” “Wal-Mart is also limited by New Delhi’s ban on foreign-owned retail chains that prevent it from selling directly to Indian consumers.” “Right now Wal-Mart operates in India through a 50-50 joint venture with Bharti Enterprises, an Indian conglomerate that also owns the company’s largest cell phone company.” “In the 1990s, Wal-Mart set up shop in China, Mexico and Brazil and now has hundreds of stores there.” (04-21-10)

71. Backing Down on Pay
Wal-Mart said on Tuesday that it would pay at least $352 million, and possibly far more, to settle lawsuits across the country claiming that it forced employees to work off the clock. Several lawyers described it as the largest settlement ever for lawsuits over wage violations.”  New York Times, December 23, 2008.  The Company agreed to settle 63 cases pending in 42 states. The payments could reach $640 million, depending on how many claims workers submit. “Wal-Mart announced the settlement less than two weeks after it reached a $54.25 million settlement covering a group of 100,000 current and former employees in Minnesota who asserted they were owed money over missed breaks and off-the-clock work.” While it is doubtful that the settlement suggests a strategic change at Wal-Mart, it does demonstrate a degree of flexibility on labor matters that is uncharacteristic of the giant retailer.. Recent court cases have not gone well for Wal-Mart, and it still faces difficulties in sex discrimination law suits.  Additionally, it apparently expects a change in the regulatory climate with the advent of the Obama Administration. (03-04-09)

70. Give Me a Break
“A state judge in Minnesota has ruled that Wal-Mart Stores violated state laws on rest breaks and other wage matters more than two million times and as a result could face more than $2 billion in fines.  The judge has threatened to impose a $1,000 penalty for each violation.”  See the New York Times, July 2, 2008, p. C4.  The suit is some seven years old.  “The Minnesota case is one of more than 70 lawsuits filed across the country in which employees have accused Wal-Mart of making them work off the clock or miss required breaks.  In Pennsylvania in 2006, a jury awarded $78 million in a lawsuit against Wal-Mart over rest breaks and off-the-clock work.”  In 2005 in California the company was ordered to pay $172 for similar complaints.  Wal-Mart, rightly or wrongly, has been targeted for years for its work, compensation, and promotion practices.  (9/24/08)

69. New Health Plan 
In bits and pieces, Wal-Mart is doing something about healthcare.  It has announced a new health plan with some interesting wrinkles to be introduced January 1, 2008.  See “Health Plan Overhauled at Wal-Mart,” New York Times, September 19, 2007.  “Wal-Mart said it would give each employee or family that signs up for coverage a grant of $100 to $500 to defray health expenses while charging premiums as low as $5 a month.  It will eliminate expensive hospital deductibles and make 2,400 generic drugs available to employees for $4 a prescription—about 2,000 more than it sells to customers at that price.”  “It could force the company’s discount-retailing competitors to offer more generous plans for their own workers.”  “The new program, for which workers can sign up starting this month, offers 50 ways to customize coverage, with varying trade-offs like higher premiums and lower deductibles.”  “She said the program emphasized preventive care, paid for by the company before a deductible kicked in.  Health care credits, for example, would make it possible for employees to see doctors and buy prescription drugs without paying anything out of pocket.”  It’s Wal-Mart’s halting advances on the preventive front that are the most impressive.  Probably the biggest thing companies can do to get healthcare costs down, and employee health up, is to get them to adopt healthy habits.  (1/9/08)

68. PR Amuck 
We have repeatedly said the Wal-Mart’s great strength is its purchasing apparatus, even though its buyers are so focused on cost that they neglect—indeed, do not even understand—quality.  Strangely, marketing is very lame at the world’s most important company.  Its pr operation seems to fit the pattern: doing awkward marketing that is often self-defeating.  We think its backward marketing makes the company’s motivation and actions seem much blacker than they really are. 

One blog, which is obviously antagonistic to Wal-Mart, does seem, nonetheless, to hone in on this hamfistedness.

I’ve been watching the furor around the rather interesting Walmarting Across America blog with great curiosity as it’s unfolded.  The blog’s been running for quite a while now (though all the historical posts have been pulled down, interestingly.  In a bit, I'll show you how to get to them all, though, so keep reading) but only in the last few days has the blognoscenti figured out that it’s actually all a sham and that far from being a couple who just ‘happened’ to drive their RV around the United States, parking in Wal-Mart parking lots as they went, it's actually a carefully scripted—and funded—campaign from the esteemed Edelman PR.

That’s a familiar PR agency because Steve Rubel, one of the best and  the brightest in the blogosphere, joined the firm a while back and since then Edelman has been in the forefront of figuring out how to intertwine public relations and the world of blogging.  With, apparently, mixed success.

What’s at question here is the free-ranging activity of Wal-Mart’s PR firm, Edelman, which seems to be off the ethical rails.  This sort of thing rather dilutes the impact a Wal-Mart can achieve with positive initiatives in energy conservation, self-help health programs, etc.  (8/22/07)

67. Skype Galore
Invented by a couple of Scandanavians, put together in Estonia, and then bought by E-Bay, Skype is about to explode.  It has been pooh-poohed by telecom executives when our associates have had conversations with the main landline carriers.  That said, we and others carry on conversations at no cost all over the world every day on Skype.  One can talk for nothing to other Skype users, or pay miniscule charges to call ordinary phones.  Once you get in the habit, it is very easy to converse, all the while doing other chores on one’s computer.  The main gaiting factor in its growth is that the headsets one uses to talk are both crummy and too expensive, although microphones are now built into many computers, obviating the need for headset-speaker combinations. 

Amazingly, Wal-Mart gets it.  It will now have a Skype section with “handsets, headsets and Web cams designed to work with Skype….”  It “will also sell the first prepaid cards for Skype calls to be sold in the U.S….”  Skype will be in about half of Wal-Mart’s stores.  The only strategic mistake Wal-Mart is making is that it is selling an array of existing gear, rather than buying in a headset that’s designed right and outsourcing its manufacture to China, where it already has a strong buying presence (Wall Street Journal, May 14, 2007, p. B3).  Like Sears of old, Wal-Mart must move to controlled product development where it offers enduring value at a good price, its cheap offerings now often a bit on the shoddy side.  (8/1/07)

66. New Yorker’s Selling Wal-Mart 
It was inevitable that the New Yorker would try to catch up with Wal-Mart sooner or later, and that it would get it wrong, as it does in “Selling Wal-Mart,” April 2, 2007, pp. 32-38.  Curiously this magazine does not do business very well, so it brings the wrong mindset to its assessment of the world’s most important company.  The sub-title is “Can the company co-opt liberals?”  And, indeed, Leslie Dach, its Executive Vice President for Corporate Affairs and Government Relations, was once a Democratic party operative who has migrated in to the company, manages its face, and believes it is a good force for America.  Along the way he worked for the National Audubon Society and the Environmental Defense Fund, so he has credentials that would warm Al Gore’s heart.

What the writer misses is that Wal-Mart actually is changing—in substantial ways: the jury is out as to whether it can refashion itself  enough to survive and to become a successful world citizen across the globe.  Still, too much, its mindware tells it that it is still the best thing in small towns across America because it puts a lot in people’s baskets for fairly small change.  It has not yet redefined itself as a company that brings quality into people’s lives.  The New Yorker, however, does not do a good job of understanding how businesspeople—in Bentonville or elsewhere—think, so the article cannot judge what is coming out of spin city and what is percolating up from a new strategy.  Strangely, too, the author never grasps that Wal-Mart’s marketing is very weak—whether it is selling the company or selling America’s consumers.  (7/18/06)

65. In Praise of Wal-Mart 
There are a host of rightish academics and think tanks that do praise Wal-Mart, and they deserve some attention.  Here, for instance, is some interesting commentary from the Washington Times:

Other academics have reached similar conclusions about Wal-Mart’s positive effects for the poor and middle class.  University of Missouri economist Emek Basker shows Wal-Mart’s presence tends to lower prices by varying amounts, perhaps nearly 10 percent in the long run.

