Price Check

KXAN-TV (TX)
April 28, 2006             [back to top] 

Every time you go shopping, you could be getting overcharged and not even know it. Electronic checkout scanners are not always accurate. KXAN NBC Austin decided to put them to the test. Our Chris Willis went shopping with a hidden camera and found out you could be getting ripped off.

The checkout scanner is a device that makes your life easier, but at what price?

"Sometimes, there's actually a price tag on the item, and then of course, there's the scanned price," Better Business Bureau Vice President Erin Jones said.

Trillions are spent each year in retail stores. Electronic scanners tally most of that money.

So the question is: do you trust them with your money? Maybe you shouldn't.

Thanks to budget cuts from the 2003 Legislature, nobody is keeping regular tabs on the accuracy of checkout scanners.

We found that people are getting ripped off.

So we decided to check them for you. We took our undercover cameras to big box retailers and grocery stores in Central Texas.

What we found may surprise you because if we're being taken, the odds are so are you.

Clearance items can really cost you. "On sale" can really mean a sneaky full price. You're about to see who's watching out for your bottom line.

Stephen Pahl is the Regulatory Programs Branch Chief for the Department of Agriculture.

"The scanner itself doesn't cause the inaccuracy because it's just a device that scans something, and it spits out the price it has scanned," Pahl said.

It's his job to make sure you're paying the right price, but lawmakers cut his random scanner checks.

The agency now acts only when a consumer complains.

"A program that we have to, you know, deter those that may be a little unscrupulous," Pahl said.

Store managers don't usually allow our cameras to come in and check things out so we used a hidden camera and went shopping.

The first stop is the Wal-Mart on 183 and I-35. We went straight to the clearance rack, which is supposedly where the best deals are, right?

We pulled a child's sweater set off the rack, which was marked $9. On the big clearance aisle, we found a halogen flood light for $3.

We also found a baseball batting glove in the 50-cents clearance bin. We ended up paying more than 20 times that price for the batting glove.

"Consumers may not be double-checking their receipts," Pahl said.

But if you do double-check your receipts, you could catch the blatant mistakes. We checked our receipts, and we found mistakes.

Of the 18 items we purchased at the Wal-Mart on 183 and I-35, three were scanned incorrectly, but the overcharge was enormous.

The sweater set scanned at $13 -- an overcharge of $4.

The halogen flood light scanned at $7.47. That's an overcharge of $4.47.

Our deal of the day turned into the biggest rip-off. The batting glove in the 50-cent clearance bin scanned at $12.46. That's nearly 23 times the sale price. It's an overcharge of $11.96.

Our 18 items totaled $70.62, which if the scanner was accurate, should've been $50.19. It was an overcharge of $20.43.

"There are many different places where pricing is shown," Jones said.

The Better Business Bureau says they're not flooded with scanner complaints because they believe consumers don't even know they're being overcharged.

"In Texas, they have about an 85-percent accuracy rate," Pahl said.

It was better, but still inaccurate when we took our hidden cameras to the grocery store.

We looked for items specifically marked "on sale" at the Fiesta on I-35. Of the 12 items we purchased, one was incorrect.

The Zip Lock bags marked "on sale" at $2.49 scanned at $2.69.

It was a 20-cent difference. If it happened to us, it likely happened to the thousands of other shoppers that day, and that can add up to huge profits for them and money out of your pocket.

"We just don't tolerate that here in Texas, so it's a zero tolerance in Texas," Pahl said.

It's fair to mention, we also went to Randalls, H-E-B and Target.

Their scanners got it right.

Wal-Mart sent us this statement, "We stock hundreds of thousand of items and can make more than 5,000 price changes per week. We strive for 100 percent price accuracy. We do audit our stores to make sure our pricing is as accurate as possible."

This is a problem you, the consumer, have complete control over. Check your receipt. Match it with the sale prices.

If you are overcharged, you can call 1-800-TELL-TDA . They move quickly and will get out to check the scanners immediately.

[back to top] 

Wal-Mart turning up heat on reluctant politicians

By Emily Kaiser
Reuters
April 27                   [back to top] 

EVERGREEN PARK, Ill., - One block outside Chicago's city limits stands a new Wal-Mart store that may be the retailer's most powerful weapon in a long-running effort to quell big-city opposition to its expansion.

