Reuters

By Reuters,
January 31st, 2007                                [back to top]

CHICAGO (Reuters) - Wal-Mart Stores Inc. is expected to move the chief executive of its U.S. namesake stores to an international position and replace him with the head of its Sam's Club warehouse club unit, Advertising Age reported on Tuesday, citing people close to the company.

The latest round of recent or pending management moves at the world's largest retailer is expected to involve 10 to 15 people, according to one person close to the company, the trade publication said in a story on its Web site.

Eduardo Castro-Wright, CEO of the Wal-Mart Stores Division in the United States, will move to an international post, though the level of that post was not clear, Advertising Age said.

Sam's Club's CEO Doug McMillon would replace Castro-Wright, the publication said.

Advertising Age said that executives were difficult to reach as they gathered in Kansas City, Missouri for an annual year-end meeting with supplier executives.

Last week Wal-Mart, which is trying to boost sales after a lackluster holiday season, named John Fleming as its chief merchandising officer. Fleming had previously led Wal-Mart's marketing division.

The Advertising Age report mentions an internal memo that was distributed last week. A Wal-Mart spokeswoman told Reuters that the company's internal communications concerned John Fleming's position and some other related changes. Wal-Mart publicly announced those changes on January 24.

When asked if the memo was related to Eduardo Castro-Wright, the spokeswoman replied "Absolutely not."

She added that Wal-Mart's policy is not to comment on rumors or speculation about personnel matters.

Castro-Wright joined Wal-Mart in 2001 as president and chief operating officer of Wal-Mart de Mexico, and then went on to be CEO of Wal-Mart de Mexico before moving to the Wal-Mart Stores division.

Meanwhile, WakeUpWalMart.com, a union-funded group, issued an open letter to Wal-Mart managers on Tuesday seeking to discuss various pay and benefit issues with them.

In the letter, the group suggests that Wal-Mart's executives, led by Castro-Wright, have implemented "a series of new anti-Associate policies."

"Sadly, these anti-family and anti-Associate policies, concocted by Mr. Wright and a bunch of consultants and accountants who have never run a store, have not only hurt Wal-Mart Associates and their families, but have even negatively impacted Wal-Mart's sales," the group wrote.

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Worry over Wal-Mart wooing tree huggers with organics

Carly Weeks
CanWest News Service
Wednesday, January 31, 2007                  [back to top]

OTTAWA - Canada's new organic food regulations won't come into effect for another two years, and even when they do, the government may lack the teeth to enforce them or stand up to corporate giants jumping on the organic bandwagon, critics are warning.

''There probably is real cause for concern in terms of the trend in the food industry to lower safety standards in pursuit of profits,'' said Michael McBane, national co-ordinator of the Canadian Health Coalition.

Organic food is becoming more popular than ever and there is worry some companies looking to make money without following the long-standing principles of the industry will push their product on the Canadian market.

Large companies such as Wal-Mart, Coca-Cola, Kraft Foods and General Mills have all entered the organic market, raising questions about the implications of corporate domination in what was once considered a fringe market reserved for tree-huggers and hippies.

Although most organic producers follow the traditional principles of the industry, some major players may try to import food made from countries that don't follow Canada's organic standards, said Cathleen Kneen, former editor of the BC Organic Grower and active member of the organic community.

''Whether Canada will go head-to-head with Wal-Mart for compliance here is a very interesting question,'' she said.

The federal government passed regulations in December which took about a decade to create.

The new rules, which take effect in December 2008, set out a number of changes, which include:

* Anyone who wants to sell a product as organic has to apply to a nationally recognized private-sector certification body, which inspects and evaluates the products. Organic certification remains in effect for one year.

* Certified organic products will have a uniform label that says ''Canada Organic.'' Multi-ingredient products, such as chips, have to be at least 95 per cent organic to have the label. Products with ingredients that are between 70 and 95 per cent organic must prominently display the percentage. Imported products with the ''Canada Organic'' label must display the country of origin.

* The CFIA can suspend the accreditation of an organic certification body if it doesn't comply with the regulations.

It's unclear whether federal inspectors will be able to do thorough checks to ensure organic food on shelves is the real deal when the rules come into effect.

The new Canada Organic Office, which is part of the Canadian Food Inspection Agency, will oversee the organic industry. The office hasn't decided how it will operate, but one option is to hire 12 inspectors to do market checks and look for organic fraud at the retail level. Another option is to add that responsibility onto the duties of the food agency's regular inspectors.

The office's Ottawa headquarters will employ five or six people in administration and managerial roles.

The entry of some large companies have created a pressing need for governments to enforce their organic rules and be vigilant about ensuring products on the market with an ''organic'' label meet the national standards, said Mark Kastel, senior farm policy analyst at the Cornucopia Institute, a research group based in Wisconsin.

''There are companies that are now doing the minimum to try to conform and to stretch every corner, creating loopholes.''

Although the U.S. government passed organic regulations several years ago, it hasn't stopped some rogue companies from skirting the rules and refusing to live up to the long-standing principles that define organic farming.

Some companies that sell products labelled as organic actually run large factory farms, while others pressure the government to allow them to use synthetic chemicals, he said.

For instance, one major issue surrounds the fact U.S. regulations state livestock must have ''access to'' pasture. Since the rules don't explicitly state the duration or amount of pasture, some companies crowd animals or limit the access animals have to the outdoors, Kastel said.

That's why federal officials must be vigilant about what it means to be called ''organic'', he said.

''It's just literally a handful of mega-farms and they're corporate compliance certifiers that have caused this problem and that's what has to be guarded on both sides of the border so these things aren't exploited,'' he said.

While organic food has become a staple of mainstream grocery stores across Canada, it will be two more years before consumers can be assured what they're buying is the real thing.

That amount of time is needed to ensure everyone, from farmers to retailers to certification bodies, have time to make the transition to the new standard.

© CanWest News Service 2007

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Wal-Mart denies new scheduling cuts hours

Critics cite memo saying employees could work less if they limit availability

The Associated Press
Jan 30, 2007                                        [back to top]

KANSAS CITY, Mo. - Wal-Mart’s union-backed critics released a company memo Tuesday saying that a new scheduling system could cut hours for individual workers, but Wal-Mart said the document was outdated and the new system is working fine.

WakeUpWalMart.com obtained a 2006 briefing packet for store managers on plans for a new computerized scheduling system aimed at better matching staff levels in Wal-Mart stores to peak crowds of shoppers.

Unions and other critics have said the centralized system, which analyzes an array of data to keep track of customer demand and generates schedules based on that, requires too much flexibility from Wal-Mart’s more than 1.3 million U.S. workers.

The briefing document, released by WakeUpWalMart during an annual meeting of Wal-Mart store managers in Kansas City, instructs managers to tell staff that workers who are unwilling to be available at peak evening and weekend times could wind up with fewer hours or drop to part time from full time.

Bentonville, Ark.-based Wal-Mart Stores Inc. said the document was a briefing paper from a pilot phase of the program last summer.

The new system has since been rolled out to all cashiers and customer service personnel, and experience has shown that employees are not losing hours, Wal-Mart spokeswoman Sarah Clark said.

“Our full-time staff is working pretty much the same days, the same approximate weekly hours, and within one to two hours of the same times as before,” Clark said.

Clark said Wal-Mart employees had shown support for the need to have more staff at peak times to take care of customers.

The pilot phase ended with a decision to allow local store managers to make last-minute changes in schedules based on individual needs, something that was not initially planned, Clark said.

“In fact, we’ve seen such significant improvement in our customer’s perceptions of their checkout experience, and such great acceptance by our associates (employees) to the scheduling program enhancements that we’ve encouraged our managers to continue to do modifications as needed to best meet the needs of their associates and customers,” Clark said.

Chris Kofinis, spokesman for WakeUpWalMart.com, said the briefing document contradicted Wal-Mart’s public statements that the new system would not cut worker hours.

“Wal-Mart has lied to its own workers and the American people because they didn’t want anybody to know the truth about the terrible effect this policy will have on its workers and their families,” Kofinis said.

The new scheduling system requires employees to fill out a form with the hours and days they are willing to work, as well their preferred hours within that range and any regular exceptions such as classes or regular medical appointments.

The briefing packet includes that form, which encourages workers to be as open as possible during peak evening and weekend hours and adds, “Limiting your personal availability may restrict the number of hours you are scheduled.”

In talking points for store managers addressing employees, the document says, “If you have restricted your personal availability to hours that don’t fall within peak customer traffic periods, it is likely that you will see a decrease in your number of scheduled hours on the draft schedules, and that could even impact your Full-Time status.”

The talking points go on to say managers will work with employees in an effort to fix the problem and add that managers should remain involved in finding a solution, such as moving the worker to a different job.

Wal-Mart tested the new scheduling system at a number of stores last year before adopting it for cashiers and customer service employees. It plans to adopt the system for all remaining employees at its U.S. stores this year, Clark said.

© 2007 The Associated Press. All rights reserved.

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Walmart may sell energy to Texans

United Press International
Earthtimes.org
2007-01-30                                [back to top]

AUSTIN, Texas, Jan. 30 (UPI) U.S. big-box store Wal-Mart announced plans to install solar panels and windmills at some stores, as well as the creation of its own electricity company.

The company's environmental goals also include selling 100 million compact corkscrew fluorescent light bulbs this year, the Dallas Morning News reported.

The electricity company, Texas Retail Energy, will supply Wal-Mart's stores with cheap, wholesale power. About $15 million will be saved by this endeavor annually, also giving the company control over its utility bills.

The infrastructure of the energy company has grown, so TRE can now sell electricity to Texas consumers. High prices for power in Texas and an open market could lead TRE to be a local competitor.

We have considered it. Whether or not it will ever materialize, we don't know. It boils down to whether the customers and suppliers want that, said Chris Hendrix, general manager of Texas Retail Energy. Short-term, it's out of our scope. Longer-term, anything's possible.Many retailers have begun installing software to control store lights and temperature to help cut bills. While many big-box stores have taken energy issues to the corporate level, Wal-Mart is the first to buy energy wholesale.

Copyright 2007 by United Press International

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WakeUpWalMart.com Launches First National Outreach Effort Targeting Wal-Mart Managers and Wal-Mart Associates

Group Releases 'Open Letter' to Wal-Mart Store Managers Attending National Conference in Kansas CityGroup Announces 'Management/Worker' Outreach Program Initially Targeting Over 350 Stores and 100,000 Employees

PRNewswire-USNewswire                    [back to top]

KANSAS CITY, Mo., Jan. 30 /-- WakeUpWalMart.com, America's campaign to change Wal-Mart, held a press conference today in Kansas City to announce a major new nationwide effort to reach out and target Wal- Mart store managers and Wal-Mart Associates in a coordinated program to recruit their support to change Wal-Mart into a better employer.

The new campaign initiative from WakeUpWalMart.com, titled "Working Together, We Can Change Wal-Mart," was officially launched in Kansas City -- the site of Wal-Mart's annual 7,000-person Store Managers Meeting. As of today, an estimated 2,000 Wal-Mart Store Managers had received the "open letter" from WakeUpWalMart.com. The letter points out the "moral dilemma" Wal- Mart store managers face in being forced to implement store policies they know to be "unfair and hurt the very people who work so hard to make Wal-Mart a success."

"By working together, we sincerely believe that Wal-Mart Associates, Wal- Mart Managers, and WakeUpWalMart.com can be an incredible force for change that will help return Wal-Mart to Sam Walton's vision where people and country come first," said Paul Blank, campaign director for WakeUpWalMart.com.

Beginning this week, as part of this new initiative, WakeUpWalMart.com began a new outreach effort to reach an estimated 100,000 Wal-Mart workers/managers at over 350 Wal-Mart stores across the country. Managers and Associates will be invited to join a nationwide conference call on February 8, 2007 to discuss the new changes that will be implemented as a result of the Wal-Mart managers meeting.

At the press conference in Kansas City, local community and faith leaders, including Reverend Doctor Ronald L. Faust, were joined by a current Wal-Mart worker, Kory Uselton, and leaders of WakeUpWalMart.com to discuss the company's recent adoption of a series of anti-family policies -- including salary caps, a restrictive attendance policy, the elimination of low deductible health care plans, and open availability scheduling -- that have negatively impacted Wal-Mart workers and their families. The speakers at the press conference implored the managers attending the Wal-Mart conference to "not let a small misguided group of executives use you to implement immoral and hurtful policies."

WakeUpWalMart.com is a nationwide group with over 310,000 supporters which has garnered national press coverage and political support from such leaders as Sen. Barack Obama and Sen. John Edwards. The goal of the group is to change Wal-Mart into a moral employer and return the company to Sam Walton's vision where people and America come first.

A copy of the open letter to Wal-Mart Managers is available by request. WakeUpWalMart.com

CONTACT: Chris Kofinis, +1-202-486-6422, for WakeUpWalMart.com

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Reliance promises to be ‘formidable’ rival to US giant Wal-Mart

AFP
1/30/2007                          [back to top]

NEW DELHI India's top business group Reliance promised yesterday to be a "formidable" competitor to US giant Wal-Mart as both move into India's lucrative and massive retail sector.

Wal-Mart, the world's largest retailer, teamed up late last year with India's Bharti Enterprises, the nation's top private phone firm, to start a nationwide store chain rivalling Reliance's huge home-grown supermarket bid. "We will be formidable competition in India," said Raghu Pillai, Reliance Retail's operations president, as the company opened nine western-style "Reliance Fresh" supermarkets in India's capital region.

The new stores are part of a cross-country retail rollout that began last November in southern India.

The retail foray comes as companies seek to tap India's increasingly affluent middle class, estimated at 300 million at least in what commentators have dubbed the "great Indian retail gold rush".

"Wal-Mart has the advantage of creating a larger-than-lifesize track record (in the US) but I'm not sure in other parts of the world that holds true," said Pillai, pointing to its experience in South Korea and Germany.

"They didn't flatten any competitors," he said.

Last July, Wal-Mart Stores announced it was getting out of Germany's cut-throat retail market and selling its 85 stores to a German retailer, incurring a loss of $1bn.

The move came two months after Wal-Mart sold its South Korean stores in what was an unusual pullback by the retailer from a breakneck global expansion spree.

In both countries, Wal-Mart did not appeal enough to domestic tastes and faced fierce competition from Korean retailers.

However, it is still faring well in many other foreign nations, especially in Canada, Mexico, Brazil and Britain.

Reliance, which has opened 49 stores so far in different parts of India, has said it aims to have 4,000 stores by 2011, with an annual sales target of $25bn.

It plans to invest $5.5bn to $7bn on its retail venture over the next few years.

Bharti Enterprises has said it will invest about $7bn in its project by 2010 and set up 200 large stores and hundreds of smaller ones. The government still bans foreign retail chains from selling directly to consumers but they are using a backdoor to enter the market by starting wholesale and sourcing firms which supply a local retail partner.

India's 15-million dusty, chaotic "mom-and-pop" corner stores are fearful that competition from the giant retailers, with their air-conditioned stores and plastic-wrapped produce, will drive them out of business.

But Pillai insisted that India's $300bn retail market "is big enough" for them to survive in the light of India's eight-to-nine percent economic growth, which he said was rapidly expanding the consumer pie.

"The traditional and modern retailers will co-exist very peacefully because the market is growing by an explosive amount," he said.

Pillai added that Reliance's retail plans will create "over 500,000" new jobs by 2010 and "two to three times that number of indirect job opportunities" in India where chronic unemployment is rife.

"The retail business in India is currently at the point of inflection," said Arvind Singhal, the chairman of retail consultancy Technopak Advisors.

Retail sales will more than double to hit $637bn by 2015, of which the organised retail segment would get a $65bn-to-$75bn share or 16 to 18 per cent of the total, up from three percent now, he forecasts.

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Ruling That Maryland Law Requiring Wal-Mart To Increase Health Benefits Violates ERISA Could Affect California Proposal

Kaiser Daily Health Policy Report
30 Jan 2007                                                        [back to top]

A federal appeals court ruling against a Maryland law that would have required large employers to expand worker health benefits could impede California Gov. Arnold Schwarzenegger's (R) universal health proposal, the Los Angeles Times reports (Lifsher, Los Angeles Times, 1/25). Schwarzenegger's proposal, announced earlier this month, contains a provision that would require employers with 10 or more employees to offer health insurance for workers or pay a fee of 4% of payroll to a state pool that would help workers purchase coverage, with the amount that they pay based on income (Kaiser Daily Health Policy Report, 1/9). The Maryland law, enacted on Jan. 12, 2006, would have required employers in Maryland with 10,000 or more employees to spend at least 8% of payroll costs on health care or contribute to a state fund for the uninsured. Wal-Mart was the only employer in Maryland that the law would have affected (Kaiser Daily Health Policy Report, 1/18). In its ruling, the appeals court cited the 1974 Employee Retirement Income Security Act, which is intended to "help employers avoid a spate of conflicting state laws -- with different levels and types of worker benefits," the Times reports. Attorney Mark Johnson, a national expert on ERISA, said he expects that Schwarzenegger's plan -- if it is challenged in court -- would violate ERISA. Johnson said, "This would be a direct attempt to manage a plan. I don't think it would pass muster." However, the Schwarzenegger administration says its plan is different from the Maryland law and it would not be overruled by federal law because it would not be company-specific, nor would it mandate a specific type of health benefit. Kim Belshé, secretary of the state Health and Human Services Agency, said the governor's proposal is different than the Maryland proposal because it is built on the "principle of shared responsibility" spread among business, individuals and government (Los Angeles Times, 1/25).

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Wal-Mart Japan unit sees wider net loss in 2006

Reuters                               [back to top]

TOKYO - Wal-Mart Stores Inc.'s <WMT.N> Japanese unit, Seiyu Ltd. <8268.T>, on Tuesday said it would fall deeper into the red for 2006 than it first estimated, with the supermarket chain struggling to boost sales in a tough market.

Seiyu will mark its fifth straight year of losses despite investments of more than $1 billion by Wal-Mart, the world's largest retailer, which owns 53 percent of Seiyu and sees it as a key to expanding in the Japanese market.

"They still have yet to turn a profit, and it's unclear when they will be able to do so," said Kazunori Tsuda, senior retail analyst at the Daiwa Institute of Research.

"Mind you, it's a very tough market and Seiyu has a very weak store portfolio," he said. Seiyu estimated its group net loss at 55.8 billion yen ($459 million), wider than its earlier projection of a 54.5 billion yen loss for the year ended December but in line with analysts' forecasts.

Same-store sales rose 0.6 percent in 2006, the first annual rise in 15 years, but company spokesman Yasuhisa Nezu said that was still below the company's target.

Seiyu also is mainly a supermarket chain and unlike other Japanese retailers such as Aeon Co. Ltd. <8267.T> it does not have finance or specialty store operations to offset sluggish sales.

Wal-Mart Vice Chairman Michael Duke told a Japanese business daily that the company might look for more acquisition opportunities in Japan. But spokeswoman Amy Wyatt said on Monday that Wal-Mart was more focused on expanding business at the Seiyu chain.

Before the announcement, Seiyu shares closed up 2.6 percent at 195 yen, outperforming a 0.11 percent rise in the Nikkei average <.N225>.

Copyright 2007 Reuters News Service. All rights reserved.

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Critics, Wal-Mart spar over leaked memo

By MARCUS KABEL
Associated Press                      [back to top]

KANSAS CITY, Mo. Wal-Mart's union-backed critics released a company memo Tuesday saying that a new scheduling system could cut hours for individual workers, but Wal-Mart said the document was outdated and the new system is working fine.

WakeUpWalMart.com obtained a 2006 briefing packet for store managers on plans for a new computerized scheduling system aimed at better matching staff levels in Wal-Mart stores to peak crowds of shoppers.

Unions and other critics have said the centralized system, which analyzes an array of data to keep track of customer demand and generates schedules based on that, requires too much flexibility from Wal-Mart's more than 1.3 million U.S. workers.

The briefing document, released by WakeUpWalMart during an annual meeting of Wal-Mart store managers in Kansas City, instructs managers to tell staff that workers who are unwilling to be available at peak evening and weekend times could wind up with fewer hours or drop to part-time from full-time.

Bentonville, Ark.-based Wal-Mart Stores Inc. said the document was a briefing paper from a pilot phase of the program last summer.

The new system has since been rolled out to all cashiers and customer service personnel and experience has shown that employees are not losing hours, Wal-Mart spokeswoman Sarah Clark said.

"Our full-time staff is working pretty much the same days, the same approximate weekly hours and within one to two hours of the same times as before," Clark said.

Clark said Wal-Mart employees had shown support for the need to have more staff at peak times to take care of customers.

The pilot phase ended with a decision to allow local store managers to make last-minute changes in schedules based on individual needs, something that was not initially planned, Clark said.

"In fact, we've seen such significant improvement in our customer's perceptions of their checkout experience, and such great acceptance by our associates (employees) to the scheduling program enhancements that we've encouraged our managers to continue to do modifications as needed to best meet the needs of their associates and customers," Clark said.

Chris Kofinis, spokesman for WakeUpWalMart.com, said the briefing document contradicted Wal-Mart's public statements that the new system would not cut worker hours.

"Wal-Mart has lied to its own workers and the American people because they didn't want anybody to know the truth about the terrible effect this policy will have on its workers and their families," Kofinis said.

The new scheduling system requires employees to fill out a form with the hours and days they are willing to work, as well their preferred hours within that range and any regular exceptions such as classes or regular medical appointments.

The briefing packet includes that form, which encourages workers to be as open as possible during peak evening and weekend hours and adds, "Limiting your personal availability may restrict the number of hours you are scheduled."

In talking points for store managers addressing employees, the document says, "If you have restricted your personal availability to hours that don't fall within peak customer traffic periods, it is likely that you will see a decrease in your number of scheduled hours on the draft schedules, and that could even impact your Full-Time status."

The talking points go on to say managers will work with employees in an attempt to fix the problem and add that managers should remain personally involved in finding a solution, such as moving the worker to a different job.

Wal-Mart tested the new scheduling system at a number of stores last year before adopting it for cashiers and customer service employees. It plans to adopt the system for all remaining employees at its U.S. stores this year, Clark said.

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Wal-Mart's New Marketing Strategy Hides Dirty Practices

By Jim Hightower,
Hightower Lowdown
January 30, 2007                                  [back to top]

You know that our world has turned totally topsy-turvy when Wal-Mart -- the low-price, bare-knuckle retailing behemoth known far and wide as the Bully of Bentonville for its ruthless corporate practices -- is suddenly putting on airs and positioning itself as (dare I say it?) metrosexual.

Yes, the world's largest and meanest merchandiser -- stung in the last few years by a grassroots rebellion of employees, small businesses, unions, neighborhood groups, environmentalists, and others that it has been so arrogantly stiffing -- is now straining to project a kinder and gentler image: urbane, upscale, green, socially responsible … even sensitive, for goodness sake. The image spiff-up comes as Wal-Mart executives have made a marketing decision to move from their suburban/rural base into cities, reaching out to a clientele that wants finer goods … and a more refined company.

But has the beast really changed? Inside the stores, and you can see a Nouveau Wal-Martique emerging. To appeal to more affluent customers (this advanced Wally-World calls them "selective shoppers"), Wal-Mart is upgrading its merchandise to include $500 bottles of wine, organic foods, $2,000 plasma TVs, 400-thread-count sheets, imported balsamic vinegar, organic-cotton baby clothes, microbrewed beers, and a new "Metro 7" line of designer fashions. Never mind that the average Wal-Mart shopper lives in the suburbs, is female, stands 5-foot-2, wears a size 14, and is looking for sensible skirts and durable go-to-work clothing -- the reinvented retailing giant is proffering skinny-legged, fur-trimmed jeans for the stylish set. It has even run an 8-page fashion spread in Vogue magazine.

Last March, this high-toned Wal-Martique opened a model store in the well-to-do corporate haven of Plano, Texas. No downscale blue-and-gray, concrete-block facade for this baby. It features two tone brick walls, wood floors, wide aisles, uncluttered shelves with cherry finish, halogen lights, and discrete fitting rooms for a hoity toity clientele. Also, forget the usual in-store McDonald's. There's an espresso bar with free wi-fi and -- Holy Sam Walton! -- a sushi bar to enhance what cosmopolitan retail consultants call "the shopping experience."

In addition, you might note what's not there. No more layaway plans, for example. No shotguns and hunting gear, either. Also, far less in the way of automotive tools and supplies. As the model store's project manager explains, "This customer is telling us they're not doing it themselves. They don't change their own oil."

Eliza Doolittles

Naturally, an upwardly mobile Wal-Mart cannot have its workers -- excuse me, "associates," as they are called in Wal-Martspeak -- garbed in those dowdy blue vests with "How May I Help You?" emblazoned on the back. Too, too tacky. When a corporate fashion designer was brought in, he took one look at Sam Walton's friendly vests and termed them "the lowest guppy in the pool" of retail outfits.

So Wal-Mart is giving a makeover not only to 1,800 stores, but also to clerks. A new dress code dictates a positively preppy look of khaki pants and navy-blue polo shirts, giving the place a feel described by the fashion designer as "much more business casual than working class." Yes, but should workers tuck their polos into their khakis for a sharp, snappy appearance, or leave the shirts untucked as a sign of an easygoing, fun-loving workplace? Believe it or not, the tucking question reached the top levels of HQ in Bentonville. Finally, the word came down from on high: "If they want to tuck it in they can. If not, they can leave it out."

And you thought there was no workplace democracy at Wal-Mart!

Workers, however, are less than charmed by the change in couture, for the company expects them to dig into their own pockets to buy the preppy uniforms. Perhaps these employees will find solace in the assertion by the fashion designer that the new duds "will raise the status of the 1.3 million Americans" who work there. It's entirely possible, of course, that workers would prefer to trade "status" for the genuine elevation that comes from higher paychecks and better treatment.

Beneath Wal-Mart's new cosmetic sheen lies the same old ugliness. The average employee toils for $8.23 an hour -- a poverty-level wage that amounts to about $16,700 a year gross (in both meanings of that word). Many don't even make that, for Wal-Mart defines "fulltime" work as 36 hours a week rather than the usual 40. It's common for bosses to hold workers to under 24 hours a week, which reduces gross annual income to only about $10,000.

Contrast this miserliness with the company's lavishing of wealth on those at the top. CEO H. Lee Scott, Jr., had a base salary of $1.3 million in 2005, plus $4 million in "incentive" payments, as well as stock and other compensation that raised his total haul to $17.5 million (including more than $100,000 for personal use of corporate jets). Also, Wal-Mart founder Sam Walton's widow and their four children, who collectively hold 40 percent of the corporation's stock, are living grandly. At present, they are sitting on personal nest-eggs of $15.5 billion each, putting all five of them among America's 11 richest people.

Meanwhile, fewer than half of Wal-Mart's employees get any healthcare benefits at all -- and those who do must pay 41 percent of the cost for a lousy plan that carries a $3,000 deductible per family plus a $300 pharmacy deductible and a $1,000 in-patient hospital deductible. Honchos at headquarters keep insisting that the health benefits they offer are "competitive" with other retailers. But look no further than Costco, where a good plan covers 80 percent of employees and the company pays 90 percent of the premiums.

The richest corporation in retailing, with $312 billion in sales (more than the next five biggest retailers combined), pushes the bulk of its workers onto public-assistance programs, even telling employees how to sign up for government help in a company bulletin called "Instructions for Associates." In all 23 states that have released data on their state-funded health-care programs, Wal-Mart is the corporation with the most employees and dependents enrolled. Also, in a 2005 internal memo, the company's head of benefits conceded that "46 percent of associates' children are either on Medicaid or uninsured."

Last February, during an online "chat" on an internal web site where Lee Scott and corporate managers occasionally exchange niceties, one uppity manager dared to ask Lee why "the largest company on the planet cannot offer some type of medical retirement benefits." Lee snapped back, "If you feel that way, then you as a manager should look for a company where you can do those kinds of things."

Such a snarly corporate attitude expresses itself daily throughout Wal-Mart's empire, where workers are squeezed for every last ounce of labor at the cheapest possible cost and then discarded at the whim of those at the top. It's not by accident that this mingy corporation faces the largest employment-discrimination class-action suit in American history, involving 1.6 million women who've been unfairly denied promotion and equal pay. It's also not by accident that Wal-Mart has been caught again and again using child labor, knowingly exploiting illegal workers, getting its products from grim sweatshops, forcing employees to work off the clock (i.e., without pay), and even denying employees their 30-minute, unpaid lunch breaks.

"Rewarding" workers

Lest you think that such disrespect comes only from the old-style Wal-Mart, check out the brand-new workplace policy now being imposed from Bentonville. Launched three months ago, it caps the wages of rank-and-file employees, doubles the number of part-time workers, cracks down on "unexcused" days off (such as having to tend to a sick child), and requires workers to be available for duty 24 hours a day, seven days a week, with no fixed schedules. The new policy is widely perceived as a crude attempt to convince longtime employees to quit so they can be replaced by even lower-wage, nobenefit part-timers.

Especially grievous is the insistence that workers make themselves available around the clock. "It makes it hard," says a former worker in a Yakima store. "If you have a function with your child or you want to go to church on Sunday, you don't want to miss those things." This abusive claim on every hour of a worker's time is exacerbated by other unsubtle prods to drive established workers out the door. In Florida, for example, several stores have abruptly banned the use of stools by cashiers and other floor workers who have back or leg problems.