Respected Massachusetts Institute of Technology economist Jerry Hausman argues that consumer welfare gains are even larger than those estimated by Mr. Basker, probably in excess of 20 percent of sales.  Jason Furman, former director of economic policy for John Kerry’s presidential campaign, claims Wal-Mart’s discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year.  These savings help poor and middle-class consumers disproportionately since they spend a greater percentage of their disposable income on food products.  Wal-Mart’s ability to help poor and middle-class consumers led Mr. Furman to dub the retailer a “progressive success story.”

These academic studies are supported by public opinion research.  The Pew Research Center last year found households making under $50,000 rated Wal-Mart most positively and shopped there more frequently.  Of those who make $20,000 or less, an astonishing 90 percent had a favorable opinion of Wal-Mart.  Minorities were also big Wal-Mart fans, with blacks and Hispanics rating the company more positively than Caucasians.  Presumably these demographic groups love Wal-Mart because the retailer has helped them stretch their dollars.

Well, none of these academics are that esteemed by the American people or by fellow professors.  But none of the academic critics of Wal-Mart are any more weighty.  It’s good to see outpourings from all sides, and there’s the hope that someone will do a measured consideration of the company that (a) can see that the company is a prod for low income people and weak national economies, and (b) that can understand that Wal-Mart is somewhat erosive of both product quality and quality of life for the middle classes and for more complex economies.  (6/6/07)

64. The Grass Grows Greener 
In “Look Abroad, Wal-Mart,” (Wall Street Journal, March 8, 2007, p.C16), sheds a little light on Wal-Mart, but offers up lousy advice.  It tells the company to invest abroad, though this will do little to improve its fortunes until it undergoes a thorough remake.  “Wal-Mart has admitted its new stores in the South and Midwest are cannibalizing business at existing outlets.  So its return on investment from launching stores in the U.S. is falling.”  “International sales, which accounted for a quarter of Wal-Mart’s revenue, grew 30% last year.”  “Moreover its overseas sales are more profitable.  Its return on capital invested in Mexico is above 25% ... about double what it makes at home.”  But note that it is only handily profitable in a few countries.  (5/2/07)

63. Exodus
Wal-Mart isn’t just firing executives: it’s losing a few.  “Its global procurement chief, Lawrence Jackson, has resigned, the fourth departure of a high-level Wal-Mart executive announced since early December.”  Jeff Macho, his replacement, had come out of Sear Holdings Corp in 2005.  Jackson had spent about 2 years at Wal-Mart, mostly as chief of human resources, having joined the company at Dollar General (Wall Street Journal, January 9, 2007, p. A14).  We are not sure that Wal-Mart, which needs to dramatically change its strategy, is sourcing new top level talent from the right companies.  Another longtime kingpin company, Citicorp, is also losing lots of talent, and Prince Alaweed, an owner of 8.9% or more of the bank, is said to have put management on notice.  (2/28/07)

62. Just Say No
One of the frustrations of dealing with Wal-Mart is that its demands may prove unconscionable.  The buyers squeeze too hard on the price.  Shipment protocols are too demanding. Your product is tossed off the shelf if something cheaper comes along or even if not enough SKUs move fast enough for ‘up’ or ‘out’ store management.  We have even chatted over the years with managers to find out why a good product disappears, and generally, the word is that it wasn’t moving fast enough.  

After some arm wrestling, a few smart companies choose not to deal with Wal-Mart.  One, a producer of organic products, chose to stay out, knowing that Wal-Mart’s demands would degrade the business.  Most recently, we have read that Roy Spence, head of GSD&M  in Austin, one of the Omnicom ad agencies, turned down the chance to bid again on Wal-Mart’s advertising account which, oddly, is back on the block.  “I want to thank Wal-Mart  for inviting us to re-pitch the business,” Roy Spence, president of GSD&M said.  “I have decided to decline” (New York Times, December 15, 2006, p. C6). 

“We helped build Wal-Mart from $11 billion in sales to $312 billion,” said Spence who worked directly with Sam Walton in more entrepreneurial days at Wal-Mart.  Draft FCB, part of Interpublic, which had the business up to a week ago, also decided not to rebid.  (1/31/07)

61. Looking for a Shoe That Fits
Still casting about for a strategy, Wal-Mart is introducing a little more variety in its mix. The Wall Street Journal overstates the case in “To Boost Sales, Wal-Mart Drops One-Size-Fits-All Approach,” September 7, 2006, pp. A1 and A17.  Over the years we have seen a raft of better quality, higher-end products get eliminated.  They are not back on the shelves, so one must take news about improved variety and quality with many, many grains of salt.  “To appeal to affluent shoppers in Plano, Texas, Wal-Mart staffed the new store with consumer-electronics specialists.”  In fact, several of the Dallas stores have always had a better product selection than you will find generally around the country. “Besides African-Americans and the affluent, it is targeting empty nesters, Hispanics, suburbanites and rural residents.”  It hopes to localize store after store, by emphasizing one demographic or another.  “The bigger changes are coming in approximately 1,500 Wal-Marts in suburban and urban areas.”  “The Plano store has about 3,000 different items—or about 2% of the total—targeting the well-heeled.  It has twice the number of organic products and a wine section with 1,000 bottles, at prices ranging from $4 to $500.”  (12/27/06)

60. Green on Green
Goals include increasing truck fleet efficiency by 25%, reducing solid waste by 25%, eliminating 30% of energy used by stores, reducing greenhouse gases by 20%, favoring suppliers who reduce emissions—all short term.  Long term it hopes to be supplied 100% by renewable energy, to create zero waste, and to sell sustainable products.  See “Wal-Mart Sees Profit in Green,” Wall Street Journal, August 21, 2006, p. B3.  (10/18/06)

59. Germany and South Korea: Wounded
Wal-Mart has gotten out of Germany and Southern Korea, taking big losses, with its tail between its legs.  “With Profits Elusive, Wal-Mart to Exit Germany,” Wall Street Journal, July 29, 2006,  pp. A1 an A6.  As we have said before, Wal-Mart is utterly dependent on a supply-chain strategy built around its ability to be a 900-pound gorilla capable of devastating other local merchants.  It lacks marketing ability, and those that have it—Aldi in Germany, Tesco in Great Britain—can give Big W its come-uppance.  “Germany’s discount retail market is turning out to be a tough one for some of the world’s biggest companies to crack.  Homegrown discount retailers offer very low prices.”  Back in America, “Wal-Mart posted sales gains of just 1.2% at stores open at least one year, compared with 4.7% during the year-ago period.”  “Wal-Mart’s global ambitions are now focused on Asia and Latin America,” particularly India, China, and Brazil.  (9/13/06)

58. Creeping into Financial Services
Wal-Mart, by one device or another, continues to tippy toe into financial services, however it can get there.  It has been inching into banking, filing an application to be an industrial bank.  It has already “built a sizable presence in the financial-services business” (Wall Street Journal, July 6, 2006, pp.C1 and C3).   “Among the offerings: check cashing, bill payment, money orders, and a partnership with MoneyGram International Inc, of Minneapolis, that enables immigrants to send money to their home countries from a Wal-Mart store.”  “Wal-Mart said it averages 1.5 million to two million money-services transactions a week.” 