Stung by resistance to new stores in Chicago, New York and Los Angeles, Wal-Mart Stores Inc. <WMT.N> is countering with a stern message for city leaders -- turn us down and we'll go to neighboring suburbs, taking jobs and tax revenue with us.

In Evergreen Park, just outside Chicago, Wal-Mart boasts that 25,000 people applied for 325 available jobs. The few who were hired call themselves "The Chosen Ones."

Nearly all the applicants listed Chicago home addresses -- much to the dismay of Chicago Alderman Howard Brookins Jr., who lobbied unsuccessfully for a Wal-Mart store in his nearby South Side district. The Evergreen Park location opened just 18 months after Chicago rejected the South Side store.

"We are losing a whole hell of a lot of revenue, and there is no answer to that," said Brookins, who recently visited the Evergreen Park store and estimated that three-quarters of the cars parked in the lot had City of Chicago stickers, indicating they belonged to city residents.

"It would be one thing if, when Chicago said no, people from Chicago weren't shopping at those stores," he said. "If you can't stop them (from shopping there) then the best thing to do is at least keep some of that tax base in Chicago."

Analysts say the Evergreen Park store could be the most important location in Wal-Mart's 3,800-store U.S. chain if it makes city leaders think twice about rejecting Wal-Mart.

"It accomplishes two great things -- it develops a very profitable store, and it sends a strong message to other cities as to what Wal-Mart's approach is going to be if they decide to be obstinate," said Darrell Rigby, head of the global retail practice for consultants Bain & Co.

Wal-Mart is nearing saturation in the smaller markets where it got its start, so growth increasingly depends on gaining access to urban areas.

But moving into big cities puts the retailer face-to-face with its biggest critics, which include labor unions, anti-sprawl groups and environmentalists who contend that Wal-Marts drive local competitors out of business, depress wages and benefits across the retail sector, and damage the environment.

Some on Wall Street have called on Wal-Mart to slow down from its typical 8 percent annual square-footage growth, noting that the return on investment has been falling in the United States. Wal-Mart insists that returns are improving now, and it has more than 1,000 new stores in the pipeline.

JOBS AND TAXES

Wal-Mart CEO Lee Scott has taken every opportunity to tout the Evergreen Park store, where he said sales were "exceeding our wildest expectations."

At the National Governors Association meeting in February, Scott hammered home the jobs message in a speech to state leaders, who have not always welcomed Wal-Mart with open arms.

He said the retailer wanted to build a store on Chicago's underdeveloped South Side, "but the local aldermen would have none of it. So Evergreen Park, just outside the city limits, welcomed us in."

He mentioned the 25,000 applicants and added: "Those men and women needed jobs. And they wanted Wal-Mart jobs."

The message appears to have gotten through.

Arkansas Gov. Mike Huckabee, a Wal-Mart proponent and chairman of the governors association, said he has spoken to several of his peers who had reservations about Wal-Mart, but were reluctant to oppose the retailer for fear of losing out on the jobs and tax revenue.

Wal-Mart is the largest U.S. private-sector employer with more than 1.3 million workers, which gives it plenty of political clout. But it has also come under fire because thousands of its employees receive government-funded Medicaid, putting major strain on state budgets.

Indeed, opponents say that much of the tax benefit from Wal-Mart stores is used up by the Medicaid expenses and costs for increased policing to address shoplifting and other crimes. They also point to economic studies that show Wal-Mart stores actually reduce retail employment because some competitors go out of business.

NEXT STOP: NEW YORK

Evergreen Park Mayor James Sexton said his village and school districts expect to receive $1.5 million this year from sales and property taxes, making Wal-Mart the largest single revenue source. He said security issues had been "nil" so far, and did not require additional police.

"We're loving it," he said. "There was some hesitation because of the union issues, but we had an agreement with Wal-Mart from the beginning that it would be built from bottom to top with local union trade people, and they upheld their promise on that."

His village also requested and received a red brick exterior, instead of the typical blue-and-gray painted box. He said the store, which is smaller than the massive Wal-Mart supercenters that carry a full line of groceries, was expected to generate $70 million in sales this year.

Wal-Mart does not disclose sales data for individual stores, but based on last year's store count and revenue, the average store generated about $65.8 million in sales. The majority of those stores were the larger supercenters, however.