Such nastiness has led to some of the first-ever public protests by employees. Once again, though, the metrosexual Wal-Mart has risen to the fore, offering a compassionate new program named "Associates Out Front" to show a little corporate love to the worker bees. Are the harsh workplace rules to be softened? Of course not! But how about this? Every week, ten employees in each store are to be allowed to meet with the manager!

If you think that's thrilling, imagine how excited workers were when they learned that an employee reward program is also being instituted. Cash? No. Time off? No. What? Close your eyes and hold your breath, for here it comes: Workers with 20 years or more service to Wal-Mart are to be presented with a special polo shirt with their years of service stitched right on front! And the honorees will not even have their pay docked to recover the $15 cost of the shirt!

The Smoke Machine

Whether it's Wal-Mart or Wal- Martique, this is a corporation that, as a matter of policy, flat runs over people in its reckless pursuit of another penny increase in profit. Abusing workers, riding roughshod over neighborhoods, squeezing out small business, roughing up suppliers, busting unions, ripping off taxpayers -- all this and more are an integral part of the corporation's business plan.

When any of these corporate uglies bubble to the surface, as so frequently happens, Wal-Mart's executive culture of dishonesty and deception automatically kicks in. Rather than alter any of its practices, the bosses roll out their extensive, richly funded, well-oiled smoke machine, spewing a dense cloud of gimmicks, attacks, stunts, deceits, and plain old hokum to try to cover up. Some examples:

THE WAR ROOM. On the second floor of the mother ship in Bentonville, Wal-Mart executives have set up a war room, modeled on political campaigns. As in the world of roughhouse politics, the corporate war room exists to attack opponents, plant puff pieces in the media, generate fake "third party" groups that give a false sense of public support for the company, etc.

In 2005 Wal-Mart hired Edelman, a huge PR/political firm, to run the war room, and Edelman dispatched its top Washington operatives to Bentonville. Michael Deaver, Ronald Reagan's image maker, was brought in, as were former top political henchmen of Bill Clinton and John Kerry, plus George W's 2004 political director. Staffers live in a corporate apartment near headquarters and report at 7 a.m. to the war room, known as Action Alley, where they work in tandem with Wal-Mart's director of corporate communications, a former political strategist for the Tobacco Institute.

WORKING FAMILIES FOR WAL-MART. WFWM is a PR front created by Edelman and funded by Wal-Mart in December 2005 to project an image of 1.3 million happy employees rallying behind their beleaguered and beloved mega-corp. Alas, WFWM, run by the former spokesman for the Republican National Committee, has been able to get fewer than 10% of Wal-Mart's "happy" workers to sign up. It also has produced more bad publicity than good.

Last February, the front group landed what it thought would be a big showfish when it signed on Andy Young as its chief spokesman. In turn, the former civil-rights leader's company was awarded a consulting contract with WFWM. The deal went bad six months later when Young told an interviewer that, yes indeedy, Wal-Mart does drive out small businesses. But that's OK, he explained, since the little stores are owned by Jews, Koreans, and Arabs who, he glibly claimed, rip off urban communities. Only hours later, Young apologized and resigned from WFWM.

TRAVELS WITH LAURA AND JIM. In September, a folksy blog was launched detailing the joyous experience of two average Americans traversing the continent in an RV. Each evening they pulled into a different Wal-Mart parking lot and interviewed workers and customers. And, golly, every single person interviewed absolutely gushed with love for the company -- no one had a disparaging word. The blog, jauntily titled "Wal-Marting Across America," read like an ad. It was. Though the couple did not mention any financial arrangement with the company, they were "sponsored" by WFWM. BusinessWeek magazine learned that this Wal-Mart front group had flown these happy travelers from their home in Washington, D.C., to Las Vegas to begin their cross-country trip. A mint-green RV awaited them, paid for by WFWM, which also paid for the gas, set up Laura's blog site, and paid her a freelance fee.

Battling the beast

So many uglies, so little space! The so-called "new" Wal-Mart is the same heavy-handed profiteer it's been since Ol' Sam Walton passed on.

High fashion or not, it remains the biggest buyer of sweatshop products in the world. Look at two major exposés last year. First, Wal-Mart was caught charging $30 for slacks which Nicaraguan sweatshop workers had been paid 12 cents to make. Workers endured unprotected exposure to toxic chemicals, 24-hour "shifts" with no overtime pay, and deductions of $1.50 from their $2-a-day wages for lunch and the bus ride to the factory. Meanwhile, in Bangladesh, Wal-Mart was buying clothing from a child-labor factory that employed 200 children. Aged 11 to 14 years old, they worked grueling shifts of up to 20 hours a day, were paid 6 cents an hour, and were routinely beaten if they took too long in the bathroom.

In a hilarious ploy, Wal-Mart made a big fuss last March about its intention to hire a "director of global ethics." The DGE would be in charge of "developing a global ethics strategy." (Here's a strategic idea: Pay decent wages!). A year later, the highly ballyhooed position remains unfilled.

The retail colossus plans to be the world's largest seller of organic foods. Sounds okay … except that it has already been caught labeling (and pricing) nonorganic food as organic and selling "organic" milk that's produced on massive factory farms that violate federal organic standards. Also, the global giant plans to import much of its "organic" food from China, where there's no effective regulation of organic production (not to mention the unorganic energy waste of shipping food more than 6,000 miles).

The bad news for Wal-Mart is that it has stomped on so many people, violated so many principles of simple justice, and thumbed its nose at so many of our society's rules of fair play that it has aroused formidable grassroots opposition. The good news for us is that these local coalitions are defeating this retailing Goliath in battle after battle from rural Vermont to the LA metroplex.

This is not only a fight against lousy wages, environmental contamination, grotesque sweatshops, and such -- it's a fight to assert our democratic ideals over the autocratic, avaricious designs of a single entity seeking nothing more noble than its own profit. Who the hell elected a handful of Bentonville bullies to remake our communities (and our world) in their narrow, self-serving image?

If you want to take back America, a good way to start is by taking on Wal-Mart.

From "The Hightower Lowdown," edited by Jim Hightower and Phillip Frazer, January 2007. Jim Hightower is a national radio commentator, writer, public speaker, and author of "Thieves In High Places: They've Stolen Our Country And It's Time to Take It Back."

© 2007 Independent Media Institute. All rights reserved. 

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Wal-Mart seen shaking up management - again

CEO of company's namesake U.S. stores and Sam's Club division may be among those affected, report says.

CNNMoney.com
January 30 2007                      [back to top]

NEW YORK  -- Wal-Mart is moving to shake up its senior management, which could mean leadership changes at the company's Wal-Mart U.S. stores division and its Sam's Club unit, according to a report published Tuesday.

Citing people close to the company, AdvertisingAge reported that Eduardo Castro-Wright, CEO of the Wal-Mart Stores Division in the U.S., may move to an international position to be replaced by Doug McMillon, chief executive of the Sam's Club unit.

Wal-Mart (down $0.40 to $47.23, Charts) told CNNMoney.com that the company does not comment on rumors or speculation related to personnel.

But at least one industry expert said that there's a good chance of more management changes to come.

"There's a high degree of likelihood of something like this happening," said Burt Flickinger, managing director with consulting firm Strategic Resources Group.

Last week, Wal-Mart tapped John Fleming as its chief merchandising officer in an effort to boost sales and profitability. (Full story)

Additionally Doug Degn announced he was retiring as vice president of food, consumables and hard lines for Wal-Mart Stores.

"With Doug Degn taking early retirement, he's an irreplaceable loss for Wal-Mart. Degn was one of the people hand-chosen by Sam Walton when he was alive to be a leader. Losing Degn makes it a problem for Wal-Mart," said Flickinger.

AdAge also reported that the management changes could affect 10 to 15 people.

Exactly where Castro-Wright, 51, would go from his current position remains unclear, AdAge reported, although he is believed to have the respect of both the company's board and senior management.

"With Wal-Mart struggling in its international markets like Puerto Rico, Japan and getting kicked in its can all over Latin America, especially with Carrefour in Argentina and Brazil, the company needs to fix that situation," Flickinger said. "Castro did a superb job with Wal-Mart de Mexico and because of that he inherited Wal-Mart U.S."

McMillon, 40, has helped make Sam's Club more competitive with warehouse club leader Costco (down $0.06 to $55.21, Charts), even as the Wal-Mart discount stores have struggled in recent months to grow profits and sales.

"These could be some good management moves, but it also is indicative of major holes in terms of Wal-Mart's bench strength," said Flickinger. "It's analogous to Gap and the Fisher family losing Mickey Drexler and the problems that followed."

Last week, Pressler was ousted as the CEO of Gap Inc. (up $0.19 to $19.00, Charts) after the retailer struggled with disappointing sales, profits and traffic trends at its Gap, Old Navy, and Banana Republic brand stores. Pressler took over in 2002 for Drexler, who helped take the apparel chain to new heights, transforming the company into a $14 billion industry leader.

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Carrefour, Wal-Mart, Tesco Eye Russia’s New Retailer

kommersant.com                  [back to top]

Retail giants Carrefour, Wal-Mart and Tesco are eyeing Russia’s new X5 Retail Group. The deal, however, can be reached no earlier than in 2008 when X5 will be able to use an option to buy the Karusel supermarket chain. Alfa Group, X5’s major shareholder, may expect to receive a 25-percent premium to the chain's market value in the deal, experts estimate. Carrefour, Wal-Mart and Tesco are interested in buying X5 Retail Group, a top manager in X5 told Kommersant last Friday, saying that representatives of France’s Carrefour met X5’s top managers last fall. X5 managers have also recently met their counterparts from Tesco and Wal-Mart. The top source of Kommersant says that the parties will most probably discuss the sale of Alfa Group’s stake. He says, though, that there are direct talks as yet.

The deal, however, is not likely to be closed till 2008 when the option to buy the Karusel supermarket chain is used. Lev Khasis, head of X5 Retail Group, confirmed earlier that the option to buy Karusel would be used in 2008. Mr. Khasis would not comment on the possible deal on Sunday.

X5 Retail Group (former Pyaterochka Holding) was set up in May 2006 following the merger of two retail giants, Perekrestok and Pyaterochka. The chain united 451 Pyaterochka and 168 Perekrestok stores before the end of 2006. The company’s profits in 2006 were over $3.45 billion, according to early reports. Alfa Group’s shareholders own 47.8 percent in X5, 21.2 percent belongs to Pyaterochka’s founders with 6.2 percent in hands of X5 managers. 24.2 percent of the stock is floated at the LSE.

Carrefour and Wal-Mark have declared their interest in Russia before. Carrefour is negotiating the purchase of shopping malls in Rostov-on-Don and Krasnodar. The French company says it will start its expansion in Russia in regions, opening from 5 to 10 stores in 2007. Wal-Mart has been rumors to be in talks to buy Ramstore and St. Petersburg Lenta retail chains. The information has not been confirmed yet, though.

The Russian food retail market is expected to be growing 16 percent annually till 2010.

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Wal-Mart may adopt rental model

MAYUR SHEKHAR JHA
TIMES NEWS NETWORK
MONDAY, JANUARY 29, 2007                 [back to top]

NEW DELHI: Rising realty costs may see the world’s biggest retailer Wal-Mart deviate from its global policy of owning its stores. According to sources, for its real estate requirements, Bharti-Wal-Mart is looking at all possible models, including long-lease and rentals. The company is also learnt to be in talks with some prominent commercial developers for signing up as the anchor tenant in malls, while most Wal-Mart stores worldover operate as stand-alones.

Meanwhile, Bharti-Wal-Mart has started acquiring real estate space for its ambitious retail venture in the country. According to sources, the company has taken close to 1.5 lakh square feet of retail space spread across various parts of the country. These are Delhi, Noida, Gurgaon, Hyderabad, Bangalore, Ahmedabad and Chandigarh, among others. Sunil Mittal is leveraging group company Bharti Realty to tie up real estate.

When contacted by ET, a Bharti Enterprises spokesperson said, “We keep exploring real estate opportunities for our retail venture. However, we do not comment on market speculations.” Sources confirming aggressive land and commercial space acquisition by Bharti-Wal-Mart, said most properties that are being signed up are in prime locations. For instance, the company has acquired land in Vasant Kunj, an area likely to witness lot of action with two huge malls coming up in close proximity.

The company has learnt to have formulated a two-pronged strategy. “In small cities, it would prefer owning hypermarkets and in large ones, opt for long-lease of properties since there’s acute shortage of quality commercial real estate,” said a source in the real estate business. The space crunch has led to rentals shooting through the roof. This is despite a pan India supply of 15 million sq ft of retail space created in the last two years. In NCR alone, retail space of almost 5-million sq ft was developed by DLF, Ansals, TDI and Aerens Goldsouk.

The total retail space under construction in the country adds up to about 150-mn sqft which will be ready for use by 2010. However, according to industry experts, even this will not be sufficient to meet the demand. Says TDI MD Kamal Taneja, “Reliance alone will consume almost 100-mn sqft within this time frame. Demand will also come from existing hypermarket chains like Pantaloon, Piramyd and Vishal Mega Mart. With international big ticket players like Tesco and Carrefour expected to enter India by next year, the demand will swell even further.”

Experts say, Bharti-Wal-Mart will have to divert focus to smaller cities, while having a symbolic presence in metros. According to AT Kearney principal Raman Mangalorkar, if Wal-Mart wants a presence in the central locations, it may have to opt for a mellowed down version, such as corner stores.

Anyway, sources say that most Wal-Mart stores, particularly the hypermarkets are expected to come up at least 10-12 km away from residential hubs.

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Greeter challenges Wal-Mart policy

By Elizabeth Bluemink,
Anchorage Daily News
January 29th, 2007                           [back to top]

DISABILITY: Woman sues, says store put her on leave rather than give her a break from standing.

Anchorage resident Barbara Flory believes her paralysis and back problems shouldn't prevent her from doing her job.

Flory, 66, has greeted Wal-Mart customers for nearly 13 years -- the last six at Anchorage's Old Seward Highway store.

But now she's battling the company over her job. She's filed a discrimination complaint against Wal-Mart with the U.S. Equal Employment Opportunity Commission.

Flory also has asked a federal district judge in Anchorage to put her back to work. She's been on unpaid medical leave since last July while the employment commission evaluates her discrimination claim.

The crux of her case: Flory repeatedly asked Wal-Mart to let her sit in a stool for a few minutes each hour and push fewer carts.

Wal-Mart denied her requests, and after she asked for reconsideration last July, the company put her on medical leave, she said.

Flory claims Wal-Mart retaliated against her and didn't give her request proper consideration.

Wal-Mart declined to discuss Flory's case while it's under litigation.

A company official pointed out, however, that Wal-Mart is a leading employer of people who have disabilities.

"We work to accommodate all reasonable requests from associates with disabilities, whether that may be an alteration of a work space or providing special equipment that may make jobs more efficient and comfortable," Janis Arms, the Wal-Mart spokeswoman, wrote in an e-mail.

The federal Americans with Disabilities Act requires employers to accommodate workers' disabilities as long as those adjustments don't pose an undue hardship on the company.

The disabled worker must be able to continue to perform the essential functions of the job, according to the act.

MORE THAN SAYING HELLO

Wal-Mart greeters do more than just say hello to customers as they enter the store. Greeters also fetch shopping carts, check receipts and help prevent shoplifting.

Flory said she can do her job, and she doesn't understand why the stool is a sticking point.

Losing her Wal-Mart income has been difficult, Flory said recently.

Her small pension and Social Security checks cover only her most basic living expenses, she said.

Flory's disability struck when she was at the prime of her life.

After years spent as a stay-at-home mom living in Ohio, Flory landed a career in law enforcement. She worked her way up the ladder to become an Ohio sheriff's deputy.

But in 1986, while she was in her 40s, Flory was struck down by an aneurysm that triggered a stroke. She's been partially paralyzed on the left side of her body ever since, according to her court filings.

After hospitalization and physical therapy, Flory re-entered the workforce with a disability -- she walks slowly and she doesn't have full use of her left arm.

In 2000, she took a job as a Wal-Mart greeter, she said.

After her sons moved to Alaska, she moved up, too. She took a greeting job at the Old Seward Highway Wal-Mart, she said.

LEG AND BACK PAINS

Flory's problems at work began about 10 months ago, when she started feeling intense shooting pains in her back and legs. The diagnosis from her doctor: a pinched nerve and herniated disc.

Flory keeps a stool in her kitchen in a senior-living apartment complex, just a half-mile from the Wal-Mart store. The pain subsides if she just sits a few minutes, she said.

Wal-Mart employs wheelchair-bound greeters in the Lower 48, and according to Flory's filings in federal court, the company has also employed at least one wheelchair-bound greeter in Anchorage.

Flory said she doesn't need a wheelchair. "I told (Wal-Mart) I could bring my own stool," she said.

RETAILERS AND GREETERS

A key factor in deciding whether Flory's request is reasonable is whether granting it would mean she can't fully do the job, disability law experts said last week.

Her case is not unique, disability experts said recently.

"She's healthy enough to work, but she can't," said Ruth Colker, a constitutional and disability discrimination law professor at Ohio State University.

"Should the Americans with Disabilities Act help her? Absolutely. She should be able to have employment," said Colker, adding that she doesn't know enough details to have an opinion about the strength of Flory's EEOC case.

It's likely that conflicts over workplace accommodations will become more common as the U.S. workforce ages, said Jim Beck, executive director of Access Alaska, a nonprofit organization that helps disabled Alaskans function independently at home and at work.

"We take a lot of calls from employers and (workers) who have this conundrum," Beck said.

Sometimes disabled workers are afraid to assert their rights or ask for modifications to their work environment because they are worried it will hurt their performance evaluations, he said.

MULTIPLE VENUES FOR GRIPE

Flory wasn't that timid. She's fighting Wal-Mart on multiple fronts -- in federal court and with her discrimination complaint.

In federal court filings, Wal-Mart recently asked a judge to dismiss her request to be reinstated in her greeter job.

The company's attorneys argued that the law requires workers to complete the EEOC process before suing in federal court.

A ruling from the judge is expected at any time, said Flory's attorney, Meg Allison of the Disability Law Center of Alaska, which is not charging a fee to represent her.

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House creates bill to head off Wal-Mart bank

Members of Financial Services Committee say they want to preserve the line between banking and commerce.

January 29 2007                [back to top]

WASHINGTON (Reuters) -- The top Democrat and Republican on the House Financial Services Committee on Monday introduced a bill that would ban Wal-Mart and other commercial companies from owning a type of bank known as an industrial loan company (ILC).

The bill was co-sponsored by Barney Frank of Massachusetts, a Democrat who is chairman of the panel, and Paul Gillmor of Ohio, the ranking Republican.

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"We are seeking to prevent the expansion of a historically small special niche into a full-fledged alternative banking system, which dissolves the line between banking and commerce," Frank said in a statement.

The legislation came just two days before the Federal Deposit Insurance Corporation holds a meeting to decide whether to extend a six-month moratorium on ILC applications. Banking experts generally expect the FDIC to keep the freeze in place for applications by commercial firms while Congress debates legislation.

The House bill, called the Industrial Bank Holding Company Act of 2007, prohibits a company from owning an ILC unless it generates at least 85 percent of its revenue from activities that are financial in nature.

Shares of Wal-Mart (Charts) closed down 0.1 percent at $47.63 on the New York Stock Exchange Monday.

Over the past six months, Wal-Mart's stock has performed roughly in line with its competitors Costco (Charts) and BJ's (Charts), with gains of 7 percent, but well behind Target (Charts), which is up 29 percent.

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Will Wal-Mart sell electricity one day?

Company enters power industry to cut costs at Texas stores

By ELIZABETH SOUDER
The Dallas Morning News
Monday, January 29, 2007                [back to top]

Wal-Mart's energy strategy goes far beyond selling squiggly lightbulbs. The world's largest retailer could one day sell the electricity, too.

The company recently made big announcements about its environmental goals to sell 100 million compact fluorescent lightbulbs (the corkscrew ones) this year, shift to renewable energy, and install solar panels and windmills at some stores.

More quietly, Wal-Mart has created its own electricity company in Texas, called Texas Retail Energy, to supply its stores with cheap power bought at wholesale prices. This saves the world's largest retailer about $15 million annually and gives the company total control over its utility bills.

Plus Wal-Mart now has the infrastructure to sell electricity to Texas consumers. That could change the game in a deregulated state where high prices have become a hot political issue.

And it could help the giant company to continue to grow, even in one of its most saturated markets.

"We've considered it. Whether or not it will ever materialize, we don't know. It boils down to whether the customers and suppliers want that," said Chris Hendrix, general manager of Texas Retail Energy. "Short-term, it's out of our scope. Longer-term, anything's possible."

Retailers are becoming more sophisticated about buying electricity as deregulation allows power companies to compete for their business.

It's no longer enough for store managers to simply write a check for the utility bill. Now most retailers make electricity decisions at the executive level.

"Because of deregulation, people have changed the way that they look at purchasing this commodity. Before, they would get a bill, they would send it to accounts payable, and that's it. Now there's a lot more that goes into it," said David Wiers, president of the Texas Electricity Professionals Association, a new group of brokers, consultants and other third parties in the power industry.

A company such as 7-Eleven or McDonald's might strike a deal with an electricity retailer to supply all Texas stores at a certain price. Others, including Lowe's, rely on brokers to buy wholesale power for the stores.

Many retailers have installed software to control store lights and temperature from a central location and collect minutely detailed information about their systems, such as the exact temperature inside each freezer.

Such technology gives big-box retailers the ability to get even better deals on electricity by agreeing to cut back electricity use anytime the grid gets overloaded.

No equal

But no other retailer has managed to do what Wal-Mart has accomplished in Texas: cut out the middleman. Wal-Mart buys power directly on the wholesale markets.

"Wal-Mart has made a pervasive commitment to minimizing costs. That's what they do," said Edward Fox, associate professor of marketing at Southern Methodist University.

In other parts of the country, Wal-Mart, the largest private purchaser of electricity in the U.S., buys electricity from third parties, just like any other retailer. But in Texas, the company saw an opportunity to try something new.

It helped found an electricity provider called Creed Power Co. and, in 2004, acquired the remaining stake in the company and changed its name to Texas Retail Energy. Wal-Mart wouldn't disclose the purchase price.

According to filings with the Public Utility Commission, the company exists to serve Wal-Mart and Sam's Club stores. Wal-Mart would have to file an amendment application to allow the company to serve other customers.

Wal-Mart's stores in Texas use 1.6 million megawatt-hours of electricity each year. That accounts for 0.5 percent of the Texas power grid last year. It's enough juice to power 133,000 homes. And it's about one-third of the annual output of one of the new coal-fired power plants TXU Corp. has proposed.

"We think we can do it cheaper than having somebody do it for us. And secondly, it put us in control of our own destiny," said Mr. Hendrix, of Texas Retail Energy. He said his group of six employees saves Wal-Mart about $15 million a year, net of the cost to run the program.

Mr. Wiers of the electricity professionals association estimates it would cost a couple of million dollars for a retailer to create an in-house electricity supplier.

Power plant next?

Mr. Hendrix said he would consider selling electricity to consumers or to Wal-Mart's suppliers, if that's what customers want. But his main focus is buying power for Wal-Mart itself.

He said he would consider buying a renewable-energy power plant, such as a wind farm, if the company can't find enough vendors to meet Wal-Mart's eventual goal of using only renewable power.

Mr. Hendrix and Angie Beehler, who handles energy regulation and legislation issues for the discounter, are active in Austin. They testify before the Public Utility Commission and take part in workshops. Mr. Hendrix has been a member of a technology advisory committee at the Electric Reliability Council of Texas, which operates the grid.

Wal-Mart has been stumping for deregulation of electricity markets around the country.

"Anytime you get competition in an energy market, you're going to have choice," Ms. Beehler said. "Don't you like a large selection of green beans? Like Del Monte, Heinz? It's about choice."

Selling electricity could represent a fresh growth opportunity for Wal-Mart.

Mr. Fox of SMU said Texas is the largest market for Wal-Mart, and therefore a saturated market.

"Given their scale and their size, they are at upper limits for what they can do in a particular market," Mr. Fox said.

Still, he added: "There's a lot of pressure to continue to grow."

Mr. Fox said electricity sales could fit with Wal-Mart's push to sell energy-efficient products and its goal to use renewable energy. He pointed to the experimental store in McKinney, where Wal-Mart installed a range of efficient technology and relies on a windmill near the parking lot for some power.

"What Wal-Mart tends to do is they experiment. They make mistakes cheaply by kind of dipping their toe in the water, and then they determine if it's something they can grow and can be a material part of their business," he said.

Mr. Fox said it's unclear whether selling electricity to consumers plays to Wal-Mart's strengths.

"I'm not sure whether it takes advantage of what they do well in terms of distribution and whether they can exploit their relationships with their customers to do well in this market," he said.

For electricity industry insiders, those customer relationships are what make Wal-Mart so intriguing as a possible electricity retailer.

"One of the things that would help our markets would be to have one of the companies in it to decide, 'I'm going to spend the kind of dollars necessary to achieve customer base,' " Public Utility Commissioner Barry Smitherman said.

"You would think a company situated like Wal-Mart that has so many customers coming through their doors every day might be able to acquire customers relatively cheaply or without spending additional dollars," he said.

Texas Retail Energy

Formerly known as: Creed Power Co.

Ownership: Acquired by Wal-Mart, the biggest private electricity user in the nation, in 2004

Business: Supplies power to Wal-Mart and Sam's Club stores in Texas

Annual electricity supplied: About 1.6 million megawatt-hours

Possibilities: Could buy a renewable-power plant or market to consumers

SOURCES: Texas Retail Energy; Public Utility Commission 

© 2007 Denton Publishing Co.

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Wal-Mart to shop for more Japanese firms

Newstex
January 28, 2007               [back to top]

TOKYO, Jan. 28, 2007 (AFX International Focus) -- US retailing giant Wal-Mart (NYSE:WMT) Stores Inc will explore more opportunities for corporate acquisitions in Japan, its vice chairman Michael Duke said in an interview with the Nihon Keizai Shimbun published on Saturday.

Duke, who oversees Wal-Mart's international operations, welcomed Japan's recent deregulation allowing foreign companies to use their local subsidiaries to acquire Japanese firms through stock swaps, the newspaper said.

He declined to comment, however, about whether Wal-Mart would ever consider pursuing a hostile takeover of a Japanese firm, the Nikkei said.

Wal-Mart recently lost to leading Japanese retailer Aeon Co in its bid for a tie-up with troubled supermarket chain Daiei Inc. (NASDAQ:DAIEY)

Wal-Mart currently owns a 54 pct stake in Japanese supermarket operator Seiyu and holds the right to increase that to 66 pct by the end of this year.

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Lawsuits sizes S-XXL: Wal-Mart is fighting suits minor to monumental brought by customers and employees

By Steve Painter,
Arkansas Democrat-Gazette
January 28th, 2007                                    [back to top]

"Every week, more than 127 million customers visit Wal-Mart stores, supercenters, Neighborhood Markets and Sam's Club locations across America." "Wal-Mart employs 1.8 million associates worldwide, including 1.3 million in the United States." Those statements appear on Wal-Mart Stores Inc.'s news releases and its Web site.

Unfortunately for the world's largest retailer, some of those employees and customers sue for amounts small and large over wrongs real and perceived.

The company is battling what could become the largest U.S. class-action lawsuit ever, with billions of dollars at stake. At the same time, it faces new lawsuits every day from people who slip and fall in Wal-Mart stores, get robbed in its parking lots or believe they were wrongfully accused of shoplifting.

In May, Wal-Mart will fill the pages of the Connecticut Law Review with material drawn from a symposium in October at the University of Connecticut School of Law titled "Wal-Mart Matters." The symposium covered topics ranging from the potentially history-making Dukes vs. Wal-Mart Stores Inc. sex discrimination case and immigration law to anti-trust issues.

Wal-Mart is in the legal and political spotlight "probably because of the symbolic role that it plays as a company that has avoided being unionized," said Richard Vedder, an Ohio University economics professor and a visiting scholar at the American Enterprise Institute, which champions limited government and private enterprise.

"Being the largest retail corporation in America of course adds to its visibility," said Vedder, a panelist at the symposium.

Wal-Mart officials quit talking publicly several years ago about the number of cases pending against the company. It likely exceeds 10,000, based on numbers the company confirmed in 2001.

A sampling of new lawsuits in recent months offers a glimpse at the range of Wal-Mart's legal battles.

In Michigan, Julie Roehm, Wal-Mart's former high-profile advertising executive, sued for wrongful termination after she was fired, claiming she is owed hundreds of thousands of dollars. She says in her lawsuit that Wal-Mart gave no examples of misconduct, then "made false and malicious statements to the media." In Indianapolis, a family sued Wal-Mart after a mirror in one of its stores fell on their 3-year-old son, killing him.

In Kentucky, a judge certified a class-action lawsuit by workers who claimed they were forced to work through breaks and meal periods. Pennsylvania Wal-Mart workers won a similar lawsuit in October, and several more are pending in other states.

In Iowa, a man sued Wal-Mart after he was charged with stealing a jacket. The charge was dropped when he produced a receipt for the jacket, which he'd bought at another Wal-Mart store.