But there are a few boulders in its path.  Most recently, “banks regulators have halted for six months any new approvals of the sort of industrial banks that Wal-Mart, Home Depot and 12 other companies are seeking to establish” (New York Times, July 29, 2006, p. B9).  “Nearly 100 members of Congress recently asked the F.D.I.C. to put into effect such a halt to give lawmakers a chance to consider legislation that would block commercial companies from owning industrial loan corporations.”  (9/6/06)

57. Wumart vs. Wal-Mart
Shares of Beijing based Wumart Stores have been on the rise.  “In February, Wumart agreed to pay US $46 million for a majority stake in Merrymart, the fourth-largest retailer by size in the Beijing area.  In April, Wumar paid US$22 million for a 28% stake in Shanghai-listed supermarket retailer Xinhua Co., which has a strong position in the northern Ningxia province.”  Major chains only have 0.5% of retail sales in the China market, obviously the world’s largest by population.  “The prospect to all this competition led local retailers to lobby for a set of proposed regulations that may curb the expansion plans of foreign retailers and benefit local players” (Wall Street Journal, July 20, 2006, p. C14).  “Wumart’s market share in the great Beijing area will be slightly more than 5%.”  Wumart is giving the foreign discount chains a run for the money.  (8/23/06)

56. -new- Tightwads
“The Walton family owns Wal-Mart stock worth more than $90 billion, more than twice the value of the Gates family’s Microsoft stock.  But the Bill and Melinda Gates Foundation is 35 times larger than the Walton Family Foundation, tax records show” (New York Times, July 2, 2006, p. BW 3).  While both Wal-Mart and the Walton family are making increasing noises about corporate responsibility, their record remains very mixed.  (8/2/06)

55. Marketing Awareness
As we have said, Wal-Mart’s great strength, up to now, has been supply-chain logistics, not marketing or customer friendliness.  But it’s beginning to change its stripes.  Recently it has put various aspects of its advertising up for grabs, trying to achieve a change in image and to better reach its customers with stronger messages and more adroit media placements.  Now it is tying the knot with world cup soccer.  See “Wal-Mart’s Big Goal,” Wall Street Journal, June 7, 2006, pp.B1 and B3.  “Courtesy of Wal-Mart Stores Inc., Argentinians … watch[ed] the international soccer tournament’s matches live this month in ministadiums set up at the chain’s superstores.  In China, Wal-Mart shoppers can practice dribbling through an obstacle course.  And in the U.S., shoppers … watch[ed] soccer demonstrations and play games on Astroturf playing fields.”  “At Wal-Mart, grand-scale soccer fever is a new byproduct of its growing presence abroad and the increasing importance of Hispanic shoppers at home.”  (7/19/06)

54. Beating Wal-Mart
It’s hard to beat Wal-Mart.  But abroad, more than one company is.  Most interesting to us is Tesco, a British grocer, that has given Wal-Mart fits in Great Britain.  It is now invading the U.S. with small convenience stores—at first.  See “No. 1 Retailer in Britain Uses ‘Clubcard’ to Thwart Wal-Mart,” Wall Street Journal, June 6, 2006, pp. A1 and A16.  In general what we learn is that Tesco understands its customers better.  As we have said many times, Wal-Mart’s great strength is its supply chain—its ability to buy stuff for less than everybody else, and then to go back to its suppliers and demand new price cuts every year.  But the merchandise is often shoddy, and, even more importantly, it is commonly mismatched with customer demand.  The things you want often simply are not on the shelves, and this product-customer mismatch has accelerated over the last few years as merchandising has gotten more and more confused. 

Tesco’s “big weapon is information about its customers.”  “Tesco has signed up 12 million Britons for its Clubcard program, giving cardholders discounts in exchange for their name, address, and other personal information.”  Its grocery market share is 31%, nearly double the 16% held by Wal-Mart’s Asda chain.”  Many of Wal-Mart’s overseas ventures are hurting to include Great Britain, Japan, and South Korea.  Smart German retailers have also given it a run for the money.  (7/12/06)

53. Getting Serious about Green Stuff
We have carefully indicated that Wal-Mart is a strategically flawed company which has elevated low cost at any price to be its supreme value—no matter what that ethic hurts. This is severely impeding the company’s growth and profits.  Nonetheless, it is now making interesting forays into health and greenness.  See “Wal-Mart Aims to Promote Health and Environment,” New York Times, June 222, 2006, p. C2.  “The plan, tentatively called the Environmental Health and Wellness Program, will emphasize practical advice, like replacing traditional light bulbs with energy-efficient bulbs that use 13 watts; those bulbs are already carried in Wal-Mart stores.  Another suggestion under consideration is to eat more fish, a healthier choice that is relatively inexpensive.”  “If he agreed to help Wal-Mart, Mr. Werbach would join an expanding list of environmental advocates who have advised the company on how to improve its record on issues like greenhouse-gas emissions and fuel efficiency.”  The Company is getting deeper and deeper into the health and environmental area: the only problem really is that it is hiring from the outside well-meaning health and environmental advocates who, in fact, don’t have much practical wisdom about moving the dial on health or the environment.  (7/5/06)

52. Wal-Mart Goes Organic
“Wal-Mart is Going Organic,” New York Times, May 12, 2006, pp. A1 and C4.  Wal-Mart has been at it a while, as careful shoppers can testify.  But the media are catching on that the company is getting reasonably serious about this niche market that accounts for 2.4% of food sales, yet is showing fast growth.  Organic food is, in fact, going mainstream, and Whole Foods will soon be more and more challenged in this area.  To raise its margins and growth, one can expect Wal-Mart to invade more and more higher priced niches, such as organics.  Additionally, this will help blunt somewhat the broad-based criticism of Wal-Mart’s social and environmental policies.  It is, in fact, to the credit of Wal-Mart, with the caveat, of course, that the firm’s supply chain managers are applying the same relentless price pressure on organic suppliers that they demonstrate with other purveyors.  This is problematic: certain quality supplier will not deal with Wal-Mart and certain of the organic products, at least in the produce sector, are not really up to snuff.  Nonetheless, Wal-Mart’s move into this sector is one of many indications that corporate America is becoming greener in many respects, and in this it is much ahead of our political parties which have been dragging their feet on environmental questions, alternate fuels, etc.  (6/28/06)

51. More on Its Greenness
Taken to be a corporate miscreant, Wal-Mart is now drumming up all sorts of notices because of its announced initiatives on the environment and sustainability.  See the New York Times, April 22, 2006, p. B5.  Grist, an online environmental magazine, believes that the company is getting some heart.  “Wal-Mart plans to spend $500 million a year to …. reduce its greenhouse gases, build more energy-efficient stores and reduce packaging waste.”  is wary about Wal-Mart, but cautiously thinks there may be “progress.”  Further, Wal-Mart is staffing up on soft functions, such as a “director of global ethics” and a “senior director of stakeholder engagement.”  See Leading Questions, March 18, 2006.  Many, of course, think Wal-Mart is co-opting the rhetoric of the socially responsible to tame its critics but without any intent to make substantive changes in its operating style.  (5/31/06)

50. Legislating Health
“On January 12th, the Democratic-controlled legislature in Maryland passed a bill requiring any employer with more than 10,000 employees to spend at least 8% of its payroll on health care” (The Economist, January 21, 2006, p.35).  “The Arkansas-based giant is the only company affected by it.”  Wrongly or rightly, it is broadly perceived that Wal-Mart does not pay its share of employee benefits, offloading the healthcare of its employees on society.  As The Economist points out, however, the bigger problem, in many states, is the number of very small enterprises that do not provide health insurance.  Wal-Mart has argued internally that it cannot afford more benefits, given the rugged competition it encounters in the retail trade, often from companies that provide little or no benefits.  (4/26/06)

49. The Sustainable Wal-Mart
Even penny-pinching Wal-Mart understands that the “sustainable” practices can often make good economic sense—for the nation and for Wal-Mart.  Turned on end, “sustainability” is a movement that argues we are wasting left and right, and aims to make us stop ravaging the earth.  There’s a contradiction here, of course, for Wal-Mart and other retailers, are dependent on our inclination to buy much more than we need.  Nonetheless, corporate sustainability officers (yes, we have a lot of them now) are helping us trim out some of the fat.  Wal-Mart is sincerely trying to give sustainability a try, and you can read its manifesto at its global warming site.  Needless to say, a 1% change in Wal-Mart practices can have an outsized positive effect on the environment and can bolster its sagging reputation.  (4/12/06)

48. Restaging the Company
A troubled Wal-Mart is doing a host of things to try to make itself a growth company again (see “Wal-Mart Beefs Up Its Ranks in Marketing to Energize Sales,” Wall Street Journal, February 21, 2006, p. A1).  It will add 60 people to its 200 people marketing staff.  “Sales gains at stores open at least a year ran below 4% for much of last year.” with competitor Target doing much better.  Last spring, “John Fleming, a former Target executive and Wal-Mart’s chief executive of its Web site, took over as the company’s chief marketing officer.”  It has also hired Stephen Quinn of Frito Lay and Julie Roehm, from the auto industry, for marketing slots. 

In Great Britain, its Asda chain is opening its first convenience store to kickstart sluggish sales.  Interestingly, Britain’s Tesco is entering the United States out West in the convenience store sector. 