A similar strategy is playing out in other cities too. Wal-Mart highlights an Oakland, California, store where 15,000 people applied for a few hundred jobs. The store is across the bay from San Francisco, another pocket of Wal-Mart opposition.

In New York, Wal-Mart is getting ready to open a store in suburban White Plains. New York City recently passed an ordinance that would force Wal-Mart to pay more for health care, and the retailer's efforts to build a store in the borough of Queens were thwarted.

Wal-Mart spokesman Philip Serghini said the White Plains store was not designed to make an impression in New York City leaders, but would no doubt draw city residents. Some 3,000 people have applied for 350 jobs, he said.

© Reuters 2006. All rights reserved.

[back to top] 

Union Leaders Target Wal-Mart

By Joe Napsha
Pittsburgh Tribune-Review
April 27, 2006                             [back to top] 

The nation's largest employers -- particularly Wal-Mart Stores --- should pay higher wages and offer workers affordable health-care benefits without shifting that burden to taxpayers, union leaders told supporters at a Pittsburgh rally Wednesday. "Workers are rallying to urge Wal-Mart to start ... treating their employees with respect and dignity. Despite $11 billion in profits last year, Wal-Mart has 1.3 million people, and over 57 percent are not offered affordable health care," Ron Lenhart, president of the United Food and Commercial Workers Union Local 23 in Canonsburg, told about 80 union members and activists during a lunchtime rally at Mellon Square, Downtown.

Wal-Mart workers who rely upon state-supported health insurance programs are costing American taxpayers about $1.4 billion every year, Lenhart claimed. The nation's largest retailer is not alone in shifting health-care costs to the taxpayers because other large corporations are doing it, he said.

Although Wal-Mart has responded to critics by providing more health-care insurance plans for its employees, Lenhart said "the new health plan simply makes more eligible employees that can't afford their health care."

In response, Wal-Mart issued a statement yesterday, saying it has expanded its $11 per month health-care plan. Half of its work force will be eligible by Jan. 1, 2007, said Kelly Hobbs, a Wal-Mart spokeswoman. Seventy-five percent of its workers already are covered by private insurance, whether it is through Wal-Mart, a spouse, or their parents' plan, Hobbs said.

"America's working families must be mystified by any group that would rally against an $11 per month health plan, $3 prescription drug co-pays and expanded health coverage for children," the Bentonville, Ark.,-based chain said.

The 30-minute rally was sponsored by Change to Win, a coalition of seven international unions, six of which split from the AFL-CIO during the past year. It is one of about 40 rallies that the union coalition is planned nationwide during its "Make Work Pay" campaign.

The rally was followed with a Downtown petition drive that gathered more than 650 signatures in support of state legislation that would require large companies -- those with more than 10,000 employees in Pennsylvania -- to pay at least 9 percent of their payroll on health insurance.

The Pennsylvania HealthCare Accessibility and Insurance Responsibility Act, known as the "fair share" health-care bill, was introduced in the state House on April 3 and was referred to the insurance committee, which has yet to schedule hearings.

[back to top] 

Unions Protest Wal-Mart Health Care

Associated Press
2006-04-27                   [back to top] 

Unions representing six million workers rallied Wednesday in 35 cities from New York to Los Angeles to protest what they called inadequate health-care coverage by Wal-Mart Stores Inc., the nation's largest employer.

In Atlanta, about 50 to 60 people gathered in a church. In Denver, about 200 people turned out. Only 14 showed up in El Paso, Texas, where organizers said they were unable to get a city permit for a larger demonstration. In Cleveland, WKYC TV reported dozens of protesters. Organizers said the totals were over 350 in Los Angeles and Portland, Ore., and around 100 in Pittsburgh.

The Change to Win labor federation of seven unions, which broke away from the AFL-CIO last year to form the nation's second largest labor group, said Wal-Mart epitomizes a business model of low pay and benefits that harm the middle class. The AFL-CIO has about eight million members.

"You can't really talk about these issues without talking about Wal-Mart. Wal-Mart drags everybody down, but they are not the only bad actor out there," said Carole Florman, spokeswoman for Change to Win.

It is the federation's first national rally targeting Bentonville, Ark.-based Wal-Mart and part of a broader campaign called "Make work pay" aimed at raising living standards for workers, she said.