John Simley, Wal-Mart's spokesman for legal matters, said each case is evaluated by lawyers at company headquarters, although cases are farmed out to hundreds of lawyers across the country. He declined to provide information about the number of lawyers Wal-Mart employs or cases pending against the company.

"It's not public information, so we don't provide details on that," he said.

THE BIG ONE

Among the current legal threats to Bentonville-based Wal-Mart, none stacks up to Dukes vs. Wal-Mart Stores Inc.

Filed in 2001 in California, the suit alleges that Wal-Mart discriminates against female employees by paying less-qualified men higher wages than women and promoting less-qualified men to management positions ahead of women.

Initially estimated to include a class of about a half-million women, the number may have grown to 2 million by now as employees come and go at the evergrowing company. All current or former female Wal-Mart workers since Dec. 26, 1998, are potential members of the class.

"There are none that are bigger than this one," said Joseph M. Sellers, co-lead counsel for the plaintiffs.

A federal judge certified the case as a class-action lawsuit in June 2004, a decision Wal-Mart appealed. A three-judge panel of the Ninth Circuit U.S. Court of Appeals heard arguments in August 2005 and has yet to rule.

"It's certainly a long time from the perspective of those of us who are awaiting a decision," Sellers said.

Depositions in the case have been on hold since 2003 while the certification issue is argued. Sellers, however, is seeking court approval to take former Wal-Mart Vice Chairman Tom Coughlin's deposition, citing his frail health.

Wal-Mart opposes the move. A hearing on the issue is set for Feb. 14.

Wal-Mart contends that female workers must sue local stores in state court because pay and promotion decisions are made at the store level.

Melissa Hart, an associate professor at the University of Colorado law school, has studied the Dukes case and finds the plaintiffs' arguments believable. Her areas of emphasis are employment discrimination, legal ethics and civil procedure.\

Particularly harmful to the company's case, she said, is a 1998 company-funded consultant's report that found a lack of equity between the sexes in management and recommended ways to address stereotyping. The plaintiffs argued the report was largely set aside and no changes were made.

As for potential damages, she said, "They'll be massive, whatever they are, when you have a class that size." Among the plaintiffs' arguments are that, in 2001, 67 percent of hourly workers and 78 percent of department managers were women, but only 36 percent were assistant managers, 14 percent store managers and 10 percent district managers.

In an article on the case, Hart contends that Wal-Mart stores have always looked to Bentonville for directives.

"Although Sam Walton is long dead, the tightly controlled, highly centralized culture that he created remains integral to the superstore's structure," she said.

WAL-MART FIGHTS BACK

Simley, the Wal-Mart spokesman, said he couldn't comment on the company's potential liability beyond what Wal-Mart said in its annual report nearly a year ago.

If Wal-Mart ultimately loses the Dukes case, the report notes, "the resulting liability could be material to the company." It adds that company officials "cannot reasonably estimate the possible loss or range of loss which may arise from the litigation."

Sellers, the plaintiffs' lawyer, also declined to speculate on potential damages. As for negotiations with Wal-Mart, he said, "They've given us no indication whether they're inclined to settle this."

In its appeal of the certification, Wal-Mart argues that evidence presented to the judge showed that "any pay disparity was localized in fewer than 10 percent of the stores nationally" and that the plaintiffs' statistics do not establish that members of the class suffered a common injury.

The judge's certification of the class action lawsuit, Wal-Mart says, stripped the company of its right to show that no discrimination occurred at individual stores or against individual plaintiffs and that "the district court simply ignored Wal-Mart's actual companywide policies, which prohibit discrimination and encourage equal opportunity."

The judge altered substantive law "solely for the purpose of certifying the largest employment class action in history," Wal-Mart argues.

Roger Pilon, vice president for legal affairs at the libertarian Cato Institute in Washington, called the Dukes case an example of "one of the more abused areas of our law today." "Are we to believe that Wal-Mart has discriminated against 2 million people?

This is discrimination law run amok," he said.

The lawsuit can't be separated from the constant political pressure on Wal-Mart from union-funded groups, Pilon contends.

"The hypocrisy that surrounds this is all but boundless," he said. "Whenever Wal-Mart opens its door and advertises for help, all the, quote, little people, unquote, for whom these groups pretend to be speaking are lined up to apply for these jobs, and they are shopping at Wal-Mart because of the lower prices."

TAKING ON THE GIANT

At a less visible level, Nashville, Tenn., lawyer Lewis Laska continues to work a niche he carved out several years ago.

Although he says he has never sued Wal-Mart, he sells the how-to kits after studying the company's litigation tendencies.

He concedes that his Web site, www. wal-martlitigation.com, has become a bit dated, but says he plans to spruce it up this year.

"It's turned out to be a much more difficult project than I imagined," he said, adding, "It's safe to say that I get e-mails every day from disgruntled employees, injured customers, vendors, all seeking specific information or global kinds of information."

For a modest price, as law work goes, he sells packets of information on the different types of lawsuits Wal-Mart typically faces: ice in parking lots, causing injury; debris in parking lots, causing injury; unknown substance on floor, causing injury; merchandise falling off shelf, causing injury; customer hit by employee-pushed carts, causing injury.

And the not-so-typical: assault by employee; employee falling on customer; exploding merchandise.

Wal-Mart has a history of not settling lawsuits, Laska said, and historically has been viewed favorably by most people.

"At one point, it was extremely difficult to get a judgment against Wal-Mart," he said.

He sees that changing with verdicts such as the Pennsylvania case, in which the company was found guilty of forcing off-the-clock work by employees.

"There is an increasing awareness in the public, particularly people that sit on juries, that Wal-Mart is not always the good citizen that it claims to be," Laska said.

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Wal-Mart may face tough questions

By Marcus Kabel,
Associated Press
January 27th, 2007                      [back to top] 

Managers and suppliers will be meeting as many observers are saying the retailer has lost its way.

For years, the annual meeting of Wal-Mart store managers and suppliers has been mostly an occasion to celebrate the company's successes and discuss its growth. This year, things are different.

The world's largest retailer is struggling, and the thousands attending next week's meeting will want to know what it plans to do about the problems.

The annual conference in Kansas City, Mo., will gather about 7,000 store managers Monday and Tuesday and then, for the next two days, draw hundreds of companies that supply the merchandise that Wal-Mart Stores Inc. of Bentonville, Ark., sells in its nearly 4,000 U.S. stores.

Wal-Mart keeps the meetings closed to outsiders, including the media, investors and analysts.

The analysts say they will be watching for signs that chief executive officer Lee Scott has a plan for recovering from a disappointing 2006. The top question now is whether the company will continue a year-and-a-half-old strategy of prying more money from affluent shoppers with trendier products or go back to low-price basics.

Efforts to improve its image with trendier fashion brands and home fashion accessories have fallen flat, although its push for higher-price electronics has done well.

Wal-Mart reported its worst holiday season ever even as it started to reemphasize its low prices after months of playing down its discount strategy. That has left customers and observers confused about what Wal-Mart is trying to be.

"Wal-Mart urgently needs to regain its price initiative," said Robert Buchanan of A.G. Edwards & Sons. "They have sent a mixed message. They have to be crystal clear that they are a low-price leader."

The retailer also is starting a two-year effort to tailor its stores to communities, offering different merchandise to six target demographic groups such as Hispanics, African Americans, and what it calls "empty-nesters/boomers."

"They're going through a big shake-up. This [meeting] gives them a chance to get everybody on the same page as to the direction the company needs to be going," said Don Gher of Coldstream Capital Management in Bellevue, Wash.

That shake-up includes a reorganization announced this week in how Wal-Mart selects its merchandise. Wal-Mart also promoted John Fleming, its top marketing executive, to head the effort in the new post of chief merchandising officer.

Fleming, a veteran of faster-growing rival Target Corp., will oversee the categories the company considers key for growth: grocery, entertainment, apparel and home furnishings.

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Wal-Mart to pay $33 million for overtime violations

By Marcus Kabel,
Associated Press
January 25th, 2007                      [back to top]

Wal-Mart Stores Inc. will pay more than $33 million in back wages to thousands of employees after turning itself in to the Labor Department for paying too little in overtime over the past five years, according to an agreement announced Thursday by the U.S. Labor Department.

Wal-Mart said the department's review of its overtime calculations also found it had overpaid about 215,000 hourly workers during the same five-year period. The company said it will not seek to recover any overpayments, which were at least $20 per worker.

Steven Mandel, associate solicitor in the Labor Department's Fair Labor Standards Division, said the case -- involving nearly 87,000 employees -- resulted from Wal-Mart coming to the department in early 2005 and asking for a review of its overtime calculations.

"They had some concern that some of the practices were not in compliance" with federal wage laws, he told a conference call for reporters

"It's not particularly unusual for an employer to come to us and talk to us about potential payroll violations," Mandel said.

But Mandel said the overtime settlement was one of the largest ever reached by the department's wage and hour division.

Wal-Mart said the settlement includes no fines or penalties and that it has adopted measures to prevent the errors from occurring again.

"The fact of the matter is we discovered this matter, we reported it to the Department of Labor and we resolved the issue," Wal-Mart spokesman John Simley said.

"We are committed to our associates (employees) and we've apologized to them for this error," Simley said.

Simley said Wal-Mart discovered possible mistakes in its formulas for overtime during a regular internal review. He said there was no connection between the company reporting itself to the Labor Department and multiple lawsuits against the retailer in recent years by employees alleging payroll violations.

Last October, Wal-Mart workers in Pennsylvania won a $78.5 million judgment for working off the clock and through rest breaks. Wal-Mart denied wrongdoing and is appealing the jury award.

One of Wal-Mart's most vociferous critics, union-backed WakeUpWalMart.com, said the overtime settlement was a sweetheart deal that favored the retailer rather than its workers.

WakeUpWalMart.com spokesman Chris Kofinis said workers were not represented in the settlement talks and added that the idea that Wal-Mart "would negotiate in the best interests of its workers is ludicrous on its face."

Critics had previously denounced a separate Labor Department settlement with Wal-Mart over child labor violations, which was made public last February.

That $135,540 settlement was later found by the Labor Department's inspector general to contain significant concessions for the retailer. The inspector general's report said the settlement was "significantly different" from other such agreements and included far-reaching restrictions on the government's ability to assess monetary penalties.

Regarding the overtime issue, Mandel said the department carried out a national review of all Wal-Mart stores over a two-year period from February 2005 to this year.

The settlement was approved Thursday by a federal judge in the U.S. District Court for western Arkansas, Mandel said.

The highest award to an individual employee was about $39,000, he said.

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State labor department sues Wal-Mart

By Kelly Johnson,
Sacramento Business Journal
January 25th, 2007                                 [back to top]

The California State Labor Commissioner sued Wal-Mart Stores Inc. on Thursday in Sacramento County Superior Court in an effort to recover underpayments of overtime wages resulting from errors in the retail chain's payroll processes.

The U.S Department of Labor also sued Wal-Mart Thursday, but immediately filed a nationwide settlement agreement regarding the overtime violations. That agreement, which includes no fines or penalties, still needs the court's approval.

Wal-Mart officials said in a news release that the company is seeking a settlement with the state that would include the assessment of penalties.

"Unlike the federal lawsuit, we have not agreed to a settlement of the California lawsuit," acting labor commissioner Robert Jones said in a news release. "While Wal-Mart has indicated its desire to pay all additional wages owed under California law, we will not agree to any settlement terms until state auditors have the opportunity to verify the accounting records relied upon by DOL officials and to examine additional records that relate to those issues that are subject to more stringent California statutes."

Wal-Mart reported the errors in calculating overtime payments in early 2005. Most of the errors resulted in small amounts of underpayments to a large number of employees throughout the United States.

Wal-Mart said it failed to include periodic bonuses and other earned income in determining some workers' weekly average hourly pay rate, or "regular rate," which is used to determine employees' overtime pay. Wal-Mart also calculated the regular rate on a biweekly instead of a weekly basis and did not properly account for overtime involving some managers-in-training and other associates. The retailer said it has corrected the problem and adopted measures to prevent them from occurring in the future.

"We want our associates to know that the situation has been fixed, that overtime calculations now are being done correctly, and that we've added safeguards to our payroll processes to make sure these types of errors don't happen again," Sue Oliver, senior vice president of Wal-Mart's People Division said in a news release.

Wal-Mart voluntarily informed the labor commissioner that the company had underpaid overtime wages to approximately 50,000 California employees. Approximately 90 percent of the workers and former employees were underpaid by less than $20 over the past five years. Wal-Mart told the state it would quickly correct the payroll calculation problems and it would pay all workers employed in California since Feb. 1, 2002 whatever they were underpaid, no matter how small the amount.

The Labor Commissioner's office has been working with Wal-Mart to determine precisely how much is owed to the California employees. Each employee is to be fully reimbursed for all wages that exceed what the U.S. Department of Labor determined are owed under federal wage and hour laws.

Many workers were overpaid as a result of the errors in the computer payroll program, but Wal-Mart will not seek reimbursement from those employees.

The state of California is seeking interest and penalties that might be owed to former Wal-Mart employees who were underpaid for their overtime work, and penalties due to the state for the violation of specific wage and hour statutes and attorneys' fees.

State officials figure any future settlement could exceed $2 million in additional payments to affected California employees. The amounts could range from $1 to several thousand dollars for a limited number of past employees.

The federal settlement involves hourly workers nationwide who worked at Wal-Mart stores, Sam's Clubs, Neighborhood Markets, logistics and the Wal-Mart corporate office.

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Mo. Appeals Court Weighs Wal-Mart Case

Court Considers Employee Class-Action Lawsuit

By KMBC
January 25th, 2007                      [back to top]

KANSAS CITY, Mo. -- Wal-Mart attorneys were back in court Thursday in an ongoing battle with some former workers over whether the low-cost retailer forced employees to work without pay.

The case could potentially involve 200,000 current or former Wal-Mart employees in Missouri, KMBC's Jim Flink reported.

A lower court has already ruled there is enough evidence to proceed with the class-action lawsuit.

On Thursday, Wal-Mart attorneys asked the Missouri Appeals Court to throw out that ruling.

Flink reported that both parties took an hour to present their cases.

At issue is whether Wal-Mart created a corporate culture that forced employees to work without pay, including during lunch hours, breaks or on overtime, and whether the company did it knowing it would make a greater profit.

Attorneys for seven former employees argued that they can prove Wal-Mart did that intentionally.

Wal-Mart's attorneys argued that it's impossible to make this a class-action case, because each employee and each store had different policies, and that there is no commonality between claims.

The appellate court is being asked to certify or decertify the case as a class-action lawsuit.

Flink reported that individually, employees would have little chance of defeating Wal-Mart in court.

The appeals court decision could take up to a year.

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Wal-Mart Settles in Overtime Case

By MARCUS KABEL,
AP Business 
Thursday, January 25, 2007                 [back to top]

Wal-Mart Stores Inc. will pay more than $33 million in back wages to thousands of employees after turning itself in to the Labor Department for paying too little in overtime over the past five years, according to an agreement announced Thursday by the U.S. Labor Department.

Wal-Mart said the department's review of its overtime calculations also found it had overpaid about 215,000 hourly workers during the same five-year period. The company said it will not seek to recover any overpayments, which were at least $20 per worker.

Separately, California's Labor Commissioner filed suit against Wal-Mart for the share of overtime shortfalls in that state. The commissioner's office said in a statement that Wal-Mart had also voluntarily notified it of the problem and was working with the commissioner.

Unlike the federal government, California has not reached a settlement, said Robert Jones, acting state labor commissioner. He said a settlement would depend on state auditors verifying the accounting records relied upon by the Labor Department and an examination of additional records relating to more stringent California statutes, he said.

Steven Mandel, associate solicitor in the U.S. Labor Department's Fair Labor Standards Division, said the case — involving nearly 87,000 employees nationwide — resulted from Wal-Mart coming to the department in early 2005 and asking for a review of its overtime calculations.

"They had some concern that some of the practices were not in compliance" with federal wage laws, he told a conference call for reporters

"It's not particularly unusual for an employer to come to us and talk to us about potential payroll violations," Mandel said.

But Mandel said the overtime settlement was one of the largest ever reached by the department's wage and hour division.

Wal-Mart said the settlement includes no fines or penalties and that it has adopted measures to prevent the errors from occurring again.

"The fact of the matter is we discovered this matter, we reported it to the Department of Labor and we resolved the issue," Wal-Mart spokesman John Simley said.

"We are committed to our associates (employees) and we've apologized to them for this error," Simley said.

Simley said Wal-Mart discovered possible mistakes in its formulas for overtime during a regular internal review. He said there was no connection between the company reporting itself to the Labor Department and multiple lawsuits against the retailer in recent years by employees alleging payroll violations.

Last October, Wal-Mart workers in Pennsylvania won a $78.5 million judgment for working off the clock and through rest breaks. Wal-Mart denied wrongdoing and is appealing the jury award.

One of Wal-Mart's most vociferous critics, union-backed WakeUpWalMart.com, said the overtime settlement was a sweetheart deal that favored the retailer rather than its workers.

WakeUpWalMart.com spokesman Chris Kofinis said workers were not represented in the settlement talks and added that the idea that Wal-Mart "would negotiate in the best interests of its workers is ludicrous on its face."

Critics had previously denounced a separate Labor Department settlement with Wal-Mart over child labor violations, which was made public in February 2005.

That $135,540 settlement was later found by the Labor Department's inspector general to contain significant concessions for the retailer. The inspector general's report said the settlement was "significantly different" from other such agreements and included far-reaching restrictions on the government's ability to assess monetary penalties.

The report said it found no evidence of violations of federal laws or regulations.

Regarding the overtime issue, Mandel said the department carried out a national review of all Wal-Mart stores over a two-year period from February 2005 to this year.

The settlement was approved Thursday by a federal judge in the U.S. District Court for western Arkansas, Mandel said.

The highest award to an individual employee was about $39,000, he said.

©2007 Associated Press

$260k Necklace Stolen From Sam's Club

Associated Press
01.25.07                               [back to top]

Two men who committed a smash-and-grab robbery at a Sam's Club store got away with a seriously big ticket item - a diamond-encrusted necklace with a price tag of $263,574.

The men were caught on security cameras as they carried out the heist at the member's-only bulk warehouse store while it was open Tuesday night, the Hillsborough County sheriff's office said.

One of the men walked in with a hammer in his belt and both changed clothes in the restroom before smashing the jewelry case and fleeing with the necklace, which is festooned with 82 carats of pear-shaped diamonds, officials said.

A day after the bold heist, surveillance camera photographs of two suspects were on the TV news, along with detailed descriptions.

The necklace is believed to be the only piece stolen, even though the display case was smashed. The piece was displayed with its price shown prominently on a card just above it.

Along with industrial-sized jars of mayonnaise and peanut butter, SAM's Club, owned by Wal-Mart Stores Inc. (nyse: WMT - news - people ), sells fairly expensive items including jewelry, flat-screen TVs and furniture.

"If somebody is not familiar with Sam's Club, they will be pleasantly surprised," said company spokeswoman Susan Koehler, who declined to comment on the robbery. "That's the fun of it. When you go in, you never know what you're going to find."

Copyright 2006 Associated Press. All rights reserved.

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Former Ad Executive Sues Wal-Mart Over Firing

Namnews                             [back to top]

Former Wal-Mart advertising executive Julie Roehm, who was dismissed last month after recruiting new advertising agencies, has filed a suit alleging the company had no right to fire her. Roehm, who was dismissed days after recruiting the retailer's first new lead-advertising agency in 15 years, claims breach of contract and fraud and said she was abruptly dismissed for failure to meet "the expectations of an officer". It seeks unspecified damages.

The company has never detailed the reason for her dismissal or that of the two agencies. A Wal-Mart spokesman did not comment, but in a filing with the court, the company said Roehm held no employment contract, and her "improper conduct" precluded any damages.

Roehm was recruited a year ago from DaimlerChrysler AG at an annual salary of $325,000, offered a signing bonus of $250,000, and stock and other incentives valued at as much as $300,000. Wal-Mart had questioned Roehm about whether she had a personal relationship with a subordinate, or had accepted gifts from ad agencies, both of which are forbidden at Wal-Mart. Both Roehm and Sean Womack, former Vice President of Communications Architecture, who was dismissed at the same time, have denied any improper behavior.

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Wal-Mart chooses Novell-Microsoft solution for future web endeavor

by Matt Mondok
January 24, 2007                    [back to top]

Wal-Mart supports the partnership between Microsoft and Novell, and the retailer plans to show its affection for the two by using both Windows Server and SUSE Enterprise Linux for its upcoming projects, not Red Hat, which it currently runs. The company already runs Windows, and Microsoft will be providing it with SUSE Linux Enterprise subscription certificates.

What does Wal-Mart plan to do with its new infrastructure? Chief technology officer Nancy Stewart says the company is looking to broaden its web presence so that it may appeal to a global audience. Okay, but why would the company not forge on with Red Hat? Mainly because of the intellectual property protections offered by the Novell and Microsoft deal; salt in Red Hat’s wound.

Last November, Red Hat corporate secretary Mark Webbink said Novell was tricked by Microsoft. "Novell has fallen into the trap of allowing Microsoft to do exactly what it wants to do, which is to trumpet IP (intellectual property) solutions and promises,” he said. When three financial institutions signed on with both companies in December, and one was a Red Hat customer, Red Hat CEO Matthew Szulik said there was much ado about nothing. "Those were existing accounts and there is at least one of them that I can speak definitely that is also a Red Hat account. So those were older engagements and we were not involved in competitive situations with those two or three years ago when they became Novell accounts."

Right now, it’s unclear whether Wal-Mart will migrate all of its Linux servers from Red Hat to SUSE, but the retailer is putting all of its confidence into Microsoft and Novell. "That's our direction. That's where we're going, but if we hit a roadblock and we can't go forward, it's up to Microsoft and Novell to figure out what to do about it," Stewart said.

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Wal-Mart eyes expansion

Jason Misner
01/24/07                      [back to top]

The Wal-Mart store on Dundas Street is looking at a major expansion that would include a supermarket. The city circulated a seven-page public notice, dated Friday, Jan. 12, showing Wal-Mart wants to add a 4,180-sq.-metre (44,977-sq.-foot) grocery store to its current 12,000-sq.-metre (129,000-sq.-ft.) building.

That would make it at least similar to the size of the Wal-Mart store that opened in Ancaster last fall and was one of the first to introduce a grocery store concept in Canada, under the Supercentre banner. These kinds of stores range in size from 150,000-215,000-sq.-ft., according to Wal-Mart.

The application for Official Plan and zoning bylaw amendments comes as news of a deal that paves the way for the retailer to build a second store near the city's downtown continues to reverberate in Burlington.

Last week the city revealed details of an arrangement it reached with Wal-Mart on Jan. 9 to build a store at the corner of Fairview and Brant streets, next to a GO train station. It was also before the Ontario Municipal Board, but the recent deal has effectively put an end to that hearing.

Wal-Mart wouldn't say much about the Dundas Street expansion application but spokesperson Kevin Groh noted the store has no immediate plans to expand.

"In terms of the Dundas store, ultimately we may choose to expand the store, but we have no short-term plans whatsoever," he said. "The application is a contingency plan, preserving our opportunity to one day expand.

"It's premature for us to put a Supercentre label on it in Burlington."

The company said it expects to open up as many as 14 Supercentres by the end of 2007.

Senior city planner Silvina Kade said Wal-Mart has submitted a market study that concludes there is support for a grocery store in the area, partly because of growth in the Alton community, a major residential development.

A staff recommendation will go before the city's community development committee Monday, Feb. 12 but it will be made public Feb. 5 so residents can have time to look it over.

The Dundas Street store also went through an OMB challenge in 2002 before it eventually opened on a 7.28-hectare (17.9-acre) site.

Wal-Mart's foray into the grocery store industry simply means more choices for consumers based on different supermarket shopping opportunities, according to the Canadian Council of Grocery Distributors.

"As an association we don't have an opinion whether a particular company coming in is good or bad but we do know we're seeing our members respond very strongly to changing competitive dynamics and that is going to be good for customers," said David Wilkes, senior vice-president of the association that counts Sobeys, Metro A&P and Loblaw as members. "We have some of the best grocery stores that are serving the Canadian marketplace."

The group is a not-for-profit organization committed to advancing and promoting the food distribution industry across Canada.

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R.I. County judge to rule on Wal-Mart class-action suit

By Brian Krans,
Quad-Cities Online 
January 24th, 2007                                       [back to top]

A Rock Island County judge said he'll soon rule on whether a local lawsuit filed against Wal-Mart can be given class-action status.

Attorneys representing three local plaintiffs argued Thursday in Rock Island County Circuit Court that about 223,000 employees for Wal-Mart and Sam's Club employed in Illinois since 1996 are owed compensation for working off the clock and through their rest breaks.

Wal-Mart attorneys argue that not every person who worked at Wal-Mart even claims to be wronged and granting class-action status would be assumptive.

The suit, filed in 2001, is one of many suits filed against the retail giant regarding alleged wage and hour violations.

Last year, a jury awarded $78.5 million to 176,000 plaintiffs in a similar class-action suit filed in Philadelphia. Wal-Mart is appealing that decision and a $172 million verdict in a similar California case. The company settled a Colorado suit for $50 million, according to The Associated Press.

New York attorney Judith L. Spanier, arguing for local plaintiffs Lisa Brown, Cynthia Camp and Joseph Stanfield, listed numerous documents and statistics to show problems chain-wide and inside Illinois with Wal-Mart employees not getting scheduled breaks and forced to work off the clock.

Judge Mark VandeWiele told Wal-Mart attorneys, "If they could prove all of this at trial, it would seem Wal-Mart was taking advantage of its employees in Illinois."

Wal-Mart's own internal audit in 1992 showed 32 percent of required breaks were not taken, despite executive policy and federal law dictating every break must be taken, Ms. Spanier said.

"Wal-Mart cannot run away fast enough from its own policy," Ms. Spanier said. "For Wal-Mart to come in here and say they don't have accurate records is absurd."

An Oct. 9, 2000 letter from a corporate lawyer to Wal-Mart executives listed Illinois in the top 10 states with the highest possible liabilities due to "chronic problems" in meal- and rest-break violations. The letter, which was part of Ms. Spanier's presentation, listed possible liability to the company at $80 million to $100 million.

Rock Island attorney Matthew Pappas, representing Wal-Mart, objected to Ms. Spanier's showing of the document, arguing it was protected under attorney-client privilege. Judge VandeWiele put the document under seal.

Mr. Pappas said the plaintiff's "unoriginal" argument was the same presented in similar cases across the country. "There seems to be this thing going around that because you're Wal-Mart, you must be doing something bad," he said.

He said the more than a quarter-million Wal-Mart employees who would be given class-action status fit into 85 different class systems. He said some things happening at stores are the result of individual managers' decisions.

A Boston attorney for Wal-Mart, Donald R. Frederico, said statistics don't tell the full story of each employee, and federal judges have ruled facts must be proven true before certifying a class.

The three local plaintiffs allege they were forced to work off the clock. Ms. Brown previously gave a deposition that she was told to clean up the store without pay. Ms. Camp was told to set up a display and move carts and merchandise. Mr. Stanfield said he had to shelve merchandise with a forklift, Mr. Frederico said.

"The idea that there is this uniform pressure from Wal-Mart to work off the clock or miss breaks doesn't hold up under the plaintiff's testimony," he said. "The plaintiffs allege all of these people were working in a uniform way."

Judge VandeWiele said he'll issue his ruling on the class-action status soon. When he does, he said he won't see the case again "for a few years" while the losing party takes his decision to the appellate courts.

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Wal-Mart Destroys Social Capital, Study Finds

The Hometown Advantage                     [back to top]

The presence of a Wal-Mart store reduces a community's level of social capital, according to a new study by economists Stephan J. Goetz and Anil Rupasingha.

Bowling Alone author Robert Putnam defines social capital this way: "Social capital refers to features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit." Social scientists generally measure a community's social capital by looking at such factors as how many civic and social organizations it has and the degree to which residents participate in public affairs.

Communities with higher levels of social capital are healthier and more resilient, and their members are better able to work together to solve problems. Economists have found that social capital also contributes to economic growth and poverty reduction.

"Our results indicate that the presence of Wal-Mart depresses social capital stocks in local communities," concluded Goetz and Rupasingha in their study, "Wal-Mart and Social Capital," which was published by the American Journal of Agricultural Economics.

Continue reading "Wal-Mart Destroys Social Capital, Study Finds @ The Hometown Advantage http://www.newrules.org/retail/news_slug.php?slugid=350

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Wal-Mart's PR bloopers

The world's largest retailer set out to clean up its image with a new public relations campaign - and promptly landed six spots on this year's list.

By Adam Horowitz, David Jacobson,
Tom McNichol, and Owen Thomas                        [back to top] 

1. Because if there's anything America loves, it's a politician...

In an attempt to put a smiley face on its tarnished image, Wal-Mart hires heavy-hitting public relations firm Edelman, which sets about using tactics derived from political races to reverse public perceptions of the giant retailer.

Dubbing its campaign "Candidate Wal-Mart," the firm trumpets all manner of new Wal-Mart initiatives: improved employee health-care benefits, higher starting pay levels, new stores in downtrodden neighborhoods, reasonably priced organic foods, and a flat $4 fee for hundreds of generic prescription drugs.