Eduardo Castro-Wright, who has done a superb job for Wal-Mart in Mexico, now has been brought in to turnaround the U.S.  A one-time Honeywell executive, he is expected to make a lot of changes and to hasten the refurbishment of U.S. locations.  (4/12/06)

47. Leak Lovers
We think The New York Times got snookered on this one.  Our hats off to Wal-Mart, since we think it staged a leak that makes Andrew Card, Karl Rove, Lewis Libby, and all the whisperers in the Bush Administration look like rank amateurs.  Both the administration and Wal-Mart pride themselves on being notoriously opaque.  But we think Wal-Mart keeps a tighter lid over the country it has become, and, with all its public relations gaffes, knows how to dribble out stories it wants heard.  On Friday, February 17, 2006, a slow news day anyway, Business Day at the Times broke “On Private Web Site, Wal-Mart Chief Talks Tough,” pp.C1 and C4: 

Copies of Mr. Scott’s postings covering two years were made available to The New York Times by Wal-Mart Watch, a group backed by unions and foundations that is pressing Wal-Mart to improve its wages and benefits.  Wal-Mart Watch said it received the postings from a disgruntled manager….  The website has a folksy name … Lee’s Garage, because Mr. Scott pumped gas at his father’s Kansas service station while growing up. 

The Times journalists obviously believed they were getting out the dirt on a hard-fisted, uncaring Lee Scott who mistreats his employees.  But a careful reading shows that that these entries on Wal-Mart’s internal website are very carefully staged and that they largely allow management to get out its story inside the company—and now outside, with the help of The Times.  He manages to convey that the discount industry is bitterly competitive, with competitors biting at his heels, making it imperative to save pennies at every turn.  We would guess that Scott in this article would not come off badly to those in the middle of the road whom his public relations factotums badly want to reach. 

On the other hand, the article also reveals that management does not have an answer to its strategic dilemma.  Its “always at low cost” mantra has about run its course.  (3/15/06)

46. Field Report, January 26,2006
Two of our research analysts visited Sam’s mid-morning to measure its quality along several dimensions.  There were no gasoline shortages at the pumps (previously a problem), but two pumps were out of order.  Check out times were reasonable, an improvement, as it used to take quite a while to get through the cash registers in the morning.  Sam’s sort of plods along early in the days.  It’s when the staff does meetings, sorts through paperwork, restocks shelves, and does practically everything else other than serving customers.

For several years, we have reported that Sam’s has deep, enduring problems in the quality goods arena.  Oddly enough product quality has declined since the demise of the founder, although service has improved in some regards.  Commonly better goods are discontinued after a very short time: Evian, Guinness, Hagen Daas, Stella Artois are just a few of the items that have disappeared from these stores.  For sure many of these brands are unwilling to endure the margin erosion the store’s buyers demand.  Sometimes this is due to purchasing managers who have not been properly trained to advance the franchise, but store managers, in addition, do not have any feel for relatively upscale products and will throw out good products one may find in other cities. In several niches, Sam’s has no quality product offering.  A smart customer will, for example, buy his cookies elsewhere.

On this visit we ran a test with Marques de Paiva coffee which, oddly enough, Sam’s stocks.  Brazil is a huge coffee producer, but the quality is generally indifferent, and so it has only been able to obtain commodity prices for its crops.  De Paiva, with both French roast and organic, is ostensibly of high quality and it has enjoyed some acceptance.

Sam’s had different sizes of this coffee on different shelves, mixed in with its low grade brands.  It sells for more or less twice the price of other varieties.  It is poorly displayed: more demanding customers cannot quickly find and identify premium products.  But the problems do not stop there.  The shelf price was clearly displayed beneath the product for the smaller sizes: $10.74.  But the checkout price in the Sam’s system was $11.77, a serious discrepancy.  This is a frequent occurrence at Sam’s: mix-ups on pricing crop up often, and they do not favor the customer.  This shoddy practice drives away higher-end, busy customers who buy premium products, the type of customer Wal-Mart knows it has to start attracting.  The frugal upscale customer goes to Trader Joe’s, now a subsidiary of a German merchant.  We would surmise that these kinds of difficulties with quality offerings would provide a strategic opening for Costco and other merchandisers. 

Once again, Sam’s—Wal-Mart’s warehouse store—is immeasurably cleaner and more orderly than other Wal-Mart stores.  Generally, too, the personnel are friendlier and very much more polite—a matter of some emphasis now at Sam’s.  We notice that cash register personnel are wearing support garments around their midriffs since they are now forced to trundle even the heaviest merchandise, lacking a flexible scanner to check out boxes and other heavy customer purchases.  Customers clear registers at Sam’s faster than they do at Costco, which has a major checkout problem. 

Even with a surfeit of personnel at the customer service counter, we were in line for 15 minutes trying to clear up some minor questions.  This would seem to indicate serious glitches in its customer service processes.  As at Costco, Lowe’s, Home Depot, and a host of other chain discounters, the signage is terrible, and products are hard to find.  Such display problems result in lost sales.  (2/22/06)

45. Passages to India
With signs that India may open up its retail markets to foreigners, Wal-Mart is nosing around in New Delhi.  It has applied to open its first liaison office there.  “According to estimates by McKinsey & Co, India’s $250 billion retail business is the world’s eighth-largest” (Wall Street Journal, January 18, 2006, p. A9).  “Wal-Mart and other global names rely increasingly on international operations for growth.”  But the company still only gets 20% of its sales internationally.  Already a huge buyer of Indian goods, Wal-Mart promises to be an even larger purchaser when it gets stores on the ground there, a fact that is not lost on Indian politicians.  It exported $20 billion worth of goods from China in 2005.  (2/15/06)

44. Good News, Bad News: Wal-Mart PR
Wal-Mart has put together a war room of public relations people to get out the good and counter the bad press it is getting around the country.  Thus far, this operation is faulted for being awkward, and its spokespeople tend to give rote, memorized answers that often don’t have much to do with the event or news they are trying to explain away.  But this is a brand new effort on the part of Wal-Mart, and it will eventually become less ham-fisted.  Sam Walton did not really approve of public relations, feeling that good products and low prices would speak for themselves, so this amounts to a change in direction for the company.

Global Insight has just conducted a study and put on a conference financed and sponsored by Wal-Mart.  Global Insight reports back:  “Wal-Mart increased net consumer purchasing power by $118. billion last year, translating into savings of $401 a person.”  On the other hand, “David Neumark, a senior fellow with the Public Policy Institute of California, and two other economists found evidence that earnings for a county’s retail workers fell by 3.5 percent eight years after Wal-Mart entered the county” (New York Times, November 5, 1005, p. B4).  There seems to be little question that Wal-Mart does hold down consumer prices, but that the social costs of some of its actions may be severe.  At least at question is whether it depresses wages, worker health, product quality, and local environmental conditions.  As well, there is now some question as to whether, given its current strategy, it is increasing shareholder value.  Wal-Mart’s use of Global Insight would have to be voted a success.

Meanwhile, websites that are keeping track of Wal-Mart continue to proliferate.  Generally, they are a little worrisome because one cannot learn immediately who is behind them and what the motivations are.  Interesting, for instance, is Always Low Prices, Always?, which indicates it aims to publish the worst and the best about the company and even claims to take on many who are protesting Wal-Mart practices.  On this site, one can find good links to a host of serious commentators on Wal-Mart as well as links to miscellaneous Wal-Mart bloggers.  The editor of this now darkened site has offered some murky, convoluted reasons for shutting it down.  As we said, the motivations of those behind these Wal-Mart blogs are often a little tangled.

New, pesky PR problems crop up for Wal-Mart daily.  A new movie, Wal-Mart: The High Cost of Low Price, showed “at about 1,000 churches, synagogues and religious sites nationally on Nov. 13 in a bid to force changes in Wal-Mart’s employment and other practices” (USA Today, October 27, 2005, p.1B).  And an internal Wal-Mart memo “recommending the company consider changes that would ‘dissuade unhealthy people from coming to work at Wal-Mart’” has sparked much criticism (USA Today, October 27, 2005, p. 3B).  Apparently the 27-page memo includes a raft of steps to curb healthcare costs.  (1/4/06)

43. The Half Greening of Wal-Mart
Wal-Mart management, after several years of acting defensively and protesting all the complaints about its environmental and labor policies, is moving to meet its critics perhaps halfway, even if it is not fully acknowledging its social responsibilities.  In October it called on Congress to raise the minimum wage, initiated far-reaching energy saving policies, and offered minimal health plans that will cover a much larger percentage of its workforce. 