Wal-Mart called the rallies a political stunt that ignored the fact that it created 225,000 U.S. jobs last year and provides career opportunities and above-average pay and benefits for the retail sector. It also says it saves its customers, including working families, about $2,300 a year.

"We are an economic engine. Wal-Mart is good for the communities we serve," said company spokesman Dan Fogleman. He added that Wal-Mart recently announced it would help small businesses grow around 50 stores it plans in blighted urban areas.

The rallies were organized together with WakeUpWalMart.com, a political campaign group started a year ago by the United Food and Commercial Workers union to pressure the retailer to raise pay and benefits and improve working conditions. The UFCW is part of Change to Win.

Paul Blank, campaign director for WakeUpWalMart.com, targeted Wal-Mart's health-care insurance, which he said failed to cover 57 percent of its work force, or 775,000 employees. That estimate is based on earlier Wal-Mart numbers, the group said.

Wal-Mart's own latest count from February was that 615,000 employees, or 46 percent, were enrolled in company health plans as of January.

The unions also cited an internal Wal-Mart memo, which became public last fall, that said 46 percent of the children of Wal-Mart workers were uninsured or on public health care.

Wal-Mart has defended its health care coverage and twice since October has announced improvements, including shorter eligibility periods for part-time workers, coverage for their children, lower premiums between $11 and $23 a month and reducing prescription co-pays to $3 from $10.

The announcements reflect growing outside pressure on the company, which was exhibited in the state of Maryland recently. There, the state's legislature passed a law that requires companies with more than 10,000 Maryland employees to spend at least 8 percent of their payroll on employee health care or pay the difference into the state's Medicaid fund.

The Change to Win federation is made up of the carpenters' union, the laborers' union, the service employees, the Teamsters, United Farm Workers, UFCW and UNITE Here.

[back to top] 

What's Online Maybe the Heirs Aren't Apparent

By DAN MITCHELL
April 29, 2006               [back to top] 

THE watchdog group Public Citizen (citizen.org) and the advocacy group United for a Fair Economy (faireconomy.org) issued a report this week saying that 18 superwealthy families are largely responsible for financing the lobbying campaign aimed at repealing the estate tax; the Senate is scheduled to take up repeal next month.

The families, worth $185.5 billion, have financed and coordinated the campaign and have, until now, managed to hide their participation behind the trade associations and business groups they have formed to represent their interests, Public Citizen reported. The families include those behind some of the nation's biggest and best-known companies, like Wal-Mart, E.& J. Gallo Winery, Nordstrom and Koch Industries.

In a news release presenting the 58-page report, available on its Web site, Public Citizen pulls no punches. "This report exposes one of the biggest con jobs in recent history," Joan Claybrook, president of Public Citizen, said in the release. "This long-running, secretive campaign funded by some of the country's wealthiest families has relied on deception to bamboozle the public not only about who must pay the estate tax, but about how repealing it will affect the country."

Several liberal blogs played the report like a snare drum. A Daily Kos blogger, Chris Kromm, thinks it is just the kind of issue that liberal politicians should use to appeal to Middle America. "This is a perfect issue for Southern progressives," he writes. "Half of the superrich families are based in or have close ties to the South."

Conservative bloggers have largely ignored the report — according to search results on technorati.com — though opponents of the estate tax have offered retorts in the comments sections of several blogs. "So what?" asks someone on the TaxProf Blog. "Or is the thesis that only wealthy liberals like Soros and Peter Lewis are allowed to participate in politics in the United States?"

THE BEST REVENGE Down several steps from the superrich dwell those whose finances are judged more by yearly income and spending than by wealth. These are people who "live well," according to Forbes.com. And they spend at least $277,342 a year in Chicago. In New York City, a family of four isn't living well unless it spends $483,775. In Wichita, Kan., it's $189,305.

Forbes lists several criteria for good living through spending, including: owning a BMW and a Lexus; private schools; regular meals at upscale restaurants; a weekend home; and three vacations a year with stays at places like the Ritz.

"We are not talking about great riches," Forbes.com explains. "There are millions of Americans who work hard to be able to afford the best for their families — and themselves — but who don't entertain notions of owning private jets, sprawling country estates or closets full of the latest fashions. Their goals are more grounded: a good education for their children, a nice house, a weekend place, the occasional trip, a night out once a week and a little money in the bank.