As a result, candidate Wal-Mart quickly becomes, well, the most popular politician since Spiro Agnew. By year's end Wal-Mart suffers its first quarterly profit drop in a decade, sees same-store sales decline in November's run-up to the crucial holiday shopping season, and suffers a series of public relations gaffes so stunning that it lands six spots in this year's edition of the 101 Dumbest Moments

2. Perhaps Michael Richards will be able to find work after all...

Availing itself of PR firm Edelman's deep political connections, Wal-Mart recruits civil rights leader and former U.N. ambassador Andrew Young to chair its company-funded Working Families for Wal-Mart.

In an August interview with an African American newspaper in Los Angeles, Young says the megaretailer "should" displace its urban corner-store competition.

"You see, those are the people who have been overcharging us.... I think they've ripped off our communities enough. First it was Jews, then it was Koreans, and now it's Arabs."

3. Oh, you were doing it to keep your employees from improving their working conditions? Well, that's all right then...

Former Wal-Mart vice chairman Thomas Coughlin - whose compensation from salary, bonuses, and stock grants totaled several million dollars per year - is discovered to have cooked up fraudulent expense invoices in a scam to siphon off $500,000 over the course of seven years.

Coughlin, who reportedly told enabling subordinates that he was using the funds for a secret antiunion initiative, pleads guilty and is sentenced to more than two years of home confinement

4. We hear Lonelygirl15 is a huge fan of Sam's Club...

In September a folksy new blog called Wal-Marting Across America pops up on the Internet.

The blog documents the purportedly spontaneous discoveries of RV-traveling megastore megafans Jim and Laura as they pull over to chat with happy Wal-Mart employees, like the guy whose company health insurance saved his son's life, or the woman who worked her way up from cashier to corporate manager.

Unfortunately, it neglects to mention that Wal-Mart arranged Jim and Laura's itinerary, paid for the RV, and compensated them for the blog entries. Exposed by BusinessWeek.com, the stunt is especially bad news for Edelman, since it violates ethical guidelines it helped to write for the nascent Word of Mouth Marketing Association.

5. Cutting off your nose to spite your smiley face...

In December, six weeks after hiring Interpublic Group's DraftFCB as its new advertising agency, Wal-Mart fires both Draft and Wal-Mart senior vice president Julie Roehm, who led the agency search.

Roehm reportedly attended an expensive dinner paid for by Draft at a hip Manhattan restaurant, in violation of a Wal-Mart policy that prohibits employees from accepting gifts from vendors.

The move is expected to delay Wal-Mart's efforts to shift from a mass advertising strategy to one that tailors pitches to specific demographic groups, seen as key to reversing its slumping sales.

6. Don't worry, Andrew Young explained it to us. It's some sort of Jewish/Korean/Arab conspiracy...

Bringing the ever-friendly spirit of its in-store greeters online, Walmart.com offers DVD shoppers helpful recommendations for films they might be interested in purchasing.

Customers looking at the Web site's product pages for Charlie and the Chocolate Factory and Planet of the Apes, for instance, are steered toward "similar items" such as Martin Luther King: I Have a Dream/Assassination of MLK and Unforgivable Blackness: The Rise and Fall of Jack Johnson. Wal-Mart spokeswoman Mona Williams says the company is "heartsick" over the incident but has "absolutely no evidence" that the connections were made intentionally

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Fired exec says Wal-Mart couldn’t change

Roehm, hired to work on retailer’s image, suing for breach of contract

Reuters
Jan 24, 2007                          [back to top]

NEW YORK - Wal-Mart Stores Inc. may have wanted change when it hired Julie Roehm as its head of marketing communications last year, but Wednesday she said the world’s largest retailer rejected change once she arrived.

“Many companies — and Wal-Mart’s not the first — want change. They know that something needs to be done and they want to seek it,” she said, after speaking on a panel at a Reuters Newsmaker event in New York.

But just as a body can reject an organ after a transplant, so too can corporations reject the very type of change they are seeking, Roehm said.

“Sometimes, you know you need it to survive, but sometimes it just rejects,” she said.

Roehm declined to give specifics of changes she tried to push through.

Roehm was abruptly fired from Wal-Mart Dec. 4 after less than a year on the job. Her departure came amid speculation she violated company policy by accepting a costly dinner hosted by Interpublic Group of Cos.’ agency DraftFCB while choosing an advertising agency for Wal-Mart.

Roehm has denied any inappropriate activity, and she has sued the retailer, claiming breach of contract and fraud. In her complaint, Roehm claims she was told by Wal-Mart that she was being fired because she had not been “fulfilling the expectations of an officer of the company.”

In court papers, Wal-Mart admits that Roehm was informed Dec. 4 that her employment was being terminated, but it denies the other allegations.

A Wal-Mart spokeswoman declined to comment.

Roehm was expected to help Wal-Mart expand its image beyond that of just a low-cost retailer and help it attract consumers who might spend money on high-priced electronics or trendy apparel.

She joined the retailer from DaimlerChrysler, where she was the director of marketing communications for the Chrysler, Jeep and Dodge brands and was known for pushing the limits with her ads.

In 2004, she pushed to have Chrysler’s Dodge brand sponsor a pay-for-view “Lingerie Bowl” that would feature scantily clad women playing football during halftime of the Super Bowl. But Chrysler canceled its sponsorship in the face of criticism from female customers.

Roehm said that after working in numerous cities in different companies, she was probably overly confident in thinking she could fit in to Wal-Mart’s culture and easily push through changes.

“The truth is that I was probably overly confident that I could adapt to their culture and succeed in that environment,” she said. “They were probably overly ambitious on the fact that they thought that I was the right person for them — that I was the right kind of change.”

While she did not last long at Wal-Mart, Roehm said she does not think her experience would keep others from working at the retailer.

“Anybody enamored with the idea of creating change at the world’s largest retailer will go” there, she said.

Since leaving Wal-Mart, Roehm said she has been talking to numerous companies about job opportunities, but has made no decisions yet about her next move.

Copyright 2007 Reuters Limited. All rights reserved.

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Wal-Mart Changing Merchandising Operations

Reuters                                       [back to top]

CHICAGO (Jan. 24) - Wal-Mart Stores Inc. said on Wednesday it is reorganizing its U. S. marketing and merchandising operations, including moving its chief marketing officer to the role of chief merchandising officer.

Wal-Mart , the world's largest retailer, said that it is moving into the second phase of a three-year strategy to increase sales and profitability.

While the company has added more upscale items to its shelves, such as flat-panel televisions, and cut prices on items such as toys and food leading up to Christmas, overall sales during the holiday season were lackluster.

John Fleming was named chief merchandising officer after leading the marketing division for almost two years. Stephen Quinn was promoted to chief marketing officer, after serving as senior vice president of marketing.

The changes come after other marketing changes.

Wall-Mart's marketing communications chief, Julie Roehm, left the company in early December, along with her vice president, Sean Womack. Her departure came amid speculation she faced scrutiny from the retail chain for accepting a costly dinner hosted by Interpublic Group of Cos' (IPG.N) agency DraftFCB. Roehm has denied any inappropriate activity.

Less than two weeks ago, Wal-Mart selected agencies from Interpublic and France's Publicis (PUBP.PA) for its advertising work. Fleming led the review.

Wal-Mart put its estimated $580 million advertising account up for review in December, just days after Roehm's departure and barely one month after a previous review assigned the work to DraftFCB and Aegis Group media buyer Carat.

Wal-Mart also said that its merchandise initiatives will be focused on five divisions -- grocery, entertainment, apparel, home and pharmacy & optical.

Four of the divisions will report to Fleming, who will also be responsible for a new organization focused on customers and another new organization for planning, pricing and replenishment.

The pharmacy and optical division will continue to report to Bill Simon, executive vice president of professional services and new business development.

Shares of Wal-Mart, which is based in Bentonville, Arkansas, rose 26 cents to $48.07 in morning trading on the New York Stock Exchange.

Copyright 2007 Reuters Limited. All rights reserved

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Wal-Mart shuffles chief marketing officer

United Press International                     [back to top]

BENTONVILLE, Ark., Jan. 24 (UPI) -- Wal-Mart Stores Inc. shuffled its U.S. marketing and merchandising management team following weak sales, the Bentonville, Ark., retailer said Wednesday.

Chief Marketing Officer John Fleming is now its chief merchandising officer, Wal-Mart said.

Fleming was central to an embarrassing 2006 advertising strategy to appeal to more affluent shoppers, which Wal-Mart canceled late in the year after sales faltered.

In his new job, Fleming oversees Wal-Mart's grocery, entertainment, home and clothing divisions. Wal-Mart's apparel sales slumped after its upscale marketing push emphasized skinny-legged pants and nightclub wear.

In a return to more promotional marketing efforts, senior marketing Vice President Stephen Quinn succeeds Fleming as chief marketing officer.

Fleming ran Pepsico's Frito-Lay division before joining Wal-Mart in 2005.

Copyright 2007 by United Press International

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Is Wal-Mart's Support for Suse Linux a Tipping Point? 

By Chris Maxcer
LinuxInsider
01/23/07                                      [back to top]

Microsoft and Novell have garnered a big customer win following their odd couple deal to collaborate: Wal-Mart, the world's largest retailer, has decided to ditch Red Hat in favor of Novell's Suse Linux, with Microsoft providing assistance in managing interoperability with Windows in the company's mixed-platform IT environment.

Microsoft (Nasdaq: MSFT) and Novell (Nasdaq: NOVL) are proudly announcing the biggest proof-point to date that their groundbreaking alliance to work together for the benefit of their customers has real traction: Wal-Mart (NYSE: WMT) , the world's largest retailer, is gearing up to take advantage of Microsoft and Novell's collaboration and interoperability efforts between Microsoft Windows and Linux.

Under the terms of the agreement, Microsoft will deliver Suse Linux Enterprise Server subscription certificates to Wal-Mart for use in its IT infrastructure . The entire deal only recently became possible due to Microsoft and Novell's November 2, 2006, agreement to collaborate on Windows and Linux interoperability.

Complicating Factors Wal-Mart currently uses Microsoft products, as well as Linux solutions from Novell's market-leading rival, Red Hat (Nasdaq: RHAT) .

The collaboration with Microsoft and Novell will allow Wal-Mart to manage Windows and Linux by extending its existing Microsoft management tool set and authentication platform: Systems Management Server, Active Directory, and Microsoft Operations Manager.

However, the retailer also cited concerns over intellectual property assurance -- namely the potential for a lawsuit over Microsoft's claims that Linux violates its patents -- and noted that the decision to work with Microsoft and Novell provides the IP assurance Wal-Mart also expects.

Moving Past the Patent Fuss "I think when you put aside the fuss around the patent, technical, legal and philosophical issues -- just looking at this from a business perspective -- there was a lot of skepticism around the time of the announcement if there was anything to the agreement," Michael Goulde, a senior analyst for Forrest Research, told LinuxInsider.

"This would not have happened had it not been for recognition on the part of Microsoft that customers wanted them to shift their position. ... Microsoft is now more positively disposed to being responsive to what customers are actually trying to accomplish," he observed.

Wal-Mart's decision to use Suse Linux over Red Hat points out that there are more customers with mixed environments that really do want Microsoft to help them interoperate with non-Microsoft solutions.

More than 90 percent of respondents to a survey that Microsoft released in early December favored vendor cooperation and interoperability. While that finding wasn't surprising, Microsoft also reported that more than two-thirds of all respondents -- and 79 percent of respondents who already used Red Hat -- said the agreement was more likely to make them choose Suse Linux for their datacenter.

Is Wal-Mart the Tipping Point? Because Wal-Mart is such a high-profile customer, might the retailer's decision fuel new enterprise adoption of Suse Linux?

"I think it's something that other customers will look at closely," Goulde said. "It's a big step in the right direction, but there has to be some outcome. Wal-Mart has to be willing to say in six months or a year that it worked out great. Such an announcement from Wal-Mart -- or another customer -- would go a long way."

In other words, the end result has to be successful before many other enterprises actually follow suit, noted Goulde.

Red Hat, by the way, appears to be taking the announcement in stride:

"As Red Hat demonstrates growth around the world and across industries, the competitive landscape continues to be lively," Leigh Day, a spokesperson for Red Hat, told LinuxInsider.

"We expect to compete," Day added. "Customers should be wary of solutions that might seem attractive near term, but have questionable long term prospects."

Copyright © 1998-2007 ECT News Network, Inc. All Rights Reserved.

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State Orders Wal-Mart To Pay Pesticide Fees Company Must Pay State More Than $1.2 Million

KCRA 3 Investigates
January 23, 2007                            [back to top]

SACRAMENTO, Calif. -- A California state agency is hitting the nation's largest retailer with more than $1 million in fines and fees.

A letter was recently sent to Wal-Mart, telling the company it must pay the state more than $1.2 million related to pesticides sold in California.

The California Department of Pesticide Regulation said Wal-Mart is refusing to pay fees on more than $57 million in sales. The state requires retailers to pay a 2-cent fee on every dollar of pesticides sold.

So what happens if Wal-Mart refuses to pay?

"We will have no alternative but to turn to the state attorney general's office and they could file an unfair business practices complaint," California Department of Pesticide Regulation spokesman Glen Brank said.

That would not be good for Wal-Mart.

The company is already under criminal investigation by the U.S. Attorney in Los Angeles.

That investigation alleges Wal-Mart is illegally shipping hazardous waste out of state to avoid environmental fees in California.

California representatives from Wal-Mart have not returned calls from KCRA 3 Investigates seeking comment.

Copyright 2007 by KCRA.com. All rights reserved.

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New CEO of Wal-Mart China to Come into Office in Feb. 2007

SinoCast
January 23                             [back to top]

SHANGHAI, -- The world's biggest supermarket chain retailer Wal-Mart said Ed Chan will succeed Joe Hatfield to be president and chief executive of its China company in February 2007.

Prior to joining Wal-Mart, Ed Chan from Hong Kong was director for North Asia region of Dairy Farm and he worked for Bertelsmann Music Group and McKinsey & Company. His succession marked that the retail giant is strengthening localization in the Chinese market.

The retail group just opened its second outlet in Shanghai on December 23, 2006, since its operation of the first store in Pudong District of the city in August 2005, and then it will build another one in old West Gate.

Wal-Mart is slower in creation of outlets in the city compared with French Carrefour, but the group has caught up with the archrival in terms of local outlets after acquisition of Trust-Mart which has most stores in China.

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WalMart a flourishing conduit of poor quality products

Isabel P. Ball
The Filipino Press
January 22, 2007                        [back to top]

Quality has always means to me a certain standard for products, when consumers could get a long mileage of use, and before, quality was the hallmark of consumer products in America. As has been, the stamped seal of Made In USA was a guarantee of consumers’ satisfaction. Recalling how as a young girl in the Philippines our parents would insist that we buy nothing but parts with the USA seal stamped on it.

With time, that scenario has changed with globalization. Perceptively, quality, nowadays has taken a backseat to quick profits in America, and occurring with speed of soil erosion in a flooded river. The catalyst is the brainchild of world distribution marketing the birth of gargantuan WalMart store.

I first heard of Walmart open in my small university town of Fort Collins in mid-80s. Then, the community buzzed with excitement about availability of affordable products. Curiosity, more than anything, I stepped inside the store, and to my chagrin, I saw what I had initially thought about the chain store, a quality much lower than sold at the JC Penney, May D & F, Sears, Kmart, Montgomery Wards and other reputable store names, I used to shop at.

The initial visit was repeated in the 2000s, when the store in National City opened. Our shopping spree at the Mall and other outlets, before Walmart, stopped, altogether, as the conglomerate has turned into a one-stop-shop, selling clothes, groceries, nursery, electronics, pharmacy, tools, to just about anything an individual would need.

Walmart, an alternative store, apparently, has easily captured America’s consumer heart, raking in billions in profit, thereby, edging many other stores out of the competition landscape, or had somehow forced other stores to downsize to survive. As the buying power of many Americans slips, Walmart is becoming the most frequented shopping place for the mainstream, enticing even the quality-conscious middle class.

Not much of a shopper myself, and on a restrained budget, like many Americans, I would buy essentials at the Walmart. While I endure the sacrifices of patronizing the cheaper price products, noticeably, the quality is eroding, and seemingly becoming disproportionate to the price tags that had kept up with inflation.

In my recent shopping, a pack of underwear bearing a reputable brand, attractively colored and designed, however, belied poor quality in materials and workmanship from Mexico. Sizes starkly differed, as though the materials were overstretched, and the elastic were like a rubber band that has reached its elasticity point. As I was stymied by an earlier return of a wrong-size pack of underwear, I decided to keep the hipsters for validation. Soon, I was able to prove a fact that the eyes are still the best means by which to judge the physical quality of a product. Discards the pack of hipsters had become, and so was my hard earned moolah into the trash. Similarly, the socks I bought containing many pieces in a pack, were also of low quality. A one color, fit-many-sizes pack was a disappointing buy. They fit loosely in my size 7-foot. Cumbersome and irritating, they rotate about inside the shoes; the heels and toes ending on wrong sides of the foot.

On that shopping day, I sort of splurged myself, and picked up a handy cassette player, of an unknown brand, selling truly inexpensively, and was irresistible. In addition, a boom box with cassette, CD, radio features, also of unknown brand, I bought for its looks to replace the still functioning, but bulky Sony stereo. These electronics, however, all lay in my room, unused for lack of the expected quality in sound and performance. You would say perhaps that price always has its weight on quality. To which I’d debate that poor quality products should have no place on any stores. If these products fail to satisfy the consumer, then, the sensible act is to ban them from production, avoid related waste.

Walmart is a store riddled with controversies. It has been alleged to employ cheap labor, and illegal employees in its roster. These, and the degraded quality of products imported mainly from China and Mexico, to mention a few, are the sources of the store’s strength in the business.

The community is saving, price wise, indeed. But something that America seems to be ignoring is the equation of quality to the price. What good are the cheap priced products if consumers are not satisfied with them? In the short and long term, realization might dawn that all these price wars add nothing to consumers’ prosperity, instead only creating few more billionaires in the midst of an impoverished citizenry, at the same time, contributing to an increase in the world garbage. Couple with consumer angst, and worthless consumer products, the situation could reach an economic fatigue point.

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Wal-Mart eyes Microsoft for Web build-out

By Martin LaMonica
CNET News.com
January 22, 2007                                  [back to top]

Retail giant Wal-Mart Stores is contracting with Microsoft and Novell--Microsoft's preferred Linux partner--to build out the company's Web operations, according to a Wal-Mart executive.

On Tuesday, Microsoft and Novell are expected to announce that Wal-Mart is the latest customer to purchase both Microsoft software and support certificates for Novell's Suse Linux Enterprise Server.

In an interview arranged by both companies, Wal-Mart's senior vice president and chief technology officer, Nancy Stewart, provided some details on the project involving Wal-Mart, Microsoft and Novell.

Stewart said Wal-Mart is in the midst of expanding its Web presence globally. The partnership between Microsoft and Novell, announced last November, provides "a fine support structure" for the project, she said.

Wal-Mart, currently a Red Hat Linux customer, intends to use Windows Server and Suse Linux Enterprise Server in the expansion, she said.

"That's our direction. That's where we're going, but if we hit a roadblock and we can't go forward, it's up to Microsoft and Novell to figure out what to do about it," she said.

With the partnership, Microsoft is seeking to make Novell its preferred Linux provider and to have both companies' products work well together. Microsoft offers coupons for Suse Enterprise Linux support services as well as legal indemnification for customers who use both Microsoft and Novell's Linux, which is open-source.

Wal-Mart, a global retailing giant with $315 billion in annual revenue, is already a Microsoft customer, and Stewart said the multiyear relationship has been "outstanding."

She said the intellectual property protections in the Novell deal give Wal-Mart more confidence in using Linux more broadly.

Questions over intellectual property are a "huge problem," Stewart said. The company now uses Linux in the data center of its current Web presence but had some trepidation with the idea of expanding it a much larger operation.

"To think about using it pervasively, we were very concerned about it," she said. The larger Web operation would have "significantly higher legal exposure."

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More U.S. states consider erecting barriers to Wal-Mart's banking plans

By Lauren Coleman-Lochner
and Alison Vekshin,
Bloomberg News
January 22nd, 2007                              [back to top]

NEW YORK: Wal-Mart Stores, the world's largest retailer, faces legislation in at least five more U.S. states that would ban it and other nonfinancial companies from operating banks.

Since the end of November, legislators in Nebraska, Texas, Colorado, Kansas and Maine have introduced bills to stop commercial companies from opening bank branches.

Wal-Mart's application in 2005 to start a Utah-based bank to process electronic transactions has drawn opposition from community banks and legislators who say the retailer might ultimately open bank branches in its stores and drive other financial institutions out of business. Wal-Mart has said it has no intention of becoming a commercial bank.

"We're just pleased that all these states are stepping up and really sending a signal to Utah and to Washington that they've got deep concerns about these industrial loan companies," said Stephen Verdier, director of congressional affairs for the Independent Community Bankers of America.

Wal-Mart must win approval from the Federal Deposit Insurance Corporation, which in July imposed a six- month freeze on new and pending industrial-bank applications to examine any risks they might pose to the U.S. financial system.

Industrial banks are state-chartered banks that can make loans and process credit card transactions. Five states have passed laws blocking such banks, and others are considering doing so.

Wal-Mart's application to start an industrial loan company "has nothing to do with opening a consumer bank," said Kevin Gardner, a company spokesman. "We simply want to sponsor credit and debit card transactions, save the processing fees associated with those transactions and pass the savings on to our customers."

Three members of the U.S. Congress who are at odds over industrial banks met last week to discuss the issue. Representatives Barney Frank, a Democrat, and Paul Gillmor, a Republican, who both oppose commercial ownership of industrial banks, met with Senator Robert Bennett, a Republican member of the Senate Banking Committee. Industrial banks are a major industry in his home state of Utah.

"We did not reach an agreement on the issue," Gillmor, of Ohio, said after the meeting.

Frank, of Massachusetts, the chairman of the Financial Services Committee in the House of Representatives, and Gillmor, a committee member, introduced legislation last year to ban new commercially owned industrial banks. The proposal stalled in Congress. Gillmor said he and Frank planned to reintroduce the measure.

The Federal Deposit Insurance Corporation, the regulatory agency that insures deposits at U.S. banks, may announce its decision on how to handle the applications at a meeting this month, when its moratorium expires.

Gillmor and Frank have asked the chairwoman of the agency, Sheila Bair, to extend the moratorium at least through July to give Congress a chance to offer it direction on the issue.

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Black-clad protesters will march against Wal-Mart

By Carmela Fragomeni
The Hamilton Spectator
Jan 22, 2007                                        [back to top]

News that a Wal-Mart store has been approved in an area close to Burlington's downtown continues to resonate badly with residents. They plan two protests today.

The Rambo Creek Ratepayers' Association expects a large crowd to fill City Hall council chambers this morning at 10 a.m. when it presents a traffic study showing Fairview Street is the wrong location.

It argues traffic will spill over into residential streets as drivers try to avoid the congestion.

And a citizens' group is inviting residents to join it tonight on a march to City Hall.

The protesters will dress in black, carry signs denouncing the Wal-Mart and march into a city council meeting to "mourn" the loss of community they fear the Wal-Mart will cause.

The ratepayers' association engaged the Student Math Action Research Team, part of the Ontario Public Interest Research Group at McMaster University, to conduct the detailed traffic study it's presenting to the Ontario Municipal Board this morning.

The presentation is going ahead despite Burlington council pulling out of its OMB battle with the world's largest retailer last week.

The Ontario Municipal Board resolves disagreements relating to community planning by hearing and ruling on appeals.

The withdrawal effectively ended the OMB hearing, but the board and city agreed to hear details of the residents' traffic research today.

Study author Bob Hicks said plans to put traffic lights just north of the Brant Street and Fairview signal intersection will create more congestion and safety concerns.

The protest march tonight is organized by a grassroots group called Sustainable Burlington, which has nothing to do with the city's sustainable development advisory committee.

"We'll have signs for the lamentation of the decision because it left a lot of citizens sad and sorrowful," said group member Tracey Tingle.

The group, which was formed in September, is trying to create local sustainability, "because we see a crisis coming with dwindling energy resources and increasing climate change," said Tingle.

She said Wal-Mart epitomizes the opposite of sustainable living because of its use of big box stores and the energy resources involved in transporting its products from overseas.

She said the demonstration will be peaceful.

"We just want to make our sorrow at this decision known."

The group is meeting at the Upper Canada cinemas on Brant Street for a free viewing of a 20-minute film on Wal-Mart at 6:30 p.m.

It will then march to City Hall in time for council's 7 p.m. community development committee meeting.

The film, Wal-Mart: The High Cost of Low Prices, is a short version of the original which looks at the impact of the retail chain on local communities.

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Supermarkets Revamping Strategy to Compete With
Wal-Mart, Target

FoxNews
Sunday , January 21, 2007                         [back to top]

JACKSONVILLE, Fla. — Long gone are the days when shoppers auto-piloted to the nearest grocery store to purchase food.

Last year, research conducted by retail consulting firm Retail Forward found that 46 percent of shoppers prefer to shop for food where they can also purchase items like clothing, home accessories and CDs (think Wal-Mart and Target stores).

Nowadays, as more shoppers eschew their local grocery store for the price-slashing power of a Wal-Mart Supercenter, analysts say grocery stores are retooling their strategies to halt shoppers from shifting their allegiance to one-stop "big box" retailers. Meanwhile, some shoppers are altering their shopping patterns altogether to chase the best customer service or unique, specialized products.

The shake-up means traditional grocery stores are reinventing product mixes and creating niches to maintain market share and sustain sales growth, all while capturing the attention of an increasingly disloyal army of shoppers. Retail analysts say the key to luring customers back to grocery stores is to offer them something unique: Top-notch customer care, eclectic and exclusive products or an innovative store floor plan were examples given.

"At this point, supermarkets have either caved in to the pressure (of Wal-Mart and others) or they've figured out how to compete," said Mark Hamstra, the retail and financial editor of Supermarket News.

But that strategy shift is a bumpy road for grocery retailers.

"I think generally that traditional supermarkets are being phased out," said David Livingston, a supermarket analyst and founder of DJL Research. "Look at how much business Wal-Mart is getting. It's all about price - convenience is secondary."

In Jacksonville, Wal-Mart's aggressive expansion has disrupted the market shares of the other grocery chains, according to the December issue of the Shelby Report, a grocery industry publication that tracks supermarkets' market share.

While Publix still reigns as the top grocery store in the area with 42 stores and 33.17 percent market share last quarter, its market share dropped 1.19 percent points when compared to the same time period in 2005.

In second place is Wal-Mart, which brought its Supercenters to the Jacksonville market in 2003, with 12 locations and 26.68 percent of the area's market share, 8.48 percent points up from the same time period in 2005.

Winn-Dixie, which has only recently emerged from bankruptcy, was first knocked out of its No. 2 position by Wal-Mart in September 2006. In the Shelby Report's December issue, Winn-Dixie's 45 locations captured 22.83 percent of the market share, down 2.89 percent from 2005.

Supercenters are applying a lot of pressure to traditional grocers, said Sandra Skrovan, vice president of Retail Forward, during an Internet seminar last month.

In addition to the onward march of Supercenters, more people spend money eating out at restaurants, which is also pinching grocery store sales, Skrovan said.

According to Retail Forward, 10 years ago, supermarkets accounted for 44 percent of food and drug retail sales. Nowadays, Skrovan says, it's down to 28 percent. Skrovan said Retail Forward found only a third of shoppers polled in the company's Shopper Scan survey still made a weekly trek to the supermarket.

Plenty of factors are chipping away at grocery sales. "Supercenters are a big change driver," Skrovan said during the Web seminar, noting that Wal-Mart's food business was estimated to total $120 billion in domestic 2005 sales. Meanwhile, Target stores (as well as smaller retailers, like dollar stores) are devoting more shelf space to food.

The key: Be different

In order to better compete with the price-slashing capabilities of giants like Wal-Mart and Target, today's grocery stores must re-invent their core selection and focus on a new mix of categories, ranging from ethnic to gourmet to organic foods, said Dan Stanek, executive vice president of Retail Forward, during the Web seminar.

Lakeland-based Publix, he noted, was experimenting with this concept by testing a "store within a store" hawking health-focused, natural and organic products under Publix's Greenwise banner. Locally, a new Mandarin Publix location on San Jose Boulevard has devoted several aisles to its Greenwise store, which has seen success, according to Dwaine Stevens, a Publix spokesman.

"I'll put it this way: (Greenwise) has been largely accepted by our customers," Stevens said, noting that Publix executives are pleased with its performance. "I think with this particular market, customers are looking for something unique: customer service and a huge offering of products."

That's a sentiment echoed by Retail Forward's Stanek. "Retailers are trying to differentiate from one another," he said during the Web seminar.

Hamstra says that's an opportunity for supermarkets to wow customers by emphasizing in-store butchers or an extensive produce selection - things the local Wal-Mart might not have. Meanwhile, grocery stories are becoming more deft at retooling their strategies by cutting operational costs so they can slash prices, and by developing exclusive "private brand" products customers can't find elsewhere.