“Currently, fewer than half of Wal-Mart’s workers are covered by company health insurance, compared with more than 80 percent at Costco, its leading competitor.”  (See the New York Times, “Wal-Mart to Expand Health Plan for Workers,” October 24, 2005, pp. C1and C9.)  While employees will get the benefits at a cheap cost, the plans do provide cheap benefits.  Some wits call them health plans for the young and healthy, saying they will not do much for the sick and the aged.  By the way, the company knows that it has a disproportionate amount of unhealthy personnel.

This is just one of many initiatives Wal-Mart unveiled, all at once, in October.  Of course, the call to raise the minimum wage may, in fact, affect Wal-Mart’s smaller competitors more than Wal-Mart, so, in some respects, this legislative call is as much a competitive joust as it is an endeavor to help the working poor. 

“In energy-saving moves that will save Wal-Mart money, Mr. Scott said the company plans to increase the efficiency of its truck fleet—among the largest in the country—by 25% in the next three years” (Wall Street Journal, October 25, 2005, pp A2 and A8).  “It will also invest a total of $500 million annually exploring technological advances to reduce greenhouse gases 20% during the next seven years and is sharing its findings with others, including competitors.”  It will favor suppliers in China who join “a green company program” it is putting together.  The company as well will be looking at inbound packaging from suppliers from a “green” point of view. 

Clearly the company is putting more energy behind its “green” program than its labor and health measures.  This puts it in lockstep with several major multinationals who are greening themselves.  What is missing, of course, is an effort to improve on its dreadful product quality, which would have both health and environmental implications.   

It is taking on additional overhead costs here, despite the fact that investors are fretting that its costs are out of whack.  This has always been a company that has rammed through low prices and low costs—at any price, and its gradual change in posture worries its avid followers.  In “Wal-Mart Investors Fret over Costs: Rise in Operating Expense Stirs Concern about a Loss of Vigilance over Outlays” (Wall Street Journal, October 25, 2005, p. C3), it is noted that “in the second quarter, Wal-Mart operating costs amounted to 18.3% of its net sales, compared with 18% a year earlier.”  “Ultimately, those extra costs, along with lackluster sales growth in stores open more than a year—3.2% in the first half of this year compared with 5.2% a year earlier—weigh on the giant retailer’s earnings.”   

We would predict that the Company will gradually undergo a change of strategy and rethink its merchandising policies, since it can only do so much to rein in rising costs and its current product/service configuration is not delivering the growth it needs.  (11/30/05)

42. 600 More Stores
Wal-Mart says “it plans to add between 555 and 600 stores globally next year, adding 60 million square feet and becoming more aggressive in the number of supercenters it opens.”  The company expects growing restrictions to impede store growth and figures it should rush openings now to dodge emerging regulation (Wall Street Journal, October 26, 2005, p. B2).  Some have speculated that its rash of moves on minimum-wage legislation, health insurance, and energy consumption also are partially intend to soften up opposition to its store openings.  (11/23/05)

41. Competing with Big Box
Outside the United States, innovative companies have done a better job of competing with the goliath than companies here, basically because domestic discounters and general merchandisers try to do knock offs of Wal-Mart merchandising.  Costco, for instance, has a lot going for it: intense sales per square foot, very large presence in wine sales (Wal-Mart now trying to grab more here, as it adds on a commitment to hard liquor), some agile selection of merchandise that Wal-Mart is missing, etc.  But the basic way to beat Wal-Mart is to offer quality merchandise and service, both of which are consistently mediocre at Big Box.  In Mexico, Wal-Mart owns 55% of the market, especially since it acquired the big Cifra chain 7-plus years ago.  But Soriana, once faltering in fourth place, is coming on strong, having bounced up to 2d place with a 17% market share.  “Soriana’s sales have compounded at a 17% rate since 1994.  The company is debt free, and its growth … is entirely financed by operations.”  “In the third quarter of 2004 … Soriana’s operating margin at 6.1% equaled Wal-Mex’s.”  See Forbes, December 27, 2004, pp.137-147.  “Soriano’s strategy, in short, was to offer its higher prices with a little stardust and a better understanding of Mexicans’ middle-class aspirations.”  To help fight Wal-Mart’s purchasing power and vast supply chain, the Mexican government now allows Soriano, Comercial Mexicana and Gigante to pool their purchasing power.  (11/23/05)

40. Wal-Mart Worker Association
In central Florida, workers are joining the Wal-Mart Workers Association, a group battling the company’s apparent reduction of working hours in order to avoid paying out health benefits.  Backers of the Association include the United Food and Commercial Workers Union, the Service Employees International Union, Acorn, an advocacy group (, the Marguerite Casey Foundation, and the Nathan Cummings Foundation.  With the company’s determined efforts to fight unionization, labor leaders feel such an association is another way to begin to bring workers together to fight alleged abuses.  (10/12/05)

39. Sober Sam Goes off the Wagon
Wal-Mart, which does not allow employees to drink on premises or at company affairs and makes its officers pay for their own drinks, is getting deep into the drinks business.  See “A Sober Wal-Mart Launches Drive into Tricky Area: Liquor,” Wall Street Journal, August 17, 2005, pp. A1 and A8.  It only amounts to $1 billion of sales now, but the category grew 154% last year.  It has teamed up with Diageo PLC, the world’s biggest liquor company, which has even devised a dulce de leche spirit for Wal-Mart shelves and expanded its Bentonville office to 13 people.  Wal-Mart is doing somersaults to make sure it can open up in restrictive states, such as walling off liquor departments or locating its liquor stores just over the state line from very dry or very strict locations.  (9/21/05)

38. Guilt Trip
“Is It Ethical to Shop at Wal-Mart?” asks the Markkula Center for Applied Ethics at Santa Clara University (  Jeffrey Seglin, who writes about ethics for The New York Times, says “Yes.” Bob Brownstein, policy director of Working Partnerships USA says “No.”  They were speakers at Ethics at Noon Presentation on April 12, 2004.  Seglin more or less treats Wal-Mart as part of an inevitable consolidation trend.  He notes that many of us hold its stock and, further, that Wal-Mart is a substantial philanthropist.  Brownstein tends to think it makes poor people grow just a bit poorer.  Hence, in his eyes, it deserves to be shunned.  (9/14/05)

37. Hail, España
“Wal-Mart … has been the largest retailer in Mexico for five years.  But until recently, its approach to targeting Hispanics in the U.S. has been low key.”  Now it is moving into high gear, putting out its circulars in Spanish and has a magazine for Hispancs called Viviendo (Living).  With Sprint it is offering prepaid wireless aimed at Spanish speakers.  Latinos are now 14% of the population, with burgeoning disposable income.  See The Wall Street Journal, May 31, 2005, p. B9.  (8/31/05)

36. Another Stab at the Banking Business
“The retailing giant said it has filed an application to operate an industrial bank based in Salt Lake City to handle electronic-payment processing in its stores” (Wall Street Journal, July 20, 2005, p. C4). Given its 140 million credit transactions each month, the savings would be huge.  Bankers worry that this is just a prelude to opening branches in stores and offering other services.  Previous efforts by Wal-Mart to enter banking have been resisted by an array of institutions.  “Only seven states charter industrial banks.  Utah is amongst the most active, with 29 current industrial banks” with assets of more than $120 billion.  General Electric and Target Corp are amongst those operating in Utah.  (8/3/05)

35. Free-loading Companies?
Senators Kennedy of Massachusetts and Corzine of New Jersey are offering a bill “requiring that states report the names of companies that have 50 or more employees who received government-funded healthcare.”  (See the Boston Globe, June 23, 2005, P. E4.)  “More than 600,000 of Wal-Mart’s 1.26 million US workers get benefits from government programs or through a spouse’s employer, the lawmakers said.  …  Wal-Mart offers eight health plans, with premiums starting at $40 a month for an individual, and doesn’t cap most expenses, the company said.”  Lawmakers believe that Wal-Mart and other large employers are offloading their healthcare burdens on taxpayers.  (7/6/05)