For a little perspective, Forbes.com offers this: "Of course, these numbers are estimates. You certainly can live for less — or for far more. Take a two-week rental instead of buying a summer home, send your children to public schools or dine at home every night, and you will need to earn less money."

Copyright 2006 The New York Times Company

[back to top] 

Young Faces Critics Over Backing of Wal-Mart

By Marilyn Geewax
Atlanta Journal-Constitution
April 25, 2006                                [back to top] 

WASHINGTON — The Rev. Joseph Lowery and dozens of other civil rights and religious leaders are signing a letter that condemns former Atlanta Mayor Andrew Young for his work defending Wal-Mart Stores Inc. The letter, which could still undergo some minor changes before being released today, said Wal-Mart has a "history of breaking child labor laws" and engages in "unethical" business practices. The company now is using Young "to try to turn our eyes from the truth," it says.

Young, in his own letter to church officials released Monday, praised Wal-Mart for allowing poor people to be able to buy "low-cost fruits, vegetables, vitamins, medicines and clothing."

Since February, Young has been serving as chairman of the steering committee for Working Families for Wal-Mart, a group that defends Wal-Mart's business practices.

The letter invokes the name of the Rev. Martin Luther King Jr., the revered civil rights leader who worked closely with Young during the height of the movement in the 1960s.

"Dr. King would have disagreed with Mr. Young on this issue — King sided with the poor," says a passage from the Rev. Jeremiah Wright, pastor of Trinity United Church of Christ in Chicago. "Young is taking a stand against the poor and is siding with the filthy rich who are oppressing the poor."

Young himself is a minister with the United Church of Christ, whose officials initiated the letter, according to Ron Stief, who heads the church's Justice and Witness Ministries.

Stief said Monday the final version of the letter would be sent to Young this morning. It will be released to the media later in the day.

John Thomas, general minister and president of the United Church of Christ, has already sent a private letter to Young, Stief said.

The church cannot order Young to change his position on Wal-Mart. Stief said the purpose of both the private and public letters is to ask Young: "What are you doing defending a company that has done more to hurt working people than any other company?"

Among those who signed the letter were Lowery, another Atlanta-based minister and civil-rights-era leader. Stief said the final version of the letter will have about 50 names attached, including a number of clergy members from the United Church of Christ, the United Methodist Church, the Catholic Church, the Episcopal Church, Jewish groups and others.

The letter quotes Lowery, former head of the Southern Christian Leadership Conference, saying he is "disappointed" that Young "has chosen to defend the wayward ways of Wal-Mart."

Working Families for Wal-Mart was launched with Wal-Mart's funding in December. Last week in Rogers, Ark., just a few miles from Wal-Mart's headquarters, Young chaired the first meeting of 10 members of the group's steering committee, made up of business and community leaders who support Wal-Mart.

Young's consulting firm has a contract for an undisclosed sum with the group. His responsibilities include writing opinion articles and speaking with reporters about Wal-Mart's positive impacts on low-income people.

On Monday, committee spokesman Kevin Sheridan released a letter that Young already had composed and is planning to send to officials of the United Church of Christ to explain his position. Quoting from the gospel of Matthew, Young points out that Jesus Christ admonished his followers to feed the hungry. Young said that has always been his goal as well.

He said that while Wal-Mart may be "far from perfect," it has provided low-priced goods and foods for poor people. He said Wal-Mart critics are misguided. "After failing to get the government to address a social safety net, they are criticizing Wal-Mart for failing to provide it," he wrote.

Besides being an ordained minister, Young is a civil rights leader and former congressman, United Nations ambassador and Atlanta mayor.

After last week's steering committee meeting, Young released a statement noting that Wal-Mart plans "to build more than 50 stores in struggling urban areas, expecting to create up to 25,000 jobs in areas desperately needing employment."

"Even as a lifelong Democrat and union supporter, I have to say it's time for Washington, D.C., union leaders to let working families decide where to shop and work," he said in his statement.

A copy of the letter to Young was provided by Wal-Mart Watch, a union-supported group that pushes Wal-Mart to change its business practices. Spokesman Nu Wexler said that William Jarvis Johnson, Wal-Mart Watch's director of Faith