Winn-Dixie has made a point of improving store appearance and customer service, and new stores are expected to open next fiscal year. Executives have stated goals of revamping dozens of stores with new colors and signage, along with a floor plan emphasizing fresh produce.

"You can't beat Wal-Mart when it comes to price, so grocery stores must make themselves a niche," said analyst Livingston. "Publix stands apart with customer service. Whole Foods does it with the organic market."

That said, Wal-Mart has made a push into the organic market as well, announcing last year that it planned to double its organic offerings. But analysts say traditional supermarkets might still have the edge.

"People go to a chain like Wal-Mart for dry goods and the basics, like a bulk pack of detergent or Gatorade," Hamstra said. "Most analysts are looking at Wal-Mart's addition of organic offerings as a non-event. Wal-Mart is responding to customer demands, but they haven't really gone into it in a big enough way that it's going have a meaningful impact."

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Columbus New Wal-Mart Store Prepares to Open

by Roszell Gadson
wxtx.com                                      [back to top]

There will soon be one more reason to shop in north Columbus. On Monday Wal-Mart opens its first Columbus supercenter.

It will be the second major store opening in one week. The Wal-Mart Supercenter rolls back its doors Monday morning. Manager Bill Abercrombie says there are a few differences from the Phenix City store. "The layout and the look. You'll see a little difference in the colors...color scheme of the store. Those would be the big difference we carry the same merchandise," he says.

The neighboring Sams store opened its doors Thursday, and Wal-Mart will bring even more traffic to Whittlesey Blvd. This has some customers wondering if north Columbus is getting too crowded. "I actually use to live over in Spring Lake and we had to move from here because it was getting too congested already," says shopper Amy Watson.

Abercrombie says there are several entrances to the store. He says this should help make traffic flow smoother. "We will have eventually 3 of them that you can either enter or leave through," he says.

The new Wal-Mart opens to customers at 8 am Monday. The old Wal-Mart on Airport Thruway will close on Sunday. Another supercenter will be built on that site.

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US farming watchdog accuses Wal-Mart of mis-selling

By Stephen Foley 
21 January 2007                           [back to top]

Wal-Mart, the controversial retailing giant, is under investigation in the US over allegations it is trying to pass off non-organic foods as organic.

It has been accused of using misleading labelling that is "tantamount to consumer fraud" by an organic farming watchdog, the Cornucopia Institute. The body has handed its complaints to the US Department of Agriculture (Usda).

The Wisconsin Department of Agriculture, Trade and Consumer Protection is also conducting an investigation into whether Wal-Mart is placing "natural" produce on shelf space labelled as containing organic items.

The Cornucopia Institute claimed to have found dozens of examples of Wal-Mart's mislabelling products - from "all- natural yogurt" to soya milk "made from organic soybeans".

Usda is examining the watchdog's claims, while the Wisconsin authorities are examining Wal-Mart's practices and those of other supermarkets within the state.

Wal-Mart said it had written to store managers to ask them to be careful, but added that consumers could tell whether a product was organic by looking for the Usda label.

The Cornucopia Institute first raised the issue with Wal-Mart last autumn, but found fresh examples of mislabelling on return visits to stores this month.

"The vast majority of organic farmers and food marketers operate with a high degree of organic integrity," said Tom Willey of T&D Willey Farms of California, an organic producer of fresh market vegetables. "These abuses endanger the credibility of the organic label for all of us."

Wal-Mart, which owns Asda in the UK, is trying to build a green reputation and attract more affluent consumers.

A year ago the retailer announced that it would stock new ranges of organic food.

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New Wal-Mart Supercentre opening Wednesday

NewPeel.com
01/21/07                                      [back to top]

Bramptonians are invited to attend the grand opening of a brand new Wal-Mart "Supercentre" slated for Wednesday, Jan. 24, at 8 a.m. Supercentres are roughly one-third larger than a typical Wal-Mart.

They carry fresh produce, meat and baked goods in addition to electronics, household furnishings and clothing.

The new Wal-Mart supercentre is located at 30 Coventry Road, near the intersection of Airport Road and Queen Street.

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Wal-Mart Work Policies Spark Debate

By Anita French,
The Morning News 
January 20th, 2007                             [back to top]   

Vanessa Walker doesn't think Wal-Mart's new work schedule policy is bad for employees, and she works for the company.

"I think it's great because we actually have the associates here when the customers are here. We don't have lines," Walker said.

Ditto, said LaToya Machado, a cashier at the Wal-Mart store in Grapevine, Texas. She said the new scheduling system is much fairer than what the company had previously.

"I like it. It works for my personal life as well as bringing money home for the kids. I know my schedule two weeks ahead, and it will stay that way unless I change it. Basically, you manage your own schedule, so if you didn't get what you wanted you didn't do the schedule right," Machado said.

Walker is a customer service manager at a Wal-Mart store in North Richland, Texas and has worked for the retailer five years. She and Machado are employees at two of the pilot stores where Wal-Mart initiated its controversial new policy of scheduling employees to come in during times of high customer traffic.

Walker said the new system changed her hours, but it has worked out fine.

"I have children to pick up, so I love (the schedule). And it seems like the cashiers are happier," Walker said.

Machado has been with Wal-Mart almost two years. As for her fellow employees, she hadn't heard any complaints about the scheduling system, Machado said.

BAD MOVE

Judging by the reaction of critics, however, Wal-Mart's new policy is the proverbial last straw.

Online financial newsletter The Motley Fool.com called it "Orwellian." Wal-Mart Watch, the Washington-based and union-backed group that has an ongoing campaign against Wal-Mart Stores Inc. over its wages and benefits, said the new policy was an attempt by the company to force out full-time employees -- a charge repeated by some who identified themselves as employees and posted comments at The Morning News Web site.

Wal-Mart Watch spokeswoman Laura Jack said "it interferes with the ability of workers to live their own lives."

"It transforms them into a commodity that can be shifted around. We're not saying a company shouldn't dictate when employees should go to work, but by putting them on a schedule policy that essentially allows them to shift at will, it really disrupts the lives of workers."

Jack said she couldn't provide the names of any Wal-Mart employees who related their unhappiness to Wal-Mart Watch over the scheduling.

But Chris Kofinis of Wake-Up Wal-Mart, also a Washington-based and union-backed group, was able to provide the names of two Wal-Mart employees who oppose the new scheduling system.

One of them is Cynthia Murray, a fitting room employee at a store in Laurel, Md., who has worked for Wal-Mart seven years. She said the new scheduling is soon to be implemented at her store.

"It's not a very good policy. You're taking a person from 40 hours to 20 hours a week. How are people supposed to pay their bills? (Wal-Mart) has said they are going to work you any day or any time they want. It's not customer friendly. They can say what they want about the schedule, it's not going to work for a majority of the associates. All it's going to benefit is Wal-Mart," Murray said.

The Morning News was unable to reach the other employee, Delora Lewis of Ponca City, Okla., whose name was provided by Wake-Up Wal-Mart.

'JUMPED THE SHARK'

Even Ron Galloway, producer of a pro-Wal-Mart documentary, said the company has "jumped the shark."

"I just wish they would put as much effort in increasing sales ... as they are in monkeying with employees. Just leave the employees alone for awhile," Galloway said.

Wal-Mart spokesman John Simley said the new scheduling system won't have any effect on increasing part-time workers versus full-time, and that a lot of the negative comments are based on rumors.

"Our experience with the pilot (tests) we have done in 39 stores is that (the new schedule policy) has created more predictability in schedules for associates," he said. "The tests we have run show that the system does two things very well: it improves the shopping experience because there is always the right number of people in the store, and it improves the work environment. There is a predictability that never existed before."

Wal-Mart is using "state of the art" computer software to match customer traffic with staffing, Simley said. Employees are asked what their preference is in working hours, and the store does not schedule them "outside their availability," he said.

"They don't have to be on call. Employees will know what they will be working three weeks ahead," Simley said.

He also said those employees with seniority are shown preference when it comes to scheduling.

WORKER SUPPORT

Both Walker and Machado said they didn't have to be on call. Their names were provided to The Morning News by Wal-Mart spokeswoman Sarah Clark, and Machado also has been interviewed by another newspaper, the Sun Journal in Maine, about the new scheduling.

Jim Howell of Tifton, Ga., contacted The Morning News about the issue. He said he is a nine-year Wal-Mart employee and, in previous e-mails to the newspaper, said he was disturbed over the company's leadership and treatment of employees.

But Howell said he supports Wal-Mart's new scheduling policy.

"They don't have enough help in the store, especially on the weekends. There needs to be some changes. Previously, when you went to Wal-Mart, you filled out an availability sheet. Now they set the schedules when you apply for a job and that's what got so many employees upset," Howell said.

He has worked a 2 to 11 p.m. shift for years, he said, before Wal-Mart reorganized his department. Howell said he got first choice in schedules because he was second in seniority.

"I don't particularly like the hours, but I've adjusted to it," he said.

Wal-Mart is not the first retailer to use a scheduling system based on customer traffic. Simley said Lowe's uses something similar as does Target Corp. Payless ShoeSource Inc. and RadioShack Corp. are also using advanced scheduling systems, according to The Wall Street Journal.

Wal-Mart hopes to have its system in place at all of its 3,000-plus domestic stores before the end of the year, Simley said.

Retail analyst Patricia Edwards of Wentworth, Hauser and Violich in Seattle said such scheduling systems are a trend, and that retailers require flexibility of their employees.

"One of the things you have to recognize as an employer is that people have lives outside of work. Any good employer who wants to keep a happy work force recognizes that, and I can't imagine Wal-Mart wouldn't. If (the new scheduling) was absolutely horrendous, people wouldn't work for them. Every employee has a right to vote with their feet," she said.

BAD TIMING?

Wal-Mart said it would be testing the new scheduling policy last year. It stirred controversy partly because the announcement came around the same time Wal-Mart also put in wage caps for some employees and started a stricter absentee policy.

And all of the above came on top of the leaked 2005 Wal-Mart internal memo that offered what some critics felt were Draconian measures on how to reduce health-care costs among employees.

Howell, who said he considers himself a loyal employee, admitted he is concerned about some recent actions by Wal-Mart.

"It seems the atmosphere has changed so much," he said. "Instead of looking at the employees as assets, they're looking at them as how much they're costing in benefits."

In a recent Fortune article on Wal-Mart's financial and public relations woes, HSBC retail analyst Mark Husson made a startling suggestion. He said Wal-Mart should take a one-year "holiday" from earnings growth to increase pay and benefits for employees. Husson called it a "splashy act of goodwill."

"I could write the press release right now: 'Having done the right thing by consumers for so many years, it's now time to do right by our employees. It will be good for America and good for our employee turnover as well,' " he told Fortune.

Husson said high turnover at Wal-Mart is hurting sales, especially of upscale items.

Wal-Mart no longer discloses its turnover rate, but spokeswoman Sarah Clark told The Morning News several years ago that it hovered between 40 percent and 45 percent, although some outside estimates have placed Wal-Mart's turnover rate closer to 50 percent or higher.

Galloway said Wal-Mart's new scheduling policy was bad timing on the company's part, especially after it implemented the wage caps and the new absentee policy. He called it a "ham-fisted" public relations move.

"For someone making $9 an hour, with a kid, it seems to me you can't plan your life. And the publicity from this -- coming the day before the new Congress took hold - is just mind-blowing," Galloway said.

Galloway, who is based in Atlanta, produced the 2005 documentary "Why Wal-Mart Works and Why That Drives Some People Crazy," in which he interviewed several employees who praised the company. Galloway later resigned from Working Families for Wal-Mart, which is funded by the company, after Wal-Mart put in wage caps. He has since criticized the company in articles posted at The Huffington Post.

Workforce Policies Enacted By Wal-Mart In 2006:

Wal-Mart starts a new attendance policy that penalizes workers for multiple unexcused absences and requires them to call an 800 number whenever they get sick.

Wal-Mart enacts wages caps, which means employees will not receive annual raises if their pay is at or above the cap unless they move to a higher-paying job category.

Wal-Mart says it will start a new computerized scheduling system that will start moving many of its 1.3 million workers from predictable shifts to a system based on the number of customers in stores at any given time.

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Wal-Mart's Bank Push Draws Growing Opposition

Wall Street Journal
January 19, 2007                              [back to top]   

Even as federal regulators weigh Wal-Mart Stores Inc.'s bid for a banking license, several more states are considering legislation that would bar the retail giant from opening company-owned bank branches within their borders...

This month, bills that would exclude Wal-Mart and other ILC-chartered banks from establishing branches in stores have been filed in Colorado, Kansas, Maine, Nebraska and Texas. Last year, similar legislation passed in five states...

Sponsors said the impending decisions by Utah and the FDIC lend immediacy to their bills. "The fact it's Wal-Mart that could be doing this under the application that's pending lends incredible urgency. Their scale is beyond that of any other entity," said Maine Rep. Sean Faircloth, who has filed a bill pending in the Maine House.

Bob Hallstrom, general counsel of the Nebraska Bankers Association, which helped prepare a bill sponsored by the chairman of the state's banking, commerce and insurance committee, said supporters want to have legislation ready to thwart any move by the FDIC that would allow Wal-Mart to operate its own bank.

"We are moving forward to have something in place" in the event the FDIC lifts the moratorium on applications this month, Mr. Hallstrom said. The FDIC's actions in the next few weeks "will have an impact on the timing of what goes forward in Nebraska," he said.

In Colorado, a Senate bill would go further than barring in-store bank branches. It would bar a financial institution from operating within a mile-and-a-half of a facility owned, leased or controlled by a non-bank affiliate.

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Wal-Mart Cancels Meeting On Kathleen Road Store

The Ledger
Friday, January 19, 2007                          [back to top]   

Representatives from Wal-Mart Stores Inc. canceled at the last minute a meeting with Lakeland city planning officials to review its proposed 207,205-square-foot supercenter on Kathleen Road at the Interstate 4. The meeting was scheduled for 11 a.m. Thursday, but a city official said a company representative e-mailed that morning to cancel. Michelle Azel, a Wal-Mart spokeswoman, said the company had not scheduled the meeting and had no information regarding why it was canceled. Scott Gentry, the engineer who submitted the site plan to the city, could not be reached to comment. The city has not rescheduled the meeting. Earlier, city officials told The Ledger the property was not zoned for a supercenter and that they had concern about whether the roads could handle the increased traffic.

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Are Wal-Mart's "Organics" Organic?

Wisconsin officials have launched an investigation into the giant retailer's practices after complaints that it may be misleading consumers

by Pallavi Gogoi
BusinessWeek.com.
January 18, 2007                         [back to top]   

A year after Wal-Mart (WMT) laid out ambitious plans to become a much bigger player in the organic foods business, the giant retailer is running into trouble over its organic effort with consumer activists and government regulators.

It was March of 2006, at an analysts' conference, when Wal-Mart's vice-president of marketing, Stephen Quinn, said that the company would double its offerings of organic products within weeks. The company promised to make organics affordable to more consumers by offering what executives called "the Wal-Mart price." In July, the Bentonville (Ark.) retailer even launched an ad campaign on The Food Network, HGTV, and parenting and women's magazines, with tag lines like: "Know what goes well with organic milk? Organic cereal and knock-knock jokes" (see BusinessWeek.com, 3/29/06, "Wal-Mart's Organic Offensive").

"An Isolated Incident" Now there are questions about whether "the Wal-Mart price" might come at a cost to organic foods. State officials in Wisconsin have launched an investigation into the retailer's practices after complaints that Wal-Mart may be misleading consumers. A central question is whether signs on store shelves and banners above the shelves describe foods as "organic," while the foods nearby do not qualify for the label, under federal guidelines. "We are beginning an investigation that will look into signage and whether it can be considered misleading," says Jim Rabbitt, director of the Bureau of Consumer Protection at the Wisconsin Department of Agriculture, Trade & Consumer Protection in Madison. The bureau plans to examine the practices of Wal-Mart and other retailers for 30 to 60 days to determine how big an issue this is.

The U.S. Agriculture Dept. is reviewing a complaint about Wal-Mart's practices from the same watchdog group that notified Wisconsin officials. The USDA has not decided whether to pursue its own investigation. "We are seeking more information to determine what action should be taken," says Joan Schaffer, spokeswoman for the national organic program at the USDA.

Wal-Mart officials say that the company has done nothing wrong. A spokeswoman points out that the company has more than 2,000 locations that offer up to 200 organic selections, in addition to thousands of nonorganic offerings. Karen Burk, company spokeswoman, wrote in an e-mail that if there were any inaccurate signs or banners around organic foods "we believe it to be an isolated incident." She added that, "The USDA certification label is featured on the packaging of the organic selections we offer for further customer information and verification. We have sent procedural guidelines to our stores for proper management of these identification tags."

Strict Requirements Retailers and farmers involved in organic foods worry that giants like Wal-Mart may muddy the waters about what is and is not organic. Some are upset over the allegations and wonder whether other supermarkets will take steps similar to those alleged. "A huge amount of work went into coming up with a standard of quality in the organic industry," says Randy Lee, CFO at PCC Natural Markets, the largest co-op operating in the U.S., which runs eight stores in the Seattle area. "If these allegations are true, then it very easily erodes those standards and comes with a significant business impact on other retailers that have higher standards."

The watchdog group that prompted the Wisconsin investigation is called The Cornucopia Institute and has been active in what it calls "family-scale" farming. It has produced photographs of items that are not certified organic or are only partially organic that appear on shelves at Wal-Mart with banners or signs that say "Wal-Mart Organics." The photos from Cornucopia show items that could be easily mistaken for organic. Many have descriptions such as "all natural" or "natural," including Stonyfield Farms All Natural Yogurt and Florida Crystals natural sugar.

Organics have been a booming business for food manufacturers and for retailers, growing 15% annually for the last five years. It's extremely lucrative: Supermarkets typically charge a 30% to 40% premium in price for organic food, compared with conventionally grown food (see BusinessWeek.com, 5/25/06, "Going Organic: The Profits and Pitfalls").

Diluting the Movement? Retailers and farmers are anxious to protect this growing business. Lee, of PCC Natural Markets, says that if Wal-Mart is placing nonorganic items under its organic banner, then it will have a ripple effect on other national grocery chains. PCC and other organic retailers say that they train their employees and store managers rigorously to ensure high organic standards. They wonder how strong Wal-Mart's commitment to organics is. "Where is the USDA in all this?" asks Lee.

The USDA has come under fire in the past for not taking action on similar complaints. Two audits of its organic program, performed by the American National Standards Institute in 2004 and by the USDA's Office of Inspector General in 2005, were highly critical of how the USDA has handled complaints of potential violations of organic standards. The 2005 report states that "in fiscal year 2003, the eight complaints referred to the national organic program for a decision have not been resolved, one of which involved a possible prohibited substance being added to an organic product." The USDA counters by saying that complaints about organic food aren't treated like an emergency. "It's not like this is a food safety issue," says spokeswoman Schaffer.

Mark Kastel, co-director of The Cornucopia Institute, says that it launched its inquiry after a visit in September to Wal-Mart's prototype store in Plano, Tex. After noticing labeling problems in its organic offering, it sent off a letter to Wal-Mart's CEO Lee Scott suggesting that the company correct the problem. Kastel says that consecutive visits to Wal-Mart showed that the company hadn't heeded its advice, so Cornucopia filed a legal complaint with the U.S. Agriculture Dept. in November and followed up with a complaint with the Wisconsin Agriculture Dept. on Jan. 13. The latest assessment came after visiting stores and finding alleged violations in at least four states—Wisconsin, Illinois, Iowa, and Minnesota. "Wal-Mart is coming up with a different kind of organic for its consumers," says Kastel.

Gogoi is a contributing writer for BusinessWeek.com.

Copyright 2000-2007 by The McGraw-Hill Companies Inc. All rights reserved.

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Md. Wal-Mart law dealt second defeat U.S. appeals court upholds earlier ruling

Assembly seeks new health care solutions

By Matthew Dolan, Melissa Harris
and Laura Smitherman
Baltimore Sun
January 18, 2007                                                           [back to top]   

Maryland's first-in-the-nation law to compel Wal-Mart to spend more on employee health care suffered another setback yesterday, providing fresh incentive for legislative leaders in Annapolis to explore ways to boost insurance coverage that do not involve the retailing giant.

The U.S. Court of Appeals for the 4th Circuit upheld a lower court finding that struck down Maryland's legislation. A divided three-judge panel ruled that the state's Fair Share Health Care Act was incompatible with federal rules that promote uniform treatment of employees.

"In short, the Fair Share Act leaves employers no reasonable choices except to change how they structure their employee benefit plans," Judge Paul V. Niemeyer wrote for the majority, adding that such a constricted choice also violates the federal Employee Retirement Income Security Act, or ERISA.

With the future of the so-called Wal-Mart law in doubt, state legislators are planning to resurrect a host of other possible health care solutions during the 90-day legislative session that began last week, including an expansion of the Medicaid program to low-income adults, a reduction in insurance premiums for small businesses and a requirement that the state's highest paid workers buy insurance coverage.

Some leading supporters said the 2005 bill prompted the nation's largest retailer to improve its employee benefits even though the law never took effect.

"I do think Wal-Mart has changed its behavior since all of this has taken place," state House of Delegates Speaker Michael E. Busch said, adding that he was not surprised by the ruling and didn't know how the chamber would proceed.

"Part of this was just wanting Wal-Mart to be a good corporate citizen and provide the same health care benefits that all of the other big corporations do," Busch said.

State Attorney General Douglas F. Gansler now has 14 days to decide whether to ask the entire 4th Circuit court to review the decision.

"At this point, the office has just received the opinion and we are currently reviewing and evaluating what it says," Christine N. Hansen, a spokeswoman for Gansler, said in an e-mail yesterday. "Since we just received the opinion, I can't comment until we have fully reviewed it."

Steve Kearney, a spokesman for Gov. Martin O'Malley, said that a decision on whether to support an appeal of the ruling had not been made. "We continue to believe that fairness is critical to making health care more affordable," Kearney said.

During the campaign, O'Malley, a Baltimore Democrat, expressed support for shifting more of the burden for health care costs to the state's largest employers. O'Malley also advanced the idea of improving health care coverage by expanding the buying pool for small employers and creating a state fund to pay for expensive cases - which could reduce premiums.

Leaders in the Senate and House said yesterday that there was little appetite for continuing to battle over employer mandates similar to the one in the Wal-Mart law.

"If the attorney general's office calls me for advice, I would tell them not to appeal," said Sen. Thomas M. Middleton, a Charles County Democrat and chairman of the Senate Finance Committee. "First of all, Congress needs to loosen up the ERISA laws."

Senate President Thomas V. Mike Miller refused to abandon hope, however.

"We're going to try to work around what the [court's] majority said and comply with the law," Miller said. "But at the same time, we can't allow 60 percent of Wal-Mart employees' kids to go without health insurance and use the emergency rooms for care. There has got to be some relief for Maryland and the other states."

Middleton, whose committee handles health care legislation, said that the state Senate is looking at a more comprehensive approach to health care "accessibility and affordability" this year, but that a plan has not been devised.

"We've got to decide what the package is going to be, how much it's going to cost and how to get to it," he said. "I wouldn't say that we've ruled out employer mandates. Some states have it as part of their comprehensive plans. So we're going to be looking at what Massachusetts has done, the California plan, the New York plan and the New Jersey plan."

Del. Peter A. Hammen, who is crafting a bill to expand health care coverage in the state, said he would not include an employer mandate but would monitor legal challenges to legislation in Massachusetts that requires employers to provide coverage.

Employer groups praised yesterday's court decision and pledged to support other ways to provide health care coverage to more Marylanders. But those representing small business added that there are limits.

"Our members tell us they would like to provide insurance, but they can't afford it," Ellen Valentino, Maryland state director of the National Federation of Independent Business, said in a statement.

Ronald W. Wineholt, vice president for government affairs for the Maryland Chamber of Commerce, said in an interview that some elements of the Massachusetts law deserved to be replicated in Maryland.

"Each of us have a role to play in expanding health care," Wineholt said. "We need individuals who can afford to buy health insurance to buy it and we need to use incentives for other businesses to provide health insurance. The answer is not spending more, but spending more wisely."

Passed over the veto of former Gov. Robert L. Ehrlich Jr., the Maryland Fair Share Health Care Fund Act required that companies with more than 10,000 workers spend at least 8 percent of their payroll for employee health care or make up the difference in an equivalent payment to the state.

Of the four companies that size operating in the state, only Wal-Mart did not meet the spending threshold, leading the company to charge that it had been singled out unfairly. The law was due to take effect this month.

"Not only was this legislation widely viewed as bad public policy, the courts have confirmed that it violates the law," Wal-Mart spokesman Nate Hurst said in an e-mail yesterday. "This politically-motivated legislation did nothing to control the cost of health care or improve access to health care, so it's no wonder that legislators across the country have rejected this as bad public policy."

The law was rejected by U.S. District Judge J. Frederick Motz in Baltimore last summer. His opinion was broadened in yesterday's ruling, according to legal experts.

"If you take their interpretation, there is very little states can do," said Professor David Super of the University of Maryland School of Law.

But in a dissent, 4th Circuit Judge M. Blane Michael wrote that the fair share act "is a permissible response to the problem" of escalating Medicaid costs.

Vincent DeMarco, president of the Maryland Citizens Health Initiative, which backed the Wal-Mart law, said comprehensive legislation in Maryland is needed this year. His group is pushing a $1-a-pack cigarette tax increase to help pay for rising Medicaid costs.

"Exactly how it's going to be done, we haven't figured out," DeMarco said.

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Wal-Mart Unveils New Neighborhood Market Decor

Progressive Grocer
January 18, 2007                                     [back to top]   

BENTONVILLE, Ark. -- The latest supermarket from Wal-Mart has a new look and feel, new track lighting, a makeover in health & beauty, and abundance of freshly baked breads and fresh produce. Yesterday, Wal-Mart opened the newly designed Neighborhood Market in Tulsa, Okla., unveiling the fruit of its labors from several months of customer research and the prototype going forward for the 15 to 20 additional Neighborhood Markets it plans to open this year.

The 39,000-square-foot store is the first to open in the U.S. that will share a new design based on the customer research on Wal-Mart's Neighborhood Market concept. The company said it will be testing customer reaction and success of its new design, starting in Tulsa, as it focuses the brand for continued growth in the U.S.

With 112 stores already operating across the U.S., the Wal-Mart Neighborhood Market is the company's youngest store concept (introduced less than 10 years ago). While Wal-Mart's stated goal for the concept is to provide consumers "the Wal-Mart value in a smaller, convenient 'neighborhood' store format, many industry watchers see it as a supermarket-comparable format, as it combines grocery, pharmacy, and health and beauty.

"Over the last several months we have studied our customers, seeking to understand their preferences about our store's convenience and products," said Pam Kohn, s.v.p. of the Wal-Mart Stores Southeast Division, and leader of Neighborhood Markets, in a statement. "The new design package is a great example of what we now know customers are seeking in this type of store."

The most dramatically noticeable changes, according to Wal-Mart, are within the new grocery and health and beauty areas. The product selection includes increased selections in organics and produce, while the grocery area features a new layout that highlights these changes. The bakery has a "warm" feel next to the new streamlined deli area, and fresh produce is placed along vertical fruit baskets. The redesigned deli offers rotisserie chicken and a variety of freshly prepared foods including sandwiches, salads, desserts, bottled drinks, milk, juices, waters, and energy drinks. There are also more freezer doors that hold additional frozen food items than any other Neighborhood Market store today.

Throughout the store, architects and designers added earth-toned colors with natural woods that define each store department that creates a "store within a store" feel, Wal-Mart said. Along with wood trim, photography highlights selections and departments in the store.

"Our health and beauty department has probably undergone the most dramatic change within the store," said Kohn. "We want our female customers to feel this is a place in their store created especially for them."

With concave (curved) fixtures, wider aisles, and new "towers" that can display the latest trends in health and beauty, the re-design is meant to create a more personal experience for the shopper, who may need time to study new products and consider their purchase. Signage and product placement work together to help customers better identify selections. The location has changed to be closer to the pharmacy and stationery departments.

The store also features 30-minute photo lab and a drive-through pharmacy with two drive-up lanes. It will be open to customers 24 hours a day, seven days a week and will include six full-service and four self check-out lanes.

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Federal Court: Md Health-Care Law Targeting Wal-Mart Is Invalid

CNNMoney
January 17, 2007                                [back to top]   

BALTIMORE (AP)--A U.S. federal appeals court upheld a ruling invalidating a Maryland law that would have forced Wal-Mart to spend more on employee health care, agreeing Wednesday that the state law interferes improperly with federal law.

The state law would have required non-governmental employers with 10,000 or more workers to spend at least 8% of payroll on health care or pay the difference in taxes. A lower court ruled that the state law was pre-empted by the 1974 Employee Retirement Income Security Act, or Erisa.

The measure was aimed at Bentonville, Ark.-based Wal-Mart Stores inc. (WMT), which has been under attack by critics who say that its inadequate health care benefits is forcing some employees to use state-funded plans.

"Were we to approve Maryland's enactment solely for its noble purpose, we would be leading a charge against the foundational policy of Erisa, and surely other states and local governments would follow," the ruling said. "As sensitive as we are to the right of Maryland and other states to enact laws of their own choosing, we are also bound to enforce Erisa as the 'supreme law of the land."'