34. Alice’s “Kindred Spirits”
Even if Wal-Mart mostly sticks to low-cost, low-quality merchandise to get at America’s pocketbook, Sam’s daughter Alice is putting on the dog.  She has just bought Asher Durand’s 1849 painting Kindred Spirits from the New York Public Library, reputedly for something north of $35 million.  It’s migrating to Bentonville, Arkansas where it will embellish a family museum called Crystal Bridges slated to open in May 2009.  See the New York Times, May 13, 2005, p. A19.  Obviously some consumers more than others benefit from Wal-Mart’s operations.  (6/8/05)

33. Wal-Mart Moves into Financial Services
“The retail giant’s relentless push into financial services is starting to send shivers through the banking industry.”  Now it has nearly 1,000 bank branches operated by partners in its stores. Again with partners, it has gotten heavily into wire transfers and money orders.  It is pressing as well to get into banking.  See Business Week, February 7, 2005, pp. 29-31.  As profits and growth in its other areas flatten, Wal-Mart seems to be following Sears, GM, GE, and other goliaths which look for salvation in financial service activities.  (6/1/05)

32. Wal-Mart Inches Up Market
“Wal-Mart is upgrading a lot of its merchandise.”  One analyst is unimpressed.  Bob Buchanan at A.G.  Edwards remarked, “They’re trying a lot of things  but today, spring 2005, their overall assortment lacks creativity and originality.  They have missed on key products many times.”  See the New York Times, April 6, 2005, p. C3.  This attempt will, indeed, be a challenge for a company that worships low price at all costs.  If it is to go upmarket, it must not only improve its selection but it must significantly improve product quality which tends to be low.  Moreover, many of its buyers, who experienced significant shortfalls last year, have been playing it safe: they are buying traditional items from big brand houses, not the way to catch the mood swings of the volatile population that actually has dollars in its pockets.  In other words, the Company will have to learn merchandising—a skill not in high demand when it was solely a company built around its supply chain.  (5/2505)

First of all, let us make clear that we have absolutely no connection with, since we are just as interested in Wal-Mart’s strengths as its weaknesses.  We follow Wal-Mart  because it is the most important company in the world, and it is radically changing our lives—both for the good and the bad., clearly a union effort, appears to be gaining more and more strength, and is creatively assailing Wal-Mart’s wages, benefits, and employment practices, which do appear to be substandard.  We note here a full-page advertisement from this organization that ran in the New York Times and several other papers on April 20, 2005, p. A13, “How Much Does Wal-Mart Cost American Taxpayers Every Year?”  This is one of several groups across the U.S. arrayed against the company that have become alienated either by its employment practices or by its effects on the communities where it is located.  It is also arousing discomfort in the investment community because its stock has been stagnating.  (5/18/05)

30. Tough Sledding in Germany
Since 1997,  Wal-Mart  has only captured 2% of German food market, or $3.2 billion a year, and its store count has dropped slightly.  However, it did finally achieve positive cash flow in Germany in 2004.  Aldi, with a 19% share and 4,000 stores, is the chain to beat.  See Business Week, April 11, 2005, p. 54.   Also see item 16, “Aldi on the Outside,” below.  Aldi is invading the U.S., and has purchased Trader Joe’s, a very successful concept.  (5/11/05)

29.  In-Store TV Promotion Network
Wal-Mart TV, controlled from Bentonville, is growing at a torrid pace, rapidly adding advertisers and ad dollars.  Advertisers pay between $137,000 to $292,000 to show a single commercial over a 4-week period to the consumers—who can now be reached in almost all the Company’s 2600 stores.  As part of an upgrade, 600 42-inch TVs will be added by December 2005.  Plans are afoot to tailor ad presentations, so that different content will be shown in different departments or different regions of the country.  We suspect that in time Wal-Mart will begin to use this strong network for better internal communications, since it will need to be retraining all its employees.  New York Times, February 22, 2005. p. C1 and C6.  (3/23/05)

28. Wal-Mart Loses Bias Suit; $7.5 Million Award
Patrick Brady, who has cerebral palsy, was hired in Wal-Mart’s Centereach, New York pharmacy department in 2002, but left after he was assigned other duties such as collecting garbage and shopping carts from the parking lot.  He just won a big legal round, but is sticking to his new job.  Wal-Mart had previously signed a consent decree agreement over disabilities in 2001 that had involved a $6.1 million payout.  See The New York Times, February 24, 2005, p. C3.  (3/16/05)

27. Queens Quivers
Wal-Mart is now trying to open a beachhead in New York City, but there is strong resistance.  “Small businesses, union leaders, City Council members and even some mayor candidates are gearing up to prevent Wal-Mart from setting foot in town.”  It is aiming to open up in Rego Park in 2008.  According to “Richard Lipsky, spokesman for the Neighborhood Retail Alliance, an anti-Wal-Mart coalition based in New York,” the groups arrayed against the Queens store will be very broad.  See New York Times, February 10, 2005, p. A23.  For similar activity in Contra Costa County in San Francisco, see For a broad look at anti-Wal-Mart store sentiment and anti-Wal-Mart actitivity, for which we gather the unions are the major catalyst, see   Subsequently, Wal-Mart and Vornado Realty Trust, the project developer, have abandoned plans for the Queens location.  (3/16/05)

26. Off the Shelves
Wal-Mart experienced a hiccup towards the end of 2004 and quickly did some inventory adjustments and price chopping to make its numbers.  What is not completely understood is that the company’s merchandising is not keeping up with a changing America., and in local regions often completely misses the market.  Some of its presumed lower-middle class audience either does not have the bucks to spend at Big Box or is putting the money elsewhere.  Many merchandisers are going upmarket, but this store relentlessly combs upmarket out of its mix.  The list that follows are some of the goods eliminated by Sam’s, its warehouse division, over the years, even though it once stocked them for a considerable period.  We will continue to add to the list.  Gone are Pepperidge Farm cookies, Haagen Das ice cream, larger golf-size umbrellas, Evian water, liquid form Benadryl, Guinness Beer, off-the-shelf eyeglasses (better quality, volume pack), quality ballpoints, and better quality videotape/dvds.  (3/9/05)

25. Union Shy
Despite its global presence, Wal-Mart chooses to adhere to its strict anti-union policy which dates back to its small town days in the poorer parts of the South.  It has just announced that it will close a store in Quebec, “where unionized workers are attempting to negotiate the first collective agreement in North America with the company.”  This may portend difficulties for the company in Canada, one of its profitable regions, since there are union activities brewing in other parts of Canada, and Canada’s labor movement probably has more staying power than that of the United States.  See The New York Times, February 10, 2005, p. C3.  (3/9/05)

24. The Wal-Mart Obsession
The Hartman Group, in its newsletter Hartbeat, wonders why the marketing community focuses so entirely on Wal-Mart when most consumers have less than a passionate attachment to it and, in fact, there are several big holes in its approach to merchandising.  See  Says Hartman: 

You see, it’s not so much that consumers don’t like Wal-Mart as much as it is just not a salient part of their everyday life.  For many, if not most, a visit to Wal-Mart does little more than a visit to the gas station. 

All of this raises the question, how can we collectively be so obsessed with a contemporary institution that appears only modestly relevant to our individual, everyday lives? 

Namely, Wal-Mart represents a sort of hypothetical standard of efficiency by which we feel compelled to judge our daily existence, even though we have no necessary desire to live our lives that way.  In psychotherapy parlance, Wal-Mart is the judgmental parent we just can’t seem to shake; at once the cause and target of our post-adolescent angst. 

Hartman theorizes we pay obeisance to Wal-Mart because we feel that it is emblematic of efficiency and thrift.  The contradiction, however, is that in truth we don’t really want to lead stingy lives, so it is really marginal emotionally for us.  This is something Wal-Mart itself should understand as it tries to gain the affection of U.S. citizens in an ad campaign we discuss elsewhere on this page.

23. Justice Department Announces $.3.1 Million Environmental Fine
“The Justice Department announced on May 12, 2004 that Wal-Mart had agreed to pay a $3.1 million dollar fine for violating the Clean Water Act in nine states.  The penalty, the retailer’s second since 2001, is the largest ever assessed against a company for failure to manage storm water runoff.”  See Watching Justice, May 13, 2004 at

22. Bentonville’s Ad Blitzkrieg
Under assault by labor unions, communities, feminists, sundry legal authorities, consumer activists, and more, Wal-Mart on January 13, 2005 hit back with a massive advertising fusillade.  It bought full-page ads in  “more than 100 newspapers nationwide, including The New York Times and The Wall Street Journal.  The ads also ran in dailies and minority publications in 15 major markets….”  It ran a full page letter from CEO Lee Scottt, pictures of workers, and a list of positives about its labor practices.  “Public advertising has increasingly become a major part of Wal-Mart’s defense strategy. For the past few years, it has been using TV ad spots, targeting mainly consumers, to respond to image problems.”  See The Wall Street Journal, January 14, 2005, P. B3.  Also see, wherein the company is using a website to set out more of its record  and to create a little more dialogue with John Q. Public.  To see the advertisement, visit

Unquestionably the Company does feel under siege, and it is using a public image advertising campaign (these campaigns are usually unsuccessful, incidentally) to try to bounce back from an assault which is beginning to affect its business.  Historically such efforts date back to Ivy Lee, a public relations genius who helped John Rockefeller burnish his image in a nation and a marketplace that felt bruised by Standard Oil’s brutal tactics.  This campaign would seem to lack the subtlety of the old master who figured out that the best pr was a heap of unvarnished good deeds.  See
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21. George in Slow Lane
“Four seasons out, George, which is targeted to women 30 to 50 years old, is hardly the megahit industry denizens feared.  Although Wal-Mart insists sales of the George are ahead of plan this year, apparel supplier, analysts and observers say sales have been far below what the fashion world was expecting.”  The George fashion line, transplanted from Wal-Mart’s acquisition in the United Kingdom, has not taken firm root here yet.  There is some thought that there is a conflict between Wal-Mart’s low price, big box merchandising and the world of fashion.  See The Wall Street Journal, July 2, 2004, pp. B1 and B2.

20. Too Poor for Wal-Mart
Try as it might, Wal-Mart cannot seem to get past the law suits and allegations that alleges that it treats its employees unfairly (terrible healthcare policies and failure to pay for overtime), pays them too little, and discriminates against women when it comes to promotions, etc.  Barbara Ehrenreich, who even worked for the company for a while to investigate its practices, just wrote a satirical column with a huge amount of sting entitled “Wal-Mars Invades Earth,” The New York Times, July 25, 2004, p. WK 11.   She is the author of Nickel and Dimed: On (Not) Getting By in America, which deals with the struggles of the lowest wage earners, a growing segment of our population, in trying to make ends meet.  Both the chairman and chief executive of Wal-Mart make reference to the social and environmental concerns the company has aroused in its current annual reports.

19. Wal-Mart and the Malls
On Long Island and elsewhere, where land is expensive, Wal-Mart is sticking its foot in the mall waters, installing stores that are smaller than its supercenters, sometimes in malls that are distressed, with low rents, and need anchor tenants to get reinvigorated.  But some operators, rather than wooing Wal-Mart, are reworking their malls to make them flourish even in the face of competition from nearby Wal-Marts.  That may mean recruiting specialty shops, multiplex theaters, and upscale restaurants.  See The New York Times, May 26, 2004, p. C6.  Incidentally, this mall retreading ties in with the observation by some (see Big Ideas 162) that malls are tired and vestiges out of the past which are losing their franchise in America.  Obviously they have entered a complicated period of recycling where they will become something far different.

18. Wal-Mart Endangers Vermont?
“The National Trust for Historic Preservation said it was calling Vermont endangered because of the threat of ‘behemoth stores, specifically Wal-Mart  …  Vermont’s four outlets are the fewest that Wal-Mart Stores … has in any state….”  See The New York Times, May 25, 2004, p. A22.

17. Dollar Threat for Wal-Mart
Apparently, the dollar stores—the cut rate price merchants we find in strip malls—are the fastest growing retail sector in America.  “Led by Dollar General, Family Dollar, and Dollar Tree, the sector has added more than 4,000 new stores in the past three years, an increase of 34%.”  Though only accounting for $16 billion in sales last year, they are attracting the attention of the giants which are testing their own dollar sections.  The dollar chains are easy to reach, have good parking, and can pick more convenient locations for time-pressed shoppers.  With low overheads, low rent, and liquidation merchandise, they can undercut Wal-Mart.  Typically they have pulled in the under $30,000-a-year shopper, but now they are getting higher income families whose budgets are stretched.  See Business Week, May 10, 2004, pp. 78-79.

16. Aldi on the Outside
Aldi, of Germany, is a huge discounter that has been growing handily, with big margins, heavy growth, and tremendous market power.  Now at $37 billion of sales and privately owned, it is even more relentless than Wal-Mart about pricing, buying, and general cost control.  “Aldi opened its first U.S. store in Iowa in 1976 and has sales of $4.8 billion in North America….”  Trader Joe’s in America, now owned by the family, is expanding rapidly, discounting upscale grocery products.  The plan is to bring the number of Aldi stores in the States up to 1,000 by 2010.  Its narrower product range, perhaps 20,000 products, usually Aldi exclusives, permit it to contain costs and exert other tight controls.  See Business Week, April 26, 2004, pp. 60-62.

15. Santa Barbara Conference on Wal-Mart
On April 12, UC Santa Barbara held a conference on Wal-Mart attended by academics throughout the United States.  See  According to The New York Times (“Wal-Mart, a Nation Unto Itself,” April 17, 2004), the attendees generally regard Wal-Mart, for good and bad, as the prototype for capitalism in the early 21st century.  “In the 19th century,” said Nelson Lichtenstein, a history professor at UCSB and a conference organizer, “the standard-setting company was the Pennsylvania Railroad; in the mid-20th century, it was General Motors; and in the late-20th century, it was Microsoft.  Today’s prototypical company, he declared in opening the conference, is Wal-Mart, which, he said, rezones American cities, sets wage standards and even conducts diplomacy with other nations.”  Wal-Mart declined to send a representative to the conference, claiming that the agenda seemed to be tilted against the company.   

“Everyone at the conference seemed to marvel at Wal-Mart’s extraordinarily sophisticated use of technology,” including centralized temperature control of all stores from company headquarters, tight control of shipments and of its whole supply process, and detailed, real-time knowledge of worker hours and productivity.

17. Learning to Love Wal-Mart
The Economist
(April 17, 2004), ran both an editorial (p.c9) and a cover story (pp. 67-69) in which it sings the praises of Wal-Mart and its impact on business and society.  “So far, though, and despite the criticism the firm has already attracted, it has on balance been a powerful force for good, like most firms that drive up standards in any competitive market.  Wal-Mart’s success has been great for its customers…  It has been good for its suppliers, as its rigorous demands have forced them to improve their own efficiency and quality.  It has set standards which have even inspired and challenged other industries….   And though it has tried to keep labor costs down, it has been good for most of its employees because many are immigrants, part-timers or older people who might not otherwise have found a job.”  Several retail competitors both in the United States but also abroad have been set on a course of major improvement in order to deal with the Wal-Mart machine. 

The Economist notes that Wal-Mart’s operating record abroad has been very mixed.  It has unqualified successes in Mexico, Canada, and England.  But it has bombed in Germany, not doing well against the highly innovative Metro as well as other German discounters.  It is still trying to find its way in Japan.   Its “domestic discount-store business … makes up 65% of the firm’s sales and 87% of its profits.”  Here, too, it has challenges since the Southwest and even the Midwest have welcomed it, but communities in the Northeast and California have resisted its advance.  Voters in Inglewood, California, in a widely noticed referendum, recently turned down Wal-Mart’s bid to build a “big box” in their community.

16. Wal-Mart Strikes out in Inglewood
“Citizens of Inglewood, a suburb of Los Angeles, voted by a large margin … to block the retailer’s proposed 60-acre development….  Several California cities and counties, including Alameda, already have enacted legislation to ban …supercenters.  Los Angeles, San Diego and several cities in the Bay Area are considering similar bans as well.”  Wal-Mart had gone directly to Inglewood voters to try to end-run opposition in the local government.