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Dismissal upheld of Md. Wal-Mart law

By ALEX DOMINGUEZ
The Associated Press
January 17, 2007                                       [back to top]   

A federal appeals court upheld a ruling invalidating a Maryland law that would have forced Wal-Mart to spend more on employee health care, agreeing Wednesday that the state law interferes with federal law.

Maryland's law would have required non-governmental employers with 10,000 or more workers to spend at least 8 percent of payroll on health care or pay the difference in taxes. The lower court ruled that the state law was pre-empted by the 1974 Employee Retirement Income Security Act, or ERISA.

The measure was aimed at Bentonville, Ark.-based Wal-Mart Stores Inc., which has been under attack by critics who say that its inadequate health care benefits is forcing some employees to use state-funded plans.

"Were we to approve Maryland's enactment solely for its noble purpose, we would be leading a charge against the foundational policy of ERISA, and surely other states and local governments would follow," the ruling by the Fourth Circuit Court of Appeals reads. "As sensitive as we are to the right of Maryland and other states to enact laws of their own choosing, we are also bound to enforce ERISA as the 'supreme law of the land.'"

Judge M. Blane Michael said in his dissenting opinion that Maryland, along with many other states, is dealing with explosive growth in Medicaid spending and the federal government has "consistently called upon the states to function as laboratories for developing workable solutions."

The Maryland law offers employers the option to pay into a fund that will support the state's Medicaid program and does not impact ERISA plans, Michael wrote.

U.S. District Judge J. Frederick Motz had ruled in July that ERISA pre-empts "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan."

Wal-Mart Chief Executive Lee Scott said following the July ruling that overturning Maryland's law meant businesses would not have to contend with different health-coverage standards in different states.

The Maryland law came amid efforts by legislative leaders to cut the state's $4.6 billion annual Medicaid tab and was seen as a means to encourage employers to keep their employees off public health care rolls. The state's Democratic legislature overrode a veto by Republican Gov. Robert Ehrlich to pass the law, which would have taken effect this month.

Wal-Mart has 53 stores and two distribution centers in Maryland and employs nearly 16,000 people in the state.

Michael noted in his dissent that the increase in Medicaid spending is caused in part by the decline in employer sponsored health insurance.

"In Maryland's words, Medicaid 'has been transformed into a corporate subsidy,'" Michael said, noting that a study by one North Carolina hospital found 31 percent of Wal-Mart employees were enrolled in Medicaid and 16 percent were uninsured and a Wal-Mart internal company memo acknowledges that 27 percent of its employees' children are on Medicaid and another 19 percent are uninsured.

"The Act's revenue raising component is directly connected to the regulatory purpose of assessing employers that rely disproportionately on state-subsidized programs to provide health care for their employees," Michael wrote.

The Retail Industry Leaders Association, of which Wal-Mart is a member, filed suit in February against the law, with the Arlington, Va.-based group contending it unfairly targeted the world's largest retailer.

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Wal-Mart accused of 'organic fraud'

Advocacy group claims retailer is misleading its customers by labeling non-organic foods as 'organic.'

By Grace Wong,
CNNMoney.com 
January 17 2007                                 [back to top]  

NEW YORK (CNNMoney.com) -- A policy research group is accusing Wal-Mart of "organic fraud," the latest controversy to arise as the world's largest retailer pushes into the organic food industry.

The Cornucopia Institute, a Wisconsin-based advocacy group which promotes sustainable farming, claims Wal-Mart (Charts) is defrauding its customers by mislabeling non-organic products as organic.

The policy group said it conducted checks of Wal-Mart stores in five states and discovered labeling violations in virtually all of the "dozens of stores" it visited.

Wal-Mart, which uses green signs to identify organic selections at its stores, said any shelf labeling mistakes are isolated events and that it often mixes organic and conventional products on its shelves to make it easer for customers to find organic options.

"Although Wal-Mart has more than 2,000 locations that may offer up to 200 organic selections in addition to thousands of non-organic offerings, we believe it to be an isolated incident should a green organic identifying tag be inadvertently placed by or accidentally shift in front of the wrong item," the company said in an e-mailed statement.

But Cornucopia claims the retail behemoth isn't doing enough to address the problem. The advocacy group said it notified Wal-Mart of the labeling problems in September of last year, but claims that problems continued to exist at the stores when it made checks again early this year.

"It's very disturbing that the company has known about this for months and hasn't done anything about it," Mark Kastel, co-director of Cornucopia, said. "There's no excuse for this."

In addition to notifying Wal-Mart of the problem, Cornucopia filed a complaint in November with the U.S. Department of Agriculture, the federal agency which regulates the marketing of organic foods.

The complaint refers to alleged violations, such as the labeling of all-natural yogurt as organic, on Wal-Mart shelves.

Wal-Mart said its stores are sent guidelines for placing identification tags and that it works with its stores to make sure the tags are accurate. The USDA certification label on the actual packaging of organic items also helps customers verify products as organic, the company said.

Joan Shaffer, a spokeswoman for the USDA, said Cornucopia's complaint has been received and is being reviewed. The agency is seeking more information and will determine whether an investigation is warranted after additional information is received, she said.

USDA regulations on the marketing of organic food are rigorous and carry stiff penalties - each violation of willful organic food misrepresentation can result in fines of up to $10,000.

Organic food regulations can be complex, and ignorance among food managers can result in labeling mistakes, said Samuel Fromartz, author of "Organic, Inc.," a book about the organic food industry.

But it's crucial for new players getting involved in the organic food industry - which is growing by 15 to 20 percent a year - to get the labeling regulations right, he said.

"Consumers are already confused about what organic food is so if they buy a product that they think is organic and it turns out to not be organic - it just adds to their confusion and adds to a sense of mistrust about what they're buying," Fromartz said.

Wal-Mart is the latest retailer to make a push into the approximately $15 billion organic food industry that has boosted the popularity of natural food stores like Whole Foods (Charts).

The company announced last year it would start selling more organic products, raising concerns among some organic farmers that the giant retailer would undercut prices.

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Judge Repeats: Chelan’s Wal-Mart Permit is illegal

Lars Clausen
Defenders of Small Town Chelan                              [back to top]  

Chelan, Washington, January 16, 2007 – Chelan County Superior Court Judge Lesley Allen ruled for the second time against the already-built Chelan Wal-Mart. Judge Allen’s ruling reconfirmed her initial decision: the fill and grade permit and the building permit granted by the City of Chelan, Washington for a Wal-Mart store are invalid. Participants will meet again in court on Thursday, January 18. At that time Judge Allen will approve an order to be given to the City of Chelan.

Despite the rehearing granted to the City of Chelan and Wal-Mart, the court upheld the 50,000 square foot size cap approved for the Apple Blossom Center, a 198-acre planned development on the edge of Chelan. She confirmed that the General Binding Site Plan does not include permission for a 162,000 foot big-box store.

Citizen concerns about the enormous building were registered as far back as March, 2005. Immediately following the initial application for the permit in February 2005, several citizens protested that the proposed Wal-Mart was more than triple the legal allowable size. The zoning requirements for the Apple Blossom Center specifically state, "Buildings will vary in size up to 50,000 square feet." Despite these concerns, building and fill/grade permits were issued for the Wal-Mart building in April and May 2006. Defenders of Small Town Chelan then filed suit against the City of Chelan in May, 2006.

The weeks since Judge Allen’s December 29^th ruling have included strong local conversations about the Chelan Wal-Mart. Defender of Small Town Chelan member Lars Clausen observed, “People had heated opinions. The initial ruling took our community by surprise. Almost everyone assumed that since Wal-Mart had put a $25,000,000 building up on the property and hired 200 employees, ‘they must be legal.’ The initial community response after Judge Allen’s decision was significantly pro Wal-Mart.”

What’s next for the Chelan Wal-Mart? Both the City of Chelan and Wal-Mart are expected to study the decision and evaluate their options. After the second ruling Clausen hopes there will be time now for a serious conversation about the pros and cons of inviting the world’s most powerful corporation in the world to become a neighbor in this rural community of 3600 people.

“Wal-Mart is off to a bad start in our community,” says Defender of Small Town Member Jeff Berman. “They built before confirming their permit was legal. They hurried to hire two hundred people instead of waiting just a few more weeks to hear the court’s ruling. Wal-Mart has put hundreds of people at financial risk. For my money’s worth, the low prices of Wal-Mart carry too high a cost.”

Joss Paddock, another member of the Defenders of Small Town Chelan expressed his hopes “for thoughtful conversation about development in the Chelan area. Our valley has been developing fast during the past years. Everyone talks about it. Because of Judge Allen’s decision we have a little breathing room. We have a chance to stop and really think about what we want our valley to become over the next dozen years.”

For more information and to assist with legal costs: www.dontboxchelan.com

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A Wal-Mart On Every Block?

Tom Van Riper,
01.16.07                                   [back to top]  

The future of Beijing and Shanghai--a Wal-Mart on every block?

Hardly. Big retailers looking to grab their share of the exploding consumer markets of China and India have their work cut out for them, according to experts presenting at the National Retail Federation's Big Show in New York this week.

"Wal-Mart is just slowly settling in, [European stores] Carrefour and Auchan are the leaders," says Matthew Stych, a director at Euromonitor, a market research firm that tracks the industry.

Big hurdles remain for those stores looking to ramp up in the two growing countries. Among them: a wide dichotomy between rich and poor, government regulations that favor domestic business, and still-growing economic infrastructures that make for logistical nightmares.

While there's a noticeable shift in consumer preferences away from daily shopping and toward weekly "destination" shopping locations, fulfilling the desires is easier said than done. Real estate prices in high income urban areas like Shanghai and Beijing have become hugely expensive, while poor rural consumers lack discretionary income, not to mention cars to transport them to stores. Low incomes and poor infrastructures remove incentives for retailers to invest in rural areas, Stych thinks.

The potential remains, of course. Euromonitor projects that China and India will keep pushing forward with their economies, joining Russia in the group of three that will lead the globe in GDP growth by a wide margin over the next six years. Both countries have a demographic edge over their Russian counterparts--younger populations that make them even more appealing to retailers looking for the next consumer wave.

Retail sales in China still make up a very small percentage of the overall economy, compared to typical developed countries. The key to the next growth wave, Stych says, is focusing on the outskirts of the well developed big cities as well as on mid-tier cities, where the needs are still underserved (though he figures there's still room for a company like Apple to set up its stores in the upscale big city niche).

Food and other basic staples figure to be the largest retail segment in China for some time to come. But any designs Wal-Mart and other foreign companies have on that market are hindered by government policies that subsidize local companies and by local laws in many areas that limit the number of shops in a given district.

The result has been a hugely divided marketplace, with China's top 100 retailers accounting for just 10% of overall sales (in the U.S., by contrast, the top five chains account for about 20% of sales). Stych says the best bet for Wal-Mart and other large multinationals is to continue going the partnership route with domestic companies to capture the expected growth in the middle class over the next 15 years.

Additionally, consumer lending, including credit-card usage, is still relatively undeveloped and rarely used.

In India, where GDP grew better than 8% in both 2005 and 2006, an infrastructure that lacks formal supply channels and that's been slow to adopt information technology poses big challenges for large chains looking to move in. Modern retailing--sales at large chain stores that offer "destination" shopping for multiple types of goods--still account for only 4% of the country's $320 billion retail industry, according to the Retailers Association of India. Gibson Vedamani, the Association's CEO, believes some of that could change before long.

"I think in the next couple of years, IT adoption will be pretty fast," he says, potentially opening the door for the likes of Wal-Mart, Costco and other big box outlets to grow in the country.

Still, retailers are having a tough time finding space, Euromonitor reports, given the high density of store outlets per capita. Also, Indian tax laws necessitate keeping multiple warehouses, meaning companies lose the cost advantages of centralized planning and procurement. And with much of the country still without cable and Internet services, home shopping via television and the Web still make up a very small part retail sales.

But from a low base, Web shopping is up 30% over the past two years, spurred by the slow-but-rising urban consumer who is gradually becoming more commonplace. That trend bodes well not only for retailers in India, but for much of the globe. It's all part of what Stych calls the urban global consumer--as the world heads to urbanization at an ever-increasing clip over the next several years.

"We expect half the world to be living in urban areas by 2015," he says. Until then, though, convincing the two big Asian governments that their suburban citizens are ready to be served by big modern chains is the best way to heat up the market.

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Wal-Mart Accused of Mislabeling Organics

By The Morning News,
January 16th, 2007                               [back to top]  

The Cornucopia Institute, a Wisconsin-based activist group, has filed a legal complaint against Wal-Mart Stores Inc. for allegedly mislabeling non-organic products as being certified organic in some of its stores.

The Institute has filed the complaint with the Wisconsin Department of Agriculture, Trade and Consumer Protection. Institute spokesman Mark Kastel said his organization filed the complaint after Wal-Mart President and CEO Lee Scott did not respond to a letter sent by the group.

But Wal-Mart spokeswoman Karen Burke said the issue boiled down to one of misplaced signs.

"We believe it's an isolated incident if one of those organic tags should accidentally shift in front of the wrong item, and this is what the issue is about," she said.

Wal-Mart is working on the problem at the stores where the incidents took place, Burke said.

Kastel countered, however, that the mislabeling was a "systematic problem" with Wal-Mart and not just an isolated incident. *

"This is no mom and pop store. This is happening all over (Wal-Mart) stores across the country," he said.

The Cornucopia Institute earlier filed a complaint with the U.S. Department of Agriculture after receiving no response to its letter to Scott, Kastel said. The organization followed up with a complaint to the state of Wisconsin after finding out that a USDA investigation could take between one and two years, he said.

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Legislation aims to head off Wal-Mart-style banks

By Renee McGaw,
Denver Business Journal
January 16th, 2007                                [back to top]  

Colorado's bankers are launching a pre-emptive strike against retailers who want to get into the banking business.

Senate Bill 40, introduced Jan. 10, would prevent a business from running a bank within one-and-a-half miles of its own retail or commercial premises.

"We want to protect the independent banker," said Sen. Lois Tochtrop, D-Westminster, who is sponsoring the bill in the Senate. Rep. Rosemary Marshall, D-Denver, is the bill's House sponsor.

Tochtrop refused to name names. But one of the bill's obvious targets is Wal-Mart, the retailing giant whose 18-month effort to enter the banking business worries commercial bankers nationwide.

Wal-Mart's July 2005 application to the Federal Deposit Insurance Corp. (FDIC) to open an industrial bank in Utah caused such an uproar that the FDIC last summer placed a six-month freeze on new industrial bank applications, to give itself time to consider the issue more carefully. That freeze is scheduled to end on Jan. 31.

Industrial banks -- also known as industrial loan corporations, or ILCs -- were first chartered in the early 1900s as small loan companies for industrial workers. But over time, chartering states gradually have allowed them greater powers, and ILCs now offer many of the same products and services as state commercial banks.

Other retailers operate them, including Target and Nordstrom. Still others would like to -- Home Depot and DaimlerChrysler both have ILC applications pending at the FDIC.

But it's the application by retailing juggernaut Wal-Mart that has caused the most consternation, with groups including the AFL-CIO and American Bankers Association urging the FDIC to reject the request.

Wal-Mart told the FDIC that it isn't interested in lending, but wants to be able to handle its own electronic check processing, and credit card and debt card payments from its customers, instead of paying third-party service providers to do it.

But many bankers believe that if Wal-Mart enters the industry, community banks will face the same challenges that have overwhelmed many mom-and-pop retailers in the small towns where Wal-Mart has opened stores.

"If [retailers] are allowed to open their own banks, and can offer discounts to people opening accounts there, it's going to hurt the independent bankers and all the branch banks," Tochtrop said. "In the long run, it also hurts the consumer, because people lose the one-on-one, face-to-face relationship that they have with an independent banker."

"Small businesses depend on their community banks for unbiased credit decisions in order to sustain and grow their operations," officials at Independent Bankers of Colorado (IBC), the driving force behind the bill, said in a statement. "Would a retailer's bank loan money to competing businesses?"

SBl 40 would prohibit a financial institution from establishing an office, loan production office, deposit production office or branch within 1.5 miles of premises owned, leased or otherwise controlled by an affiliate that engages in commercial activities.

On Tuesday, the Senate Business, Labor and Technology Committee approved the bill by a 5-to-1 vote. The measure will now move to the Senate floor.

The ban wouldn't affect commercial bank branches located inside supermarkets or other commercial establishments, because the banks don't own those retail businesses.

Don Childears, president and CEO of the Colorado Bankers Association, said that his group supports SB 40. The CBA also plans to introduce a separate, similar bill within the next couple of weeks.

"We and the IBC have met and discussed our respective bills several times," Childears said. "We found that we took different approaches, but they are not inconsistent. So we felt that the best thing was to proceed with both of them, and I think generally both of us are supportive of the other's bill."

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March plunges as Wal-Mart pulls away

CATHERINE MCLEAN
Globe and Mail                                 [back to top]  

March Networks Corp.'s initial public offering in April, 2005, marked the next chapter of technology guru Sir Terence Matthews' growth plan for his video surveillance company. But it was built on a big bet, and that strategy unravelled yesterday.

Much of the revenue funding March Networks' expansion came from retail giant Wal-Mart Stores Inc. The peril of relying so heavily on one customer hit home yesterday when March Networks slashed its full-year financial forecasts as orders from Wal-Mart, which has added another supplier, dried up.

The unexpected news led to a big shift in the fortunes of the high-flying tech company and its well-known backer, Sir Terence. March Networks' shares lost almost half their value, plunging $9.29 to $11.84 yesterday on the Toronto Stock Exchange.

"[The stock] will be in the doghouse for a while," said Greg Eckel, senior vice-president at Morgan Meighen & Associates in Toronto, which holds shares in March Networks.

"Customer concentration is always a risk. Sometimes it's good, sometimes it's bad, depending on which horse you're hitching your cart to."

Before the Wal-Mart headache, March Networks' shares had already been headed down last year despite rapid revenue growth.

The company's biggest investor, Wesley Clover Corp., which is controlled by Sir Terence, sold 500,000 shares in July and another one million in September, paring its stake to 18.94 per cent. The reason cited for the second and larger sale was that Sir Terence needed to finance various activities, such as the 2010 Ryder Cup golf tournament, which will be held at a resort he owns in Wales, England.

Sir Terence, March Networks' chairman, wasn't available for an interview yesterday. In 2000, he acquired control of the company, which started out in 1986 as an engineering consulting firm.

Until now, March Networks has benefited from its position as the only supplier of video surveillance systems to Wal-Mart in the United States, with equipment installed in 1,400 stores. Wal-Mart accounted for 52 per cent of revenue generated by the Ottawa-based company in the six months ended Oct. 31.

March Networks, however, indicated in November that Wal-Mart would start using video equipment from a second supplier, which analysts say is a typical practice for the retailer. But March Networks couldn't yet predict the impact from that change.

The toll was evident yesterday. When March Networks didn't receive the usual uptick in orders it usually sees in January, it contacted Wal-Mart. The retailer responded on Friday, telling March Networks not to expect any "significant" orders in coming months.

"I think today I'm sure investors were caught off guard as we were Friday by the situation with our largest customer," March Networks chief financial officer Ken Taylor said in a phone interview.

March Networks now expects revenue of between $80-million (Canadian) and $85-million in the fiscal year ending in April, compared with an earlier target of $97-million to $107-million. And March Networks expects profit from continuing operations of between $4.5-million to $6-million, a significant drop from a previous forecast of between $12-million and $14-million.

"In the near term, the company will be struggling to break even . . .." Mr. Taylor said.

March Networks is looking at ways to pare expenses. But it will have to proceed carefully with cuts because it also needs resources to keep expanding its customer base in retail, banking and transportation to counter the Wal-Mart effect.

"They're going to have to walk a fine line here because of the other markets they're trying to go after," Todd Coupland, CIBC World Markets Inc. analyst, said. "I don't expect a huge restructuring."

And despite the "disappointing" downturn in business from Wal-Mart, March Networks hasn't given up on that customer, Mr. Taylor said. "That will remain a focus for us in terms of growing our overall business going forward."

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Indian politicians in Government ok Bharti-Wal-Mart joint venture but neither Bharti nor WalMart trust each other

India Daily
Jan. 15, 2007                                   [back to top]  

WalMart believes Bharti is a stepping stone to get into India and start selling poor quality Chinese made goods. Bharti believes WalMart is another naïve American company who can be milked for its dollars easily.

Having re-examined the tie-up between Bharti and Wal-Mart for retail business following political opposition, the government has found that the big-ticket venture conforms to all FDI policy norms.

"We have examined the Bharti-Wal-Mart joint venture and everything is in conformity with the existing policy on FDI in retail," high-level sources in the Commerce and Industry Ministry said.

With the government finding no fault with the venture, the stage is now set for other global retail chains like Tesco of UK and Carrefour of France to sew their deals for foray into the growing Indian market with similar arrangements.

 [back to top]  

Govt finds Bharti-Wal-Mart deal conforms to FDI norms

NewKerale.com                                     [back to top]  

New Delhi, Jan 15: Having re-examined the tie-up between Bharti and Wal-Mart for retail business following political opposition, the government has found that the big-ticket venture conforms to all FDI policy norms.

"We have examined the Bharti-Wal-Mart joint venture and everything is in conformity with the existing policy on FDI in retail," high-level sources in the Commerce and Industry Ministry said.

With the government finding no fault with the venture, the stage is now set for other global retail chains like Tesco of UK and Carrefour of France to sew their deals for foray into the growing Indian market with similar arrangements.

As the government had last year put the FDI in wholesale cash and carry on the automatic route, Bharti-Wal-Mart project is not required to seek government approvals. Similar route is open to others, the sources said.

The partnership will involve two joint ventures. While Bharti would be managing the front-end that involves opening retail outlets, the US-based world's largest retailer would take care of the back-end such as cold chains and logistics.

The two firms had announced their venture in November. But following opposition from various quarters such as CPI(M), Commerce Minister Kamal Nath had said the government would examine whether the tie-up adhered to existing FDI guidelines.

Similar model is being examined by Carrefour which is reportedly in talks with the Wadias. Tesco, which was earlier talking to Bharti, is also looking for an Indian partner.

Having allowed FDI in cash and carry and single brand retail, the government is now likely to open up foreign direct investment in specific areas such as sports goods, electronics and stationery.

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March Networks slashes sales and profit forecast as Wal-Mart orders vaporize

Canadian Press
Monday, January 15, 2007                                  [back to top] 

OTTAWA (CP) - March Networks Corp. (TSX:MN) is slashing its sales and profit outlook after the provider of Internet-based video surveillance technology suffered an order reduction from its largest customer, Wal-Mart Stores Inc.

Revenue for the financial year ending April 30 is expected to be between $80 million and $85 million, Ottawa-based March said Monday.

Analysts were on average expecting $103 million, according to Thomson Financial.

The 230-employee company , 25 per cent owned by chairman and founder Terry Matthews, who previously co-founded Mitel and created Newbridge Networks, expects annual earnings from continuing operations, excluding one-time items, to be $4.5 million to $6 million, or 26 to 34 cents per share.

Analysts were looking for 73 cents per share.

Chief executive officer Peter Strom and chief financial officer Ken Taylor told a conference call they remain optimistic about the company's prospects, but were unable to explain Wal-Mart's decision not to increase its business with March Networks as had been expected.

However, they noted that the world's largest retailer - which has installed March Networks equipment at 1,400 locations - has a policy of arranging at least two suppliers for everything it purchases for its stores.

"On Friday afternoon the company received indication from Wal-Mart that we should not expect any significant orders from them in the coming months," Taylor said.

He said management believes it can win future business with Wal-Mart - "there's absolutely no dissatisfaction with March Networks at all; they continue to like the company, like the products" - but the loss of revenue is not expected to be made up from other customers in the current quarter.

"We still feel really good about the business and we have a great funnel going," declared Strom, adding that the transportation and banking sectors are growth areas, while sales to retailers other than Wal-Mart remain solid.

"The rest of the business is very healthy."

© The Canadian Press 2007

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Wal-Mart chooses new agencies for advertising drive

NY TIMES/Taipei Times
Sunday, Jan 14, 2007                                  [back to top] 

For the third time in less than three months, Wal-Mart Stores made major decisions affecting the advertising agencies that handle its giant marketing assignments.

Wal-Mart, the nation's largest retailer, chose two agencies on Friday -- the Martin Agency and MediaVest -- to handle important assignments for ads that the company aims at mainstream consumers and that appear in major media like TV, magazines and the Internet.

Wal-Mart spends an estimated US$580 million a year on such ads.

Scuppering decisions

The announcement came five weeks after Wal-Mart stunned Madison Avenue by overturning decisions made by senior marketing executives on Oct. 25 to hire the Draft FCB Group, which is owned by the Interpublic Group of Cos, as the lead agency to create ads and Carat USA, part of the Aegis Group, to handle what is called media planning and buying -- that is, determining where ads run and how much to pay for them.

Wal-Mart attributed the reconsideration to what were described as improprieties in the selection process involving Draft FCB and two Wal-Mart marketing executives, Julie Roehm and Sean Womack, who were subsequently fired.

Roehm and Womack have denied any wrongdoing.

Wal-Mart barred Draft FCB from taking part in the new selection during the holiday shopping season, but invited Carat USA to try again -- which it did -- only to fall short the second time.

Wal-Mart let another agency owned by Interpublic, the Martin Agency, participate in the second round as it had in the first.

That paid off for Interpublic, as Martin was chosen to replace Draft FCB as the creative agency.

Celebrating brown

Martin is best known for its popular gecko ads for Geico insurance and campaigns for United Parcel Service that celebrate the color brown.

"We are very pleased with Wal-Mart's decision," Interpublic said in a statement.

Shares of Interpublic fell sharply on Dec. 7, when the creative assignment was taken from Draft FCB. They climbed US$0.33, or 2.5 percent, to close at US$13.37 on Friday.

In the second review, Martin bested one other agency for the creative assignment, Ogilvy & Mather Worldwide, part of the WPP Group.

Ogilvy had also taken part in the first review and accepted Wal-Mart's invitation to participate again.

Carat USA lost this time as MediaVest, part of the Starcom MediaVest Group unit of the Publicis Groupe, was chosen to handle the media assignments.

Copyright © 1999-2007 The Taipei Times. All rights reserved.

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Charles asks Wal-Mart boss to 'green' Britain's supermarkets

Jonathan Leake
and Yuba Bessaoud
The Sunday Times
January 14, 2007                                  [back to top] 

THE Prince of Wales has invited the head of Wal-Mart, the world’s largest retailer, to address British supermarkets on how to be more environmentally responsible.

The invitation to Lee Scott will raise eyebrows among Wal-Mart’s British rivals. Under his leadership the American chain has built out-of-town stores on greenfield sites and created a distribution network that generates millions of tons of carbon dioxide emissions a year.

However, Charles was impressed by Scott’s response to Hurricane Katrina, which wrecked New Orleans, when he declared that Wal-Mart would become more environmentally friendly.

Scott’s visit will be under the auspices of the Business & the Environment Programme, a charity set up by the prince to promote green thinking.

He will be asked to address an audience expected to include senior executives from Tesco, Sainsbury’s and Waitrose. Asda, Wal-Mart’s British subsidiary, will attend.

Scott first outlined his plans to green Wal-Mart in a speech to staff in October 2005, promising that the company would invest at least £250m a year to reduce waste, switch to 100% renewable power and use eco-friendly products.

He said Hurricane Katrina had reminded him of Wal-Mart founder Sam Walton’s original vision for the company, which was to serve the community.

He also ordered the opening of a second test store, in Colorado, that used natural rather than artificial light after opening the first in Texas. The stores replaced neon signs with light-emitting diodes and used recycled tyres to divide the parking areas.

Such moves have been viewed with cynicism by environmentalists. They have campaigned against Wal-Mart’s use of greenfield sites and its treatment of employees. One week after Scott’s first meeting with the prince a court awarded £99m to Wal-Mart employees illegally denied lunchbreaks.

Tony Juniper, the executive director of Friends of the Earth, gave Scott’s plans a cautious welcome. “The risk is that these companies might use the opportunity offered by the prince to give themselves a green veneer to make their brands seem more attractive,” he said.

Copyright 2007 Times Newspapers Ltd.

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Sainsbury, Wal-Marts Asda held talks over possible distribution collaboration

By matthew scuffham
abcmoney.co.uk
Wed, 17 Jan 2007                                    [back to top] 

LONDON (AFX) - J Sainsbury PlC and Wal-Mart Stores Inc's Asda, two of Britain's biggest rival supermarket chains, have held exploratory talks about collaboration on a distribution centre, according to the Sunday Times, citing an interview with Asda's chief executive Andy Bond.

The report says initial talks centred on a 'consolidation centre' where branded goods are stored before being transferred to distribution centres.

The Sunday Times said talks between Asda and Sainsbury took place last summer.

Sainsbury suggested a location in the north of England, but Asda's immediate requirement was for the Midlands, so discussions have not progressed.

The paper says Sainsbury has acknowledged the talks took place but played down their significance, while Asda insists the proposal is still a live idea.

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Back To The Drawing Board For Wal-Mart

By Anita French,
The Morning News 
January 13th, 2007                            [back to top] 

Wal-Mart Stores Inc. may not be ready to adopt again its founding mantra of "Stack it high and watch it fly," but the world's largest retailer might do better by returning somewhat to its roots this year.