15. Wal-Mart Works Washington
Long apolitical and far removed from Beltway affairs, Wal-Mart now is spending freely in Washington to influence legislation, trade treaties, etc.  See “Wal-Mart Opens for Business in a Tough Market: Washington,” The Wall Street Journal,  March 24, 2004, pp. Al & Al5.  In this regard, it is like Microsoft, which long avoided Washington but has since mounted a major effort there.  Both have achieved such scale that they realize that a lack of political clout now is a major barrier to growth and increased profitability.  It has lobbied extensively on trade matters and labor relations.

14. Many Suits in the Closet
Writing in 2001, Richard Willing (USA Today, August 13, 2001) says that Wal-Mart is sued more than any other organization save the U.S. government, with 4851 cases filed in 2000 and 9400 cases open.  He furthers notes that the company ultra-aggressively defends against suits, rather than settle, with the effect that it has reduced the number of actions filed against it.  He cites situations where the company appeals rather than pays claims awards, noting an instance of a woman who was still waiting after 8 years for payment of an injury award of $250,000 that stemmed from merchandise falling off the shelf that caused neck injuries.  Numerous actions have arisen from sundry security problems in company parking lots.

13. A New Approach on Personnel?
Coleman Peterson, executive vice president of human resources and Wal-Mart’s top African American, is retiring April 30 at age 55.  He is credited with cutting turnover from 70 to 50% and with recruiting five of the company’s top seven executives.  On the other hand, Wal-Mart is under assault for allegedly not paying thousands of workers  overtime due to them and for ostensibly shortchanging women on pay and promotions.  See the Wall Street Journal, February 23, 2004, p. B6.  Also pelted for using immigrants illegally as contract cleaning employees, Wal-Mart’s reputation has been taking a beating, as noted in several national surveys to include one executed recently by Harris.  See the Wall Street Journal, February 19, 2004, pp. B1 and B2.  Seemingly the central reason for its decline has been all related to employee treatment issues.

12. Blimpie et. al.
Wal-Mart has announced that 100 of its stores will soon have Blimpie outlets for sandwiches and salads, replacing its own Radio Grills.  McDonalds, Sonic, and Tastee Freeze outlets are already there.  Additionally, we know other kinds of fast food enterprises are testing at Wal-Mart, and we would expect low-end food boutiques to grow there, along with other types of outside suppliers eventually.  In other words, there is no intrinsic reason why Wal-Mart cannot become the main marketplace for all sorts of services, not just a pipeline for cheap products.  For more on Blimpie’s, see the Wall Street Journal, February 2, 2004, p. B3.

11. Wal-Mart’s Impact from A to Z
KQED and NPR put out a 4-part series on Wal-Mart on June 2, 3, 4, and 5 June 2003.  It looks at the company’s roots, its relationship with vendors, its impact on small towns, and finally its controversial impact on both inflation and wages.  See

10. Metro in the Lead on RFID
Metro, Germany’s biggest-retailer and fifth in the world at $61 billion in sales, is ahead of Wal-Mart in its program to put RFID tags on merchandise, and it is broadly working to be the technology leader in retailing.  Read more about this in Agile Companies and in Big Ideas

9. The Wal-Mart You Don't Know
“It’s the story of what the pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole.”  (See Fast Company, Issue 77, December 2003, pp. 68 and ff.)  Wal-Mart bought $12 billion worth of merchandise from China in 2002, 10% of Chinese exports to the United States.  “McKinsey & Co. … concluded that about 12% of the economy’s productivity gains in the second half of the 1990s could be traced to Wal-Mart alone” as it squeezes suppliers or buys products abroad.  Charles Fishman reports on several Wal-Mart suppliers who have had to continuously lower their prices or lose their places on its shelves.  As an aside, it is noted that Wal-Mart is very prompt about paying its bills.

8. Lock-Ins at Wal-Mart
“For more than 15 years, Wal-Mart Stores Inc. … has locked in overnight employees at some of its Wal-Mart and Sam’s Club stores.  It is a policy that many employees say has created disconcerting situations, such as when a worker in Indiana suffered a heart attack, when a hurricane hit in Florida and when workers’ wives have gone into labor.” While management claims the lock-ins are mandated by a concern for employee safety, the article speculates that the policy is meant to avoid shrinkage (theft) and employee downtime (smoke breaks, etc).  See The New York Times, January 18, 2004, pp. Al and A23.

7. Wal-Mart Offering Web Music
See the San Jose Mercury News, “Wal-Mart gets in on Web Music,” December 19, 2003, p. 1F.  Its online store “sells songs for 88 cents—undercutting Apple Computer’s popular ITunes downloads by more than a dime.”  “Wal-Mart … has elbowed aside major chains like Tower Record to become the nation’s largest music dealer.”  “Analysts say Wal-Mart’s long anticipated entry into the digital music scene fits with the retailer’s broader strategy to become an online destination for entertainment.”

6. How Wal-Mart Is Remaking Our World
This is a strident article by Jim Hightower that rails against Wal-Mart and its business practices.  See  For this particular story, which ran 26 April 2002, go to  “With more than one million employees … this far-flung retailer is the country’s largest private employer....”  He remarks particularly on employee conditions, noting average compensation of less than $11,000 per year and health benefits that only cover 38% of employees.  He also focuses closely on the working conditions of Chinese laborers at factories Wal-Mart uses, drawing from a National Labor Committee report of Charles Kernaghan.

5. Wal-Mart as Branded Clothier
“Founded in Britain in 1990, George is a key test of Wal-Mart’s ability to develop and expand an idea that didn’t originate in the U.S.  While the standalone shops are just a trial for the moment, the George brand is popping up at ... stores all around the globe, including Canada, South Korea and Germany.  Debuts are planned for Japan and Brazil as well.”  While U.S. stores now carry conservative styles, George is not a big part of U.S. mix yet, although it plans to market the brand there more aggressively.  See the Wall Street Journal, December 26, 2003, p. B1.   

4. Wal-Mart in Mexico
“With 633 outlets, Wal-Mart’s Mexican operations are by far the biggest outside the United States.”  “Its sales represent about 2 percent of Mexico’s gross domestic product—almost the same as in the United States.  Analysts say it now controls something approaching 30 percent of all supermarket food sales in Mexico, and about 6 percent of all retail sales....”  “Wal-Mart has also become the largest retailer in Canada....  The global expansion has helped make it the world’s biggest company in terms of revenues, with $245 billion in sales last year....”  See The New York Times, December 6, 2003, pp. Al and A9. 

3. Is Wal-Mart Good For America?
This article generally cites economists and others who feel that Wal-Mart has brought low prices to low-income America and more efficient business practices throughout the retail economy and among its suppliers.  It suggests that there are potential anti-trust, labor practice, and other concerns that could eventually cause problems for the company but that do not have much traction today.  “To the company’s critics, Wal-Mart points the way to a grim Darwinian world of bankrupt competitors, low wages, meager health benefits, jobs lost to imports, and devastated downtowns and rural area across America.”  See The New York Times, December 7, 2004, pp. WK 1 and 4.  The article does not answer the question it poses:  Is Wal-Mart Good for America?  Journalists are clearly ambivalent about this goliath which poses a long-term problem for the business.   

2. China May Curb Foreign Retailers
“China is contemplating new regulations that could restrict the expansion of large foreign retailers such as France’s Carrefour SA and the U.S. Wal-Mart Stores Inc. amid aggressive growth of multinationals in the country and official concerns about overbuilding in the sector.”  See The Wall Street Journal, December 11, 2003, p. B7. 

1. Toy Retailers Find Wal-Mart Competition Very Tough
Recent surveys show Wal-Mart prices to be cheaper than other toy retailers across the board, well under Toys R Us, the largest stand-alone toy retailer.  It now has 20 percent of the U.S. toy market (toy industry insiders cite even larger marketshare figures), making it now the dominant U.S. factor in toys, groceries, and furniture.  See The New York Times, December 23, 2003, pp. C1 and C4.


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