That's the opinion of some analysts, anyway, who say the company stumbled in 2006 by focusing too much on attracting a more upscale consumer instead of its core customer.

"They've misstepped on the merchandising, especially the clothing side. I would like to hope that they would focus on back to basics and solidify the relationship with their core consumer before reaching out too much to any other group," said Patricia Edwards, fund manager with Wentworth, Hauser and Violich in Seattle, who doesn't own Wal-Mart stock although her firm does.

Edwards isn't the only one who believes Wal-Mart might do better by returning to basics. Jack Trout, who heads his own marketing consultancy agency and has covered the retail industry for 40 years, wrote at Forbes.com in December that Wal-Mart made a mistake by trying to be "everything for everybody."

"My take is that if you're about value, talk more about value instead of price. You might even let your customers get a peak at what they do behind the shelves to offer that value. And you certainly can make the shopping experience better with friendlier service. (Think Southwest, which has flight attendants doing stand-up comedy.) What they shouldn't do is get fancy and try to go up market against the likes of Target," he wrote.

Wal-Mart spent part of 2006 targeting those customers who shop for basics at the company's discount stores but rarely "cross the aisle" to buy apparel. But Wal-Mart's new apparel line, Metro 7, flunked with rural shoppers and was cited by executives and analysts as one of the reasons for the company's disappointing same-store sales in 2006. *

The company fared worse during the holidays. Same-store sales in November fell 0.1 percent from the same period last year but rose 1.6 percent in December, the biggest increase Wal-Mart has had since August.

Wal-Mart's misfortunes last year led to more than grumbling. Fortune ran an article earlier this month in which it said Wall Street was "running out of patience" with Wal-Mart's stock performance and that President and CEO Lee Scott's job might be in jeopardy.

Wal-Mart stock began a decline when Scott took over in 2000 and has hovered in the $40 to $45 range for some time. Add to this the company's steady decline in same-store sales, it may not be surprising that some analysts have hinted Scott should step aside.

Edwards noted that there had already been some changes late last year in senior management at Wal-Mart, if not in corporate, but she didn't think such changes at the top were "out of the realm of possibility."

"However, I think that the December same-store sales ... may have brought Scott a bit of a reprieve. While some people are saying things are horrible and it's time for him to go, there are a certain amount of us watching the stock and thinking we have seen the bottom," Edwards said.

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Wal-Mart's New-New Adman

By awarding The Martin Agency its main creative account, the top retailer tries to put an embarrassing episode behind it and regain momentum

by Burt Helm
and Pallavi Gogoi
BusinessWeek.com                            [back to top] 

After a difficult month that saw Wal-Mart (WMT) sack a star marketing executive and fire the ad agency that exec had helped select, the retailer has decided who will handle its roughly $580 million annual advertising budget. The Martin Agency of Richmond, Va., owned by the Interpublic Group (IPG), will run Wal-Mart's general market creative account, while Publicis-owned MediaVest will handle media buying and planning, Wal-Mart said in a Jan. 12 statement. The company also named three agencies to handle multicultural advertising: Southfield (Mich.)-based GlobalHue for African-American advertising, Los Angeles-based IW Group for the Asian-American market, and Houston-based Lopez Negrete for Hispanics.

The announcement comes after a roller-coaster ride for Wal-Mart's marketing side, including the abrupt dismissal in December of Senior Vice-President Julie Roehm and the related firing of Interpublic-owned Draft FCB just six weeks after its selection as Wal-Mart's ad agency (see BusinessWeek.com, 12/7/06, "Wal-Mart Leaves Draft Out in the Cold"). The selection is especially good news for Interpublic, as the beleaguered holding company will keep the high-profile Wal-Mart business. Interpublic shares rose 2.5% on the announcement. "We're excited to work with a high-quality group of people on a canvas that is very large, very visible, at a time when Wal-Mart is doing some of the most exciting things in its history," says John Adams, Martin's chief executive officer and chairman. Wal-Mart said it had nothing to add beyond its press announcement.

Upscale Initiative Stumbled The agency selection process, originally announced this past May, was part of plans to refashion Wal-Mart's image beyond merely a big-box retailer known for low prices and attract consumers to shop for higher-margin items such as apparel and electronics (see BusinessWeek.com, 9/19/06, "Wanna Be Wal-Mart's Adman?"). After appointing John Fleming as chief marketing officer, the retailer brought in fresh talent from outside of its home state of Arkansas, including Roehm, then marketing chief for the Chrysler Group (DCX), and Stephen Quinn, chief marketing officer for PepsiCo (PEP) unit Frito-Lay. In October, Wal-Mart selected Draft FCB out of four finalists (including Martin) to lead the charge as its agency of record.

Chief among Wal-Mart's plans: Woo upscale shoppers by stocking its stores with fashionable apparel, including its new Metro 7 line, and place multipage ads with fashion bible Vogue. But that strategy backfired badly and third-quarter revenue and earnings fell short of expectations. "We expanded Metro 7 beyond what now appears to be the right segmentation," conceded Vice-Chairman John Menzer in the company's earnings conference call on Nov. 14.

More dramatic changes occurred during the week of Dec. 4. In short order, Wal-Mart dismissed Roehm and her deputy, Sean Womack. Both had been heavily involved with the agency selection process. Days later, it fired Draft FCB. Publicly, a Wal-Mart spokesperson would only say these actions were the result of "new information obtained over the past few weeks," and declined to elaborate. But people familiar with the situation say the two executive dismissals and the agency firing were due, at least in part, to violations of Wal-Mart's gift policies and a clash with its conservative culture. At the time, Roehm and Womack denied any wrongdoing.

Core Customers Appear Confused Roehm and Womack allegedly accepted gifts and were seen attending a lavish dinner thrown by Draft FCB at Manhattan hotspot Nobu—violations of Wal-Mart's strict ethics policy (see BusinessWeek.com, 11/13/06, "Mad Ave's Man of the Hour"). Roehm had already made waves at the company with a risqué TV commercial featuring a couple discussing sexy lingerie in front of family members—a spot Wal-Mart pulled almost immediately after it first appeared on TV.

Martin, creator of the much-lauded GEICO Gecko insurance-company ads, will have its work cut out for it. Wal-Mart went back to its "low price" basics for the holidays, offering some of the deepest discounts across all segments in its stores—slashing prices on more than 100 toys, 100 electronic items, and at least 50 home appliances. Still, the core customer didn't rush in to buy. Some believed that traditional customers were so bewildered with the upscale fashion items that they were scared away. After posting a 0.1% drop in November sales, its first sales decline in a decade, Wal-Mart's December same-store sales (those of stores open a year or more) rose just 1.6%, its worst showing in six years (see BusinessWeek.com, 11/14/06, "Wal-Mart: Back to Basics for the Holidays").

Martin's first job will be to bring some order back to the company's advertising. The Roehm-Womack firings threw Wal-Mart's advertising timetable into chaos, and cast doubt on whether Wal-Mart would still pursue its plan to move beyond low-price advertising and build more cachet with middle-class consumers. Many retail experts believe that Wal-Mart will stick to basics for now. "Wal-Mart has always been known for cheap stuff—lots of it," says BrandKeys CEO Robert Passikoff. "There's not enough media in the world that can change that brand perception overnight."

Playing Catch-Up With Draft FCB's selection, Wal-Mart had expected a new campaign to be ready to launch in early February. Now it's extremely unlikely that the company will be able to follow that timetable. Wal-Mart and its new agencies will now have to scramble to catch up to the retailer's original plans. When asked about a schedule, Adams would only say: "I don't know the answer to that…. We're going to be talking to them early next week and we're going to learn a lot more about what is to be done right now. We found out about this about 15 minutes before [Wal-Mart's public announcement]."

Marketing and retail experts warn Wal-Mart ads will likely not be as exciting as the Vogue ads of 2006. "Their sweet spot is family, and we can expect more of that. It's not hip and cool, or aspirational, but it's attainable," says Patricia Pao, founder of retail consultant The Pao Principle of New York. And who knows? Maybe the Gecko is looking for an additional gig.

Helm is marketing editor for BusinessWeek in New York. Gogoi is a contributing writer for BusinessWeek.com.

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Wal-Mart, critics dispute health plan

By Marcus Kabel,
Associated Press
January 12th, 2007                             [back to top] 

BENTONVILLE, Ark. — The booster shot that Wal-Mart gave to its company-arranged health insurance has increased enrollment only slightly, with fewer than half of the retailer's eligible employees signing up for plans tweaked twice in the past 16 months.

Figures released by the world's largest retailer Thursday showed that 47 percent of its eligible employees are covered by its health plans. A year ago, it was 46 percent; in 2005, just 43 percent of Wal-Mart workers were covered by company-arranged health insurance, Wal-Mart claims. But union-backed WakeUpWalMart.com said the figures in Wal-Mart's latest report conflict with numbers attributed to them in media reports over the past two years, and actually are lower.

"Whatever numbers you use, the fact is there is a consistent upward trend" in the percentage of employees with Wal-Mart health coverage, said Linda Dillman, the company's executive vice president of benefits. "Over the past three years, we've seen steady increases in associates who take our plans."

Wal-Mart has 1.34 million employees in the United States. Dillman said that the numbers of workers covered vary throughout the year because of turnover and seasonal changes in employment levels.

The company said 43 percent of its workers have coverage through a spouse, their parents or through Medicaid.

The number for people with outside coverage came from a survey of 200,000 workers, which was then extrapolated to cover the rest of the work force, Wal-Mart said in a release.

Since October 2005, Wal-Mart has shortened its eligibility period, allowed part-time workers to cover children, lowered premiums and lowered co-pays for prescription drugs. The package has been a lightning rod for unions and other critics who charge that Wal-Mart skimps on benefits.

Opponents say that Wal-Mart's latest moves to improve its health care plan are undermined by the company's much less publicized plan to rely on more part-time workers, who are less expensive than full-time workers.

"The brutal truth is that Wal-Mart's health care crisis has worsened. The percentage of Wal-Mart workers without company health care has actually increased, but rather than be embarrassed at their health care failures, Wal-Mart is trying to brag that leaving well over half of your employees and their families without company health care is improvement. What an absolute disgrace," WakeUpWalMart spokesman Chris Kofinis said.

In its latest statement, Wal-Mart said that as of Jan. 1, 47.4 percent of its 1.34 million U.S. employees were on company health plans. Of that, 1.02 million people were eligible to enroll last fall and 636,391 did so, Wal-Mart said.

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Wal-Mart health plan unused

By Ylan Q. Mui
and Amy Joyce
The Washington Post
Thursday, January 11, 2007                            [back to top] 

About 90 percent of Wal-Mart employees have health-care coverage, but 43 percent do not get it from the mammoth retailer, relying instead on benefits from a spouse, federal programs or even their parents, according to an internal survey the company made public Wednesday.

Wal-Mart has more than 1.3 million workers in the United States, making it one of the country's largest employers. It surveyed more than 200,000 during the fall open-enrollment period for health benefits, the retailer's first effort to capture such data as it faces a constant barrage of criticism from labor unions that accuse it of paying low wages and skimping on health benefits.

According to the report, 22 percent of employees receive health benefits under a spouse's plan. Nearly 5 percent are on Medicare. Four percent are insured through their parents, school or college. About 2 percent are covered by Medicaid and 1 percent use an alternate state program.

"I don't believe that our goal is ever to convince someone to move off of Medicare or their retirement plan ... to Wal-Mart health-care coverage," said Linda Dillman, who oversees risk management and benefits for the retailer. "What our goal is [is] to ensure our associates have access to health care, and that it's affordable."

Wal-Mart said about 47 percent of its employees have enrolled in the company's health plans. About 10 percent have no insurance.

The company has been under attack by critics who say it does not offer enough coverage for employees, shifting health-care costs to the government.

Wal-Mart has tried to fight back by offering $4 generic prescription drugs at its pharmacies and has made some changes to its coverage, including reducing the waiting period to one year from two for part-time employees to become eligible for benefits.

Wal-Mart Watch, which is backed by the Service Employees International Union, said the retailer should make more changes to make its plans more attractive to workers.

"Wal-Mart's health-care plan remains a raw deal for its employees," Nu Wexler, a Wal-Mart Watch spokesman, said.

In its study, Wal-Mart said more than three-quarters of its employees are eligible for its health-care plans — beating the retail-industry average of 59 percent, according to the Kaiser Family Foundation.

But the percentage of its eligible workers who sign up for coverage is lower, 62 percent compared with an industry average of 75 percent.

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Wal-Mart's New Health Care Figures Prove That Wal-Mart's Health Care Crisis Worsened in 2006

Wal-Mart's Figures Contradict Earlier Statements and Show the Number of Wal- Mart Employees Insured By the Company Actually Decreased in 2006

Chris Kofinis
WakeUpWalMart.com                                     [back to top] 

WASHINGTON, Jan. 11 /PRNewswire-USNewswire/ -- Today, Wal-Mart falsely claimed that the number of Wal-Mart employees covered by the company health care plan increased in 2006. Wal-Mart's latest health care numbers directly contradict Wal-Mart's figures from last year and prove that the company's health care crisis actually worsened. In fact, both in absolute numbers and on percentage basis, the number of Wal-Mart workers covered under the company health care plan actually decreased in 2006.

Last year, at the end of Wal-Mart's health care enrollment period, Wal- Mart made public statements to the New York Times, the Wall Street Journal, and other media outlets claiming, "638,000 workers were now insured by the company." Today, Wal-Mart said at the end of this year's enrollment period it now insured only 636,391 workers. Therefore, Wal-Mart's new health care enrollment decreased, not increased, by almost 2,000 workers compared to the same time last year.

Unfortunately, Wal-Mart wrongly claimed today, and several media outlets mistakenly reported on this wrong number, that Wal-Mart's figure of 636,391 employees represents an 8% increase in enrollment. It is impossible for Wal- Mart to have increased enrollment by 8% unless Wal-Mart lied to the New York Times and the Wall Street Journal and only insured 589,250 employees last year, not the 638,000 it claimed.

Even on a percentage basis, Wal-Mart's figures are not accurate. This year, Wal-Mart claims it increased the percentage of workers covered under the company health care plan to an embarrassing 47.4%. But, at the end of last year, Wal-Mart told the Wall Street Journal that it provided company health care to 49% of its workers. Therefore, the 47.4% actually represents a decrease of 1.6%.

Based on the misleading statements made today by Wal-Mart, WakeUpWalMart.com released the following statement attributable to Paul Blank, campaign director for WakeUpWalMart.com:

"Incredibly, Wal-Mart's own health care numbers prove that the Wal-Mart health care crisis has worsened. The sad truth is that despite making $11 billion in annual profit, Wal-Mart still fails to provide company health care to over half of its employees.

Given the enormous cost American taxpayers must pay to subsidize Wal- Mart's health care crisis, we call on Wal-Mart to stop misleading the American people and our elected leaders who expect, if nothing else, that America's largest private employer will live up to it's health care responsibilities.

At a minimum, Wal-Mart should have the decency to remember how many workers they actually provide health care to and stop changing the numbers in a deliberate and desperate attempt to mislead the public and the media as the company tries to repair its faltering public image.

In the end, we hope that Wal-Mart will wake up and realize that continuing to make misleading statements about its health care crisis will not only fail to improve its faltering public image, but will only further stoke the anger of the American people and our elected leaders who expect Wal-Mart to finally change for the better."

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Advocacy Groups In Urban Areas Seek To Improve Wages, Health Benefits For Wal-Mart Employees

AP/Boston Herald
11 Jan 2007                                         [back to top] 

The Los Angeles Alliance for a New Economy and advocacy groups in other cities on Monday in a letter asked Wal-Mart Stores to improve wages and health benefits for employees before the company expands to urban areas, the AP/Boston Herald reports. The letter -- signed by more than 100 political, religious, business and civil rights leaders from 10 cities and addressed to Wal-Mart CEO Lee Scott -- criticized the "poverty-wage jobs" offered by the company. In addition, the letter asked elected officials in urban areas where Wal-Mart seeks to expand to require the company to offer "good jobs that provide quality health insurance and living wages and that allow employees to work free from discrimination and intimidation." In response, Wal-Mart in a statement said, "The public will see through these attacks because they know Wal-Mart offers good jobs and opportunities, helps working families save money and gives back more to our communities than virtually any other company in America." According to Wal-Mart, full-time employees, on average, receive wages of $10.11 per hour, and health plans for workers in some areas cost only $11 per month (AP/Boston Herald, 1/8).

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Wal-Mart and The Pirate Bay

p2pnet.net News                         [back to top] 

Remember when some of Australia's most important banks were caught advertising on The Pirate Bay?

They hurriedly yanked the ads and now, "What's the world's largest retailer doing advertising on one of the world's most notorious pirate Web sites?" - wonders Variety.

It seems Wal-Mart has placed banner ads on TPB, going on, "Several Wal-Mart banners have appeared on the site, including an ad for the eighth season of 'The Simpsons' on DVD."

Wal-Mart ads are placed by Targetpoint, an Israeli online ad agency that serves ads to match targeted queries on the Web, says the story, going on, "Wal-Mart's ad 'The Simpsons,' for example, was served along with search results that included downloads of the series.

"While the ads encourage a legal behavior - buying DVDs - they support the site, which lists more than 130,000 BitTorrent files, including new releases like 'Casino Royale,' 'Pirates of the Caribbean: Dead Man's Chest,' and 'Saw III'."

What's the problem. It's only bidnes. And the ads, "contribute to the estimated $75,000 in ad revenues the Pirate Bay generates every month," says Torrentfreak.

Stay tuned.

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Seminar on impact of Wal-Mart on retail sector

thehindu.com
11/01/2007                           [back to top] 

Thiruvananthapuram: Will the entry of Wal-Mart hurt small retailers in India? According to Amiya Chakravarty (Philip R. McDonald Chair Professor in Operations and Technology Management at North Eastern University, Boston), the lack of facilities like transportation, large space requirements and the need to understand Indian customer's buying behaviour will come in the way for Wal-Mart's success, but they can act as an agent of change by creating new benchmarks for suppliers. Mr. Chakravarthy was responding to questions raised by participants in a seminar on ``Managing in the Networked Economy,'' organised by the Asian School of Business at Technopark on Wednesday.

© Copyright 2000 - 2006 The Hindu

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Wal-Mart trashes garbage

The suits in Bentonville, Ark., are surprising adherents to the environmental movement's 'zero waste' recycling crusade.

By Marc Gunther
Fortune 
January 11 2007                         [back to top] 

NEW YORK (Fortune) -- Wal-Mart and the city of San Francisco do not have much in common, but there is this -- both are working to achieve zero waste.

They aren't alone. The Australian territory of Canberra, a third of local governments in New Zealand, the cities of Oakland and Berkeley, a bunch of small towns in California, and Carrboro, N.C., ("Paris of the Piedmont") all have embraced a goal of zero waste.

But what is zero waste? It's just what it sounds like -- the idea that we can design, produce, consume and recycle products without throwing anything away. It's the idea that industry should mimic nature, so that, as the writer Joel Makower put it, "one species' detritus is another's pantry."

Wal-Mart saves the planet Zero waste may sound like a crazy `dream, but you can glimpse how a zero waste world might work if you know where to look. Outerwear manufacturer Patagonia makes fleece out of recycled plastic bottles. Herman Miller's Mirra and Celle office chairs can be disassembled in a few minutes for recycling.

Xerox (Charts), which aims to "create waste-free products in waste-free facilities," says on its website that it kept 107 million pounds of waste out of landfills in 2005 by reusing and recycling machines, equipment and parts.

This isn't a new idea. Sanitation workers used to be called scavengers because they resold everything of value they found. Biologist and activist Barry Commoner wrote about zero waste in a 1971 book called The Closing Circle.

But it is a radical idea. The Grass Roots Recycling Network, a group of waste-reduction activists, says: "Zero waste challenges the whole idea of endless consumption without needing to say so," and "poses a fundamental challenge to 'business as usual.'"

Interesting, then, that this crusade is getting a boost from Bentonville, Ark.

Wal-Mart (Charts) CEO Lee Scott has set a long-term goal of zero waste as part of the giant retailer's march towards sustainability. Over the next two years, Wal-Mart wants to reduce solid waste from its U.S. stores by 25 percent.

Scott's reasoning is simple: "If we had to throw it away, we had to buy it first. So we pay twice, once to get it, once to take it away." To Wal-Mart, less waste means lower costs.

The company's efforts have begun to bear fruit -- in part by actually recycling fruit.

Why Wal-Mart wants to sell ethanol When I visited Wal-Mart's experimental green store in Aurora, Co., last year, workers in the produce department were collecting old fruits and vegetables, as well as cardboard packaging, so they could be made into compost...and sold at Wal-Mart. They also used spent cooking oil as fuel, to help heat the store.

Wal-Mart's waste reduction efforts also encompass corn-based (rather than plastic) food packaging because it can be more easily recycled. It has shrunk the size of Sam's Club water bottles. It is also recycling plastic -- and making money doing so -- as the company explains here.

More broadly, Wal-Mart is putting pressure on its 60,000 suppliers to reduce packaging of all kinds. Right now, companies that make packaging have little incentive to cut back since they don't pay for disposal. The world's largest retailer may be able to change that.

How green is Wall Street? The giant retailer's efforts dovetail with the innovative work being doing by San Francisco's city environment department and its waste contractor, a $500-million year employee-owned company called Norcal Waste Systems.

Norcal and the city use a three-bin system to collect refuse from homes and businesses. Garbage goes in a black bin. (The bad guys in the movies wear black hats.) Traditional recyclables, including bottles, cans and paper, go in a blue bin. Food waste and yard trimmings go into a green bin.

The green bins of food and yard waste are trucked to a factory 55 miles away in Vacaville, turned into a rich compost called "Four Course Compost" and sold to Napa Valley wineries and farms. Your next glass of California wine may have come from grapes grown in soil fertilized by garbage.

Norcal also recycles paper, glass, plastics, construction debris, bulky items, confidential documents and wood waste. "If you can create a quality product -- clean paper, clean glass, wood -- you can find a market for it," says Mike Sangiacomo, the firm's president and CEO.

In 2006, San Francisco achieved a 67% diversion rate for its waste. (This differs from a recycling rate, but we'll spare you the details.) That rate should get to 75% before long -- a 2006 "waste characterization study" found that about two-thirds of the garbage that ends up in a landfill is food or paper that could, and should, have landed in the blue or green bins.

Retailers clean up their paper trails Getting to zero waste will be much harder, says Jared Blumenfeld, director of San Francisco Environment, a city department. "To get to zero waste," he says, "we need to develop products that can be reused or recycled." His current bugaboo is plastic grocery bags, which litter the landscape, gum up recycling machines and worse.

"From our perspective, waste doesn't need to exist," Blumenfeld says. "It's a design flaw."

Getting to zero waste will take time. Big industries, ranging from landfill owners to the makers of plastic packages, like things the way they are. Trucking garbage to dumps is often the cheapest way to get rid of it, at least for now. Even the Grass Roots Recycling Network says: "In profitability, landfill is at the top of the scale, while recycling remains at the bottom."

But in the long run -- or perhaps the very long run -- the costs of dumping in landfills will increase, as will the price of oil, the expense of chopping down trees to make paper, the damage caused by chemical fertilizers that could be replaced by compost, and so forth. That will improve the economics of recycling.

Then zero waste won't sound like a crazy dream anymore.

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Wal-Mart Executive Resigns

NamNews                                       [back to top] 

Lawrence Jackson has resigned from his post as President and CEO of global procurement to spend time with his family. Jackson, who oversees the quality of foreign-made products for Wal-Mart., will continue until 9 February to help with the transition. Jackson joined Wal-Mart in 2004 from Dollar General Corp., where he was President and COO. He began as Wal-Mart’s Executive VP of the HR division.

Jeff Macho was promoted to Senior VP of global procurement and will report to company Vice Chairman John Menzer. Macho has been working in the global procurement field for 13 years, and joined Wal-Mart in 2005 as VP and MD of apparel merchandising in global procurement.

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Bharti, Wal-Mart To Unveil Plans In February

NamNews                                            [back to top] 

Bharti Enterprises and Wal-Mart will announce the financial details and plans to roll-out retail stores across India, in February. Bharti’s Chairman Sunil Mittal said, "Complete details, including financial details, about the retail business will be announced next month jointly by Bharti and Wal-Mart".

Mittal added that the company was planning a cluster of outlets, preferably starting in north India and Bangalore. Bharti and Wal-Mart in November formed a joint venture for venturing in the retail market. Although no definite financial details have been given, Mittal said the investments would be in "billions of dollars".

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Scott Sells Wal-Mart Shares

By The Morning News
January 9th, 2007                               [back to top] 

Lee Scott, president and CEO of Wal-Mart Stores Inc., picked up almost $1.5 million this week when he sold more than 30,000 shares of Wal-Mart shares.

In two separate transactions filed Friday with the U.S. Securities Exchange Commission, Scott sold 31,544 shares of common stock at $47.39 and another 594 shares at the same price to pay taxes on the 31,544 shares sold.

The two transactions left Scott with just under $1.5 million.

Scott took home more than $10 million in salary, bonuses and other compensation from Wal-Mart in 2005, according to the company's 2006 proxy statement filed with the SEC.

Both Wal-Mart Stores Inc. and Scott have come under increasing criticism lately from analysts and others for the company's sluggish stock performance, which began a downward slide when Scott took over as president and CEO six years ago.

Wal-Mart's stock has fallen 22 percent since Scott took the reins from David Glass in January 2000, wiping out $90 billion in market capitalization, according to a Fortune.com article published Monday.

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Urban activists urge Wal-Mart to improve pay, benefits

By MARCUS KABEL,
Associated Press
Tuesday, January 9, 2007                                 [back to top] 

Community activists from Los Angeles and other big cities have issued a joint call on Wal-Mart Stores Inc. to improve its wages and health care benefits before moving into urban areas, decrying what they called "poverty-wage jobs."

The advocacy group Los Angeles Alliance for a New Economy released a statement and a letter Monday to Wal-Mart Chief Executive Lee Scott that it said was signed by more than 100 religious, political, civil rights and business leaders from 10 urban areas across the country.

The group also urged elected officials in cities where Wal-Mart wants to expand to press the world's largest retailer for "good jobs that provide quality health insurance and living wages, and that allow employees to work free from discrimination and intimidation."

Bentonville, Ark.-based Wal-Mart, which is trying to expand into more urban areas after growing in rural and suburban markets, defended its record as an employer, as a company committed to diversity and as an economic contributor to the neighborhoods where it has stores.

"The public will see through these attacks, because they know Wal-Mart offers good jobs and opportunities, helps working families save money, and gives back more to our communities than virtually any other company in America," the company said in a statement.

Wal-Mart also rejected the charge of low pay, saying it offers good jobs with competitive pay and benefits. Its average, full-time wage is $10.11 per hour and health plans cost as little as $11 per month in some areas, the company said.

The community groups said they were making their statement now to mark next Monday's observation of Martin Luther King Jr. Day.

"Too often, we hear that for our communities, any job is a good job," said Rev. Lennox Yearwood, CEO of the Hip Hop Caucus in Washington, D.C. "We reject the idea that minority communities should settle for low-paying jobs without a future."

California State Sen. Gil Cedillo, who represents Los Angeles, said Wal-Mart's low prices come at too high a cost.

"In order for our communities to achieve the American Dream, we need more than poverty-wage jobs," Cedillo said in the statement.

©2007 Associated Press

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Wal-Mart Etiquette

By Samantha JJ
Associated Content                           [back to top] 

A lump in the throat, heart beating faster, body starts to shake, panic starts to set in. What is that noise I hear? It's hyperventilation. It's the thought of going into Wal-Mart to shop. Too many rude, inconsiderate people, cutting you off on purpose, are banging into your cart, and no apology. So, I tell my husband its okay, I'll help him get through it, please just park the car. We get out of the car, and walk hand in hand towards the entrance of where the pedestrians are allowed to cross. Apparently, the cross walk is just a suggestion to other drivers. We took are chance and walked in front of a moving car, I don't mind suing. The car decided to stop to let us pass, and everyone else that was waiting to cross moved with us while they had a chance.

Now we get to the door and we open the door for the person in front of us. Well, the customers of Wal-Mart must have thought we were "door people", because we didn't get a chance to get in the door before the first 50 people. We heard "thank you" from three people. They were of the same family.

We got a cart from the overly happy greater at the entrance with the smiley stickers. Can you guess what happened? We took our cart and said thank you to the greater who handed us a cart and we were cut off by a couple other people with carts. Once again, no "excuse me", or "sorry". Now my husbands face is turning a bright red, and gritted his teeth. I smiled and said, "Just relax, its going to happen again. Try laughing at it".

We get to his favorite part of the store, the electronic area. Straight to the movie section we go. Okay, not straight through. People are standing right in the middle of the way talking. They glace over and continue talking. My husband is standing there waiting impatiently. Not me. I yell, "Excuse me", so everyone can hear, and I get the dirty look. Whatever! I smiled as I yelled it that has to count for something.

We are looking at the new releases as someone turns the corner fast and hits us with their cart. "Oh, I'm so sorry" said grandma. She's not my grandma, but she is someone's. She obviously remembers politeness. It seemed to have packed their bags and left, in most people's minds now days, without a "Dear John" letter. "No problem, I'm alright", I replied back to her with a smile. There was no way we would ever get to the game display, so we skipped it.

Now in the baby section, the main reason we came here in the first place. I see the diapers, I grab the diapers. "Lets get out of here, I want to scream", I mention to my husband. He nods as we head towards the cashier. "Be right back hun, I almost forgot something", he tells me and just leaves me standing there before I could say a word. I felt so alone standing there waiting in line while others are grimacing at me. I felt as alone as the kid picked last for a sport in school.

He finally returns with windshield wiper fluid for his car. He starts placing our items on the counter that moves towards the cashier. Well, I don't know what it's called at this time. My cousin is not answering her instant message from me asking her. She works at a Wal-Mart, she must know. Anyway, Sarah is the name of the cashier for the time being, just to give her a name. Sarah didn't eat her wheaties this morning, guessing from the look on her face. She isn't hiding the fact she is glaring at me from head to toe.

She gives us our total, while glaring at the couple behind us now. We use debit as always, because I always seem to loose money, so why carry it around. My husband cannot keep money in his pocket, because it seems to burn a hole right through it. We take our receipt and say thank you and she turns her attention away from us so fast that she might explode if she said "You're welcome".

Finally time to leave. If only we could get around the "chatter-boxes" by the exit. Here comes my bright smile, "EXCUSE ME"! They can't yell back at you if you plaster a big fake smile on your face while yelling.

At least outside we can use the cart to stop the crazy parking lot drivers. I push the cart first, and then proceed when a car stops. I wave a thank you, while smiling. The person in the car behind the stopped car, tried to drive around. What a moron. I wanted to flip him "the bird", but I refrained. My husband's profanity was loud enough for me to hear.

We get to our car, put our purchased items in the trunk, and then put the cart where it belongs. I hop in the passenger seat while my husband is smoking a cigarette. He finishes then gets in the car. He starts to back up when someone decides to try and squeeze past us. All I could do was shake my head. We finally get to the intersection lights, both happy we are going home.

You may use my techniques while shopping at Wal-Mart, or anywhere else for that matter. Just remember, if you need to yell, do it politely with a smile.

2007 © Associated Content, All rights reserved.

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Wal-Mart Director Accepts Jesse Jackson's Praise As Jackson Bashes Wal-Mart

NLPC Criticizes Wal-Mart's Efforts to Appease Critics

PRNewswire-USNewswire                                     [back to top] 

FALLS CHURCH, Va., Jan. 9 /PRNewswire-USNewswire/ -- The National Legal and Policy Center (NLPC) today criticized Wal-Mart for its floundering attempts to counter criticism of the company by Jesse Jackson.

In 2004, Christopher Williams, a long-time Jesse Jackson associate, was placed on the Wal-Mart board of directors in an apparent effort to quiet Jackson. Since that time, Jackson has only increased his criticism of the company.

Yesterday, Jesse Jackson praised Williams at the Wall Street Project conference taking place in New York City. The Rainbow/PUSH Coalition and the Citizenship Education Fund, both founded by Jesse Jackson, sponsor the Wall Street Project. Williams is CEO of The Williams Capital Group and a founding member of the Wall Street Project.

During a luncheon that included the awarding of an "Entrepreneur of the Year" distinction to James Reynolds, Jackson lauded Williams and asked him to join Reynolds during the award presentation. In addition, Williams was honored as one of the "75 Most Influential Blacks on Wall Street" at a reception later in the evening.

NLPC President Peter Flaherty said, "Wal-Mart is learning about the high cost of appeasement. Once a concession is made, Jesse Jackson will simply escalate his demands."

NLPC Director of Policy John Carlisle said, "It is pretty brazen for a corporate director to accept praise from Jesse Jackson who regularly engages in blistering attacks on the company. It certainly raises the question of divided loyalties."

Another Wal-Mart initiative to respond to criticism by "diversity" activists blew up in Wal-Mart's face last year when it hired and then fired Andrew Young. The former Atlanta mayor and UN Ambassador defended Wal-Mart on the basis that it puts small merchants out of business. He said, "First it was the Jews, then it was the Koreans, and now it's Arabs. Very few black folks own these stores."

NLPC also criticized new television ads that tout the company's record as an employer and corporate citizen.

The national ad campaign, which began yesterday, invokes the legacy of Wal-Mart founder Sam Walton. Carlisle said, "Sam Walton was a true American hero. He believed in the free market and entrepreneurship. He would be appalled at the present direction of the company, especially its present attempts to appease its critics like Jesse Jackson."

Last Month, NLPC released a special report titled Wal-Mart Embraces Controversial Causes: Bid to Appease Liberal Interest Groups Will Likely Fail, Hurt Business. The 11,000-word report is authored by Carlisle.

The report details Wal-Mart's new policies in three areas:

Racial preferences -- Wal-Mart goes well beyond affirmative action. The company mandates numerical quotas for the hiring of minorities and women, and goes so far as to penalize senior executives who fail to meet those quotas.

The retailer also requires its business partners to do the same, or risk a loss of business.

Environmental Alarmism -- In response to demands by activist groups, the company is taking steps to reduce carbon emissions, increase its sales of organically produced products, and promote renewable energy.

The retailer is pressuring its vast army of 60,000 suppliers to adopt its environmental standards. CEO H. Lee Scott invited Al Gore to speak at Wal- Mart's Arkansas headquarters on global warming. Scott has repeated scientifically dubious claims that carbon emissions cause hurricanes.

Culture Wars -- Wal-Mart is financially supporting "gay rights" groups advocating homosexual marriage.

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Wal-Mart hurts inner city

By Steve Painter,
Arkansas Democrat-Gazette
January 9th, 2007                                         [back to top] 

A coalition of civil-rights and workplace activists on Monday accused Wal-Mart Stores Inc. of exploiting workers and neighborhoods as it seeks to build stores in urban settings.

The move came as the Bentonville-based company began airing two image-boosting television commercials in cities across the United States.

The timing was coincidence, Wal-Mart spokesman Dave Tovar said. “One has nothing to do with the other,” he said.

The latest Wal-Mart barbs came from the Los Angeles Alliance for a New Economy and the Partnership for Working Families. The groups released a report outlining strategies for blocking Wal-Mart’s growth.

The world’s largest retailer is seeking to expand in urban core areas after virtually saturating its traditional small-city and suburban base in the United States.

Wal-Mart’s critics released their report after a teleconference with reporters that featured civil-rights and worker advocates from across the country.

The Rev. Eric Lee, executive director of the Southern Christian Leadership Conference of Greater Los Angeles, said Wal-Mart was engaging in “a corporate strategy that devalues the residents and businesses in inner-city, minority communities.”

Drawing comparisons to the civil-rights movement of decades ago, the Rev. Lennox Yearwood, chief executive officer of the Hip Hop Caucus, based in Washington, criticized Wal-Mart for its push for more part-time workers and fewer full-time employees as a way to cut costs.

“Wal-Mart has become our lunch-counter movement of the 21 st century,” he said. “It’s time for an opportunity-rights movement.”

Wal-Mart entered the Chicago market last year, but not until after a political battle that included special workplace requirements approved by the Chicago City Council but vetoed by Mayor Richard Daly.

To date, the company has not succeeded in entering New York City.

Tovar said the company takes pride in the jobs it provides and the savings it offers consumers when it enters a new market.

And he said the company’s commitment to diversity reaches from the store level to the board of directors.

“The public will see through these attacks, because they know Wal-Mart offers good jobs and opportunities, helps working families save money and gives back more to our communities than virtually any other company in America,” he said.

The new television commercials drew positive responses when test-marketed in Tucson, Ariz., and Omaha, Neb., last year, Tovar said.

They depart from Wal-Mart’s traditional low-price message and, instead, focus on image.

A 60-second spot called Sam’s Dream features images of company founder Sam Walton and his original five-and-dime store in downtown Bentonville. It talks about the company living up to Walton’s message of treating customers like family and giving back to the community.

A 30-second spot, Our Company, talks about the company’s health insurance plans — long a target of union critics.

Tovar said the commercials are airing in “a good amount of markets,” including Seattle, Pittsburgh and Denver, but declined to provide a full list.

“It’s in select markets where we felt would be particularly helpful to our business,” he said.

Van Jones, executive director of the Ella Baker Center for Human Rights in Oakland, Calif., participating in the teleconference, referred to the new advertising campaign as “new fiction about its impact on communities.”

Tovar said the commercials were developed last year by Blue Worldwide, the advertising division of the Edelman public relations group Wal-Mart hired earlier in the year to help counter political attacks.

That work was separate from Wal-Mart’s highly publicized hiring, then firing, last year of advertising agency Draft FCB of Chicago to handle its $ 580 million advertising account.

On Monday, Wal-Mart’s stock slipped 39 cents, or 0. 82 percent, to $ 47 on the New York Stock Exchange.

Adrianne Shapira, an analyst with Goldman Sachs in New York, downgraded the stock from buy to neutral in a note to clients.

“Will Wal-Mart continue to target incremental sales from higher-end consumers ? Or, will the company go back to its roots to reinforce its pricing message ?” she wrote. “Right now the company seems to be ‘straddling the fence’ — attempting to do both and not garnering much success.”

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Traffic is key issue in Wal-Mart fray

The Hamilton Spectator                        [back to top]

BURLINGTON (Jan 9, 2007) The fight to stop Wal-Mart from building a large store near downtown Burlington resumes tomorrow with an examination of traffic concerns.

Wal-Mart's potential impact on traffic is a hot-button issue for residents living in the city core. They will make their case against the store at an as-yet unscheduled time at the Ontario Municipal Board hearing deciding the matter. The hearing, which took a break in early December, has already spent eight weeks on planning issues and whether they permit the store in that location.

Wal-Mart, which owns 7.6 hectares of land at Fairview and Brant Streets, is appealing Burlington council's refusal to allow a zoning amendment required for its proposed store of 129,000 square feet.

Residents are up in arms over what they believe will be additional congestion on Fairview and on their own streets when drivers, in an effort to avoid traffic, travel through residential areas.

John Boich of Rambo Creek Ratepayers' Association said, "Traffic will be horrendous ... Those of us who live here know it's already a problem."

copyright 1991-2005, The Hamilton Spectator. All rights reserved

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Wal-Mart Fights for Its Reputation

The giant retailer is launching a nationwide ad campaign just as critics are stepping up their attacks

by Pallavi Gogoi
January 9, 2007                            [back to top]

The ad opens with a grainy shot of a retail store. "It all began with a big dream in a small town," a narrator says. The image changes to Sam Walton, the founder of what has become Wal-Mart Stores (WMT), the country's largest retailer. It goes on to describe how Wal-Mart workers believe in treating customers "like family," how the company has created "thousands of American jobs," and how when Wal-Mart comes to town, "it's like getting a nice pay raise."

The advertisement is part of a multimillion-dollar marketing campaign that Wal-Mart launched nationwide on Jan. 8 to tell viewers about the positive characteristics of the retail chain that has been under fire in recent months. The ads also claim that Wal-Mart's employees get health benefits for less than $1 a day and that the company contributed $245 million to local charities last year. "We think this will give more people the opportunity to learn about who we are, as we strive to build what is good for American working families," says David Tovar, spokesman for Wal-Mart. "And it will give people comfort as they shop our stores."

If only it were that easy. Wal-Mart's critics have been hammering the company over a number of issues, including its pay and benefits practices, and they show no signs of backing off. On the very day that Wal-Mart launched its ad campaign, a group called the Los Angeles Alliance for a New Economy organized a teleconference in which religious, political, business, and civil rights leaders called on Wal-Mart to improve its treatment of employees and become a more responsible community partner.

Hard-Hitting Reports The group released two statements signed by 100 urban leaders—one demanding that Wal-Mart's chief executive, Lee Scott, change his approach to urban communities, the other calling on elected officials to enact policies that encourage the creation of good jobs in urban America. "Our research found that when Wal-Mart comes into any area, it reduces earnings of the community by 1.3% and the worst affected are black workers and others of color," says Steven Pitts, a labor policy specialist at the University of California, Berkeley, who took part in the conference call.

The Los Angeles group also released a report on the impact of Wal-Mart on communities, stating that employees earn 20% less than the average retail worker earns and more than $10,000 less than what the average two-person family needs to meet its basic needs. The company enrolls fewer than half of its employees in its costly health insurance plan, compared to 67% for the average large employer.

As a result, taxpayers end up subsidizing health care for the company's workers. "In California alone, taxpayers pay $32 million annually in medical care for Wal-Mart employees," says Tracy Gray-Barkan, director of retail policy for the group and author of the report. Wal-Mart's Tovar wouldn't comment on the specifics because he didn't know the origins of the cited data but said: "Wal-Mart is proud of the economic impact that we have in communities in that we provide competitive jobs and opportunities and save money for working families in the communities that we operate in."

Repairing Its Image The back and forth between Wal-Mart and its critics underscores the fundamental challenge facing the retailer. Scott is pressing hard to improve the company's image, yet financial pressures are pushing him to take the kind of actions that antagonize the company's critics. While the activists call on Wal-Mart to boost pay or slow expansion, the company needs to open new stores and keep tight controls over expenses to satisfy shareholders. Its stock has gone sideways for five years, frustrating many investors. "As a shareholder, my main concern is that Wal-Mart might be reaching saturation point in the U.S., and if they show continued same-store sales declines, it's a huge worry," says David Abella, portfolio manager at New York's Rochdale Investments, which has $2.3 billion in assets.

He's not the only investor who's concerned. Patricia Edwards is a managing director and portfolio manager at Seattle money manager Wentworth Hauser & Violich, which has $7.9 billion in assets including Wal-Mart stock. She points out that a shiny new Wal-Mart Supercenter is built and ready to open in Chelan, Wash., but has been put on hold because of opposition from the town's citizens. The opening was planned for Jan. 22, but some opponents want to tear down the structure. "Not only is [Wal-Mart's] battered image having a negative impact on sales and earnings, but on its efforts to build new stores," she says. The company's sales growth has been sluggish of late. In December, same-store sales were up 1.6%, the slowest rate in six years.

Wal-Mart clearly recognizes the importance of its corporate image. It has been increasing efforts to counter critics in the last year and half. For years, the company avoided politics, but now it has hired PR giant Edelman and a string of big name political consultants, including Leslie Dach, a former media advisor to President Bill Clinton. The company has also steadily boosted political contributions, particularly at the state and local levels, where many of these issues are coming to the fore (see BusinessWeek.com, 9/28/06, "Wal-Mart's Rising Political Payouts").

Political Pressure Still, Wal-Mart and its business practices may become even more of a political issue in the months ahead. Presidential hopefuls Senator Barack Obama (D-Ill.) and John Edwards have already made it clear that the practices of Wal-Mart and other big businesses will be major campaign issues. And two union-funded groups, Wal-Mart Watch and WakeUpWalMart.com, are increasing the pressure on the company, charging that the Bentonville (Ark.)-based company mistreats its employees and doesn't pay a living wage or offer affordable health care (see BusinessWeek.com, 10/31/06, "Wal-Mart: A 'Reputation Crisis'").

These detractors see little new in Wal-Mart's latest advertising campaign. "Unfortunately, using Sam Walton's image in a new TV ad doesn't change the reality that Wal-Mart has turned its back on everything Sam Walton stood for, by capping salaries, eliminating health-care plans, ending its "buy American" program, and implementing a new antifamily scheduling policy that makes it difficult for employees to take care of a sick child or schedule day care," says Chris Kofinis, communications director at WakeUpWalMart.com.

Wal-Mart is fighting for its image—and for its financial future. Its reputation is becoming increasingly important to its growth strategy, as it pushes to expand into urban areas and to attract more high-income customers. "Wal-Mart is an embattled company and is fighting many wars on all sides," says Edwards of Wentworth Hauser. "The management is in a situation where they need to be working and sleeping with flack jackets on."

Gogoi is a contributing writer for BusinessWeek.com.

Copyright 2000-2007 by The McGraw-Hill Companies Inc. All rights reserved.

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The unending woes of Lee Scott

By Jon Birger,
Fortune
January 9th, 2007                            [back to top]

The king of retailers has lost ground to competitors since its current CEO took over. Wall Street is starting to lose patience, says Fortune's Jon Birger.

(Fortune Magazine) -- The world's biggest retailer had a lousy 2006.

There were personnel problems, like the resignation of Sam's Club marketing head Mark Goodman and the embarrassing ouster of Julie Roehm, the young advertising whiz Wal-Mart had hired away from DaimlerChrysler.

There were legal troubles: In October a Philadelphia jury ordered Wal-Mart to pay $78 million to a class of 185,000 workers who claim they were denied breaks and forced to work off the clock. There were also business woes: The company took a $900 million charge after its forays into Germany and South Korea turned sour.

Same-store sales growth turned negative in November before rebounding to 1.6 percent in December - ahead of analysts' predictions of 1 percent, but still skimpy. (Same-store sales at Costco (Charts) and Target (Charts) were up 9 percent and 4.1 percent, respectively.) And Wal-Mart's stock, currently about $47 a share, was flat in an otherwise strong year for stocks.

Then there were the public relations fiascoes. Wal-Mart (Charts) had to sever its relationships with political consultant Terry Nelson and former Atlanta mayor Andrew Young. Nelson had a hand in the race-baiting "Harold, call me!" spot in the U.S. Senate race in Tennessee, and Young, while speaking on behalf of Wal-Mart, accused Jewish, Korean and Arab shopkeepers of selling spoiled food to inner-city blacks.

Bad years do happen to good companies. But for Wal-Mart, 2006 was just another downer in a period of decline that's lasted seven years and overlaps the tenure of the company's current CEO, Lee Scott.

Unhappy investors

Wal-Mart's stock has fallen 22 percent since Scott took the reins from David Glass in January 2000 (the Standard & Poor's 500 index is down just 2 percent over the same period), wiping out $90 billion in market capitalization. Those are huge numbers, and at any other company there would be a groundswell of rage from investors - the kind that just cost Robert Nardelli the CEO job at Home Depot (Charts). (During Nardelli's six-year tenure, Home Depot's stock outperformed Wal-Mart's, 3 perent to 7 percent.)

At Wal-Mart there has been no uprising apart from some speculation in the retail trade press last summer that Scott's job might be in jeopardy because he had taken May off. (Wal-Mart denied the reports.)

Still, Wall Street seems to be losing patience. Among institutional investors unloading Wal-Mart shares last year were American Century, MFS, Marsico Capital and Chase Investment Counsel. Chase, an independent investment firm that operates the Chase Growth Fund, sold its entire four-million-share stake late last summer in favor of positions in Kohl's and J.C. Penney.

Asked what Wal-Mart could do to get back on track, Chase Growth manager David Scott (no relation to Lee) says, "I don't know. That's probably why I no longer own the stock."

There are those on Wall Street (though none would speak for attribution) who think Scott himself is the problem. "It's like he's forgotten what the business model was all about - driving the top line by relentlessly lowering prices," says one Wall Street analyst. "But you look at their margins, they seem to be getting away from that."

Indeed, Wal-Mart has been taking a bigger profit on each item sold. Wal-Mart's gross margins, according to Baseline, have increased to 25 percent this year from 22 percent in 1999, which appears at odds with the chain's historical commitment to "everyday low prices."

Others are more charitable. "If anything, I think investors sympathize with [Scott] for being under the gun the way he is," says Margaret Gilliam, president of Gilliam & Co. and a veteran retail analyst, who was close to the late Sam Walton and remains in touch with the Walton family. Sam's heirs, along with other insiders, control 40 percent of the company's stock.

"I know [Scott] has the support of the family," Gilliam says. She points out that Scott has been forced to spend a considerable amount of time fighting persistent (and unfair, in Gilliam's view) attacks by two union-funded anti-Wal-Mart groups - Wal-Mart Watch and Wake-Up Wal-Mart - who complain about employee pay and benefits (see "Attack of the Wal-Martyrs"). Those campaigns may have hurt. According to a 2004 McKinsey & Co. report, 2 percent to 8 percent of Wal-Mart customers surveyed have ceased shopping at the chain because of negative press.

Getting back its mojo

It's true that Scott faces huge challenges. With expected sales of $350 billion for the fiscal year ending this month, Wal-Mart is such a behemoth that increasing the top line by 10 percent means adding $35 billion in yearly sales. That's roughly equal to the combined revenues of Staples, Barnes & Noble, Starbucks and Nordstrom.

And Wal-Mart under Scott has done some things right. Its green strategy - which includes everything from cutting back on packaging to selling more energy-saving light bulbs - has generated positive press, deservedly so (see "The Green Machine").

Scott himself has come out of the Bentonville bunker and made himself more accessible to the public - although he declined to be interviewed for this article. Scott also deserves credit for knowing when to cut his losses in South Korea and Germany. And unlike Home Depot's recently deposed Nardelli, Scott has neither a garish pay package nor a reputation for imperiousness. None of that, though, has budged the stock.

How can Wal-Mart get its mojo back? Here are four ideas from Fortune interviews with analysts, investors and retail experts:

Spin off Sam's Club. Sam's Club was designed to compete against warehouse clubs like Costco. Costco, though, has run circles around Sam's, and warehouse club pioneer Sol Price offered an explanation in a 2003 interview with Fortune: "The biggest thing with Sam's was that it didn't have a free hand to compete with Wal-Mart."

Spinning off Sam's would be good for Wal-Mart shareholders. Not only do spinoffs typically outperform the S&P 500 - by as much as ten percentage points during their first two years - but the stock of the parent company fares better too. "

Companies do much better when they're run on their own," says retail guru and Wal-Mart bull David Berman of hedge fund Durban Capital. "The same CEO is going to be hungrier and working harder."

Stop trying to be a growth stock. Wal-Mart has lately looked for growth in upscale goods and expansion into Europe and Asia. The problem is, says UBS analyst Neil Currie, "when Wal-Mart travels outside the U.S., the scale advantage doesn't mean as much." And Wal-Mart is still trying to figure out how to compete with chains that offer better service on pricey items like flat-screen TVs. Bear Stearns analyst Christine Augustine, another Wal-Mart bull, says, "If they don't take any risk, they'll never move forward."

But Staples founder Tom Stemberg thinks Wal-Mart should "quit trying to be a growth company, stop being distracted by [Europe and Asia], and focus on the U.S., Canada and Mexico," says Stemberg, now a partner with private-equity shop Highland Capital. That would free cash for stock buybacks and dividends. "Instead," Stemberg says, "they've decided they're going to defy the laws of gravity by expanding to half the world and trying to go upscale in fashion."

Extend an olive branch to the haters. HSBC retail analyst Mark Husson's suggestion was the boldest we heard: Take a one-year "holiday" from earnings growth to increase pay and particularly benefits for employees. "I could write the press release now," says Husson, whose stock-picking prowess ranked among the top 5 percent of all analysts last year, according to StarMine. "'Having done the right thing by consumers for so many years, it's now time to do right by our employees. It will be good for America and good for our employee turnover as well.'" Husson says high turnover is hurting sales, especially of upscale items.

A splashy act of goodwill, says Husson, should also make it easier for Wal-Mart to expand in blue states, where efforts to open new stores have met the most resistance. Kentucky has three times as many Wal-Mart supercenters (61) as California (21). On a per capita basis, Wal-Mart is four times more concentrated in red states than in blue, whereas Target's stores are evenly divided.

Show some urgency. Perhaps what's most troubling about Wal-Mart is that neither Scott nor those around him seem to feel investors' pain. "Why would our CEO be on the 'hot seat' in a year where we've had record sales and earnings?" Wal-Mart spokeswoman Mona Williams asked Fortune in an e-mail. Williams blames the stock drop on Wal-Mart's 12-month trailing price/earnings ratio of 54 when Scott took over: "Was that a realistic number long-term?" (Wal-Mart's P/E is now about 17.)

When Scott does acknowledge problems, his diagnoses seem off. In an October meeting with analysts, Scott blamed Wal-Mart's surprisingly weak same-store sales growth on high gas prices and on store remodelings. HSBC's Husson says, "They've done remodels before - they should know what the effect is." As for gas prices, Scott predicted sales would rebound when energy prices fell. Prices did fall, from $3 a gallon in August to $2.30 in late December, yet Wal-Mart's slide in same-store sales growth continued, from 2.7 percent and 1.8 percent in August and September to - 0.1 percent and 1.6 percent in November and December. While December's number was touted as a rebound, it was well below the 3.3 percent retail average for the month.

Scott may yet turn things around, of course. Bets in China and India for instance, may start paying off. But Wall Street is not likely to put up with a 2007 from Wal-Mart that looks anything like the year that just ended.

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Bharti, Wal-Mart likely to announce plans soon

IRIS NEWS DIGEST
09 January 2007                                           [back to top]

Bharti Enterprises is likely to announce the financial details and plans to roll-out the retail stores across the country in the next month, reports Economic Times.

Bharti Enterprises had recently tied up with the US retailer, Wal-Mart. Bharti planned a cluster of outlets, preferably beginning with north India and Bangalore.

Bharti Enterprises focused its strategy on telecom while spanning diverse fields of business. The creation of `Airtel` to becoming the largest manufacturer and exporter of world class telecom terminals, under its `Beetel` brand, has helped the company create a position for itself in the global telecommunications sector.

While a joint venture with TeleTech, USA marked Bharti`s successful foray into the customer management services business, Bharti Enterprises` dynamic diversification has continued with the company venturing into telecom software development.

Recently, Bharti successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India to export fresh agri products exclusively to markets in Europe and USA.

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Wal-Mart in political-style TV campaign

UPI                                [back to top]

BENTONVILLE, Ark., Jan. 9 (UPI) -- Wal-Mart Stores Inc. has launched a U.S. TV campaign modeled after political advertising to polish the retailer's tarnished image, the company says.

The campaign includes a commercial called "Sam's Dream," in which a male narrator says, "It all began with a big dream in a small town, Sam's Dream." The narrator later says, "It's been said that when Wal-Mart comes to town, it's like getting a nice pay raise."

Another commercial touts Wal-Mart's recent healthcare initiatives, saying the chain has "moved 150,000 uninsured employees into a company-sponsored health plan."

The commercials, created by Washington-based Blue Worldwide, a division of Wal-Mart PR firm Edelman, seek to appeal to working families by promoting a study financed by Wal-Mart that finds the retailer saves the average family $2,300 a year.

The campaign represents a dramatic shift away from recent campaigns focused on the retailer's merchandising efforts to woo more affluent shoppers, Advertising Age reports.

Wal-Mart, the nation's largest retailer, reported a 1.6 sales gain in December.

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Wal-Mart Makes Leadership Changes in Global Procurement

Experienced Retailer Promoted as Lawrence Jackson Resigns

PR Newswire                                         [back to top]

BENTONVILLE, Ark., Jan. 8 /PRNewswire-FirstCall/ -- Lawrence Jackson, President and CEO of Global Procurement, has resigned from Wal-Mart Stores, Inc. , effective Feb. 9. Jeff Macho has been promoted to Senior Vice President of Global Procurement, effective immediately. Macho is based in Shenzen, China, and will report to Vice Chairman John Menzer. Jackson will continue with the Company until Feb. 9 to help in the leadership transition.

"We have been fortunate to have had the benefit of Lawrence's experience and drive over the past two years," said Wal-Mart Stores, Inc. President and CEO Lee Scott. "He has been passionate about keeping us focused on our customer and has played a big role in moving our business forward during his time here."

Jackson joined Wal-Mart in 2004 from Dollar General Corporation, where he was President and Chief Operating Officer. He has also held a wide variety of positions in Safeway, Inc. and PepsiCo, Inc. He hit the ground running when he came to Wal-Mart, heading up the world's largest private workforce as Executive Vice President of the company's human resources division. In April of last year, he was promoted to President and CEO of Global Procurement, leading the company's efforts for quality products and ethical sourcing in some 60 countries.

"Throughout the past 30 years as I've built my career, my family has been unselfishly supportive," Jackson said. "I now have three teenagers, and have decided to spend more time with them and my wife. I've been at Wal-Mart during a time of almost unparalleled transformation and the company has given me a tremendous opportunity to learn and grow while contributing in key areas," he continued. "I would not trade my experience at Wal-Mart for anything."

Jackson intends to stay active with his business interests through teaching, executive coaching and corporate board work.

Macho has been working in the global procurement field for 13 years. He joined Wal-Mart in 2005 as Vice President and Managing Director of Apparel Merchandising in Global Procurement. He is responsible for managing, developing and implementing strategic initiatives in overall apparel sourcing. He has helped build a whole new organization and direct import process for apparel, resulting in a true global sourcing organization with a local presence in the major markets. This includes taking a leadership role with the supply base, market research, production and quality.

"I look forward to working with Jeff and the new perspective he will bring to Global Procurement," Scott said. "We are fortunate to be able to tap into his talent and the experience he has in both global sourcing and merchandising. Jeff understands what the customer wants, what the customer needs, and what we as a company need to do to deliver that."

Before Wal-Mart, Macho was Vice President and Managing Director for the International Buying Offices for Sears, based in Hong Kong. There he was responsible for all buying and quality assurance offices in 21 locations worldwide. He has also gained extensive experience at other retailers, holding positions ranging from buyer to divisional vice president at retailers including Dayton Hudson, the former May Department Stores and Federated Department Stores.

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Wal-Mart: Where's the Remodeling Boost?

McGraw-Hill Companies
January 8, 2007                                         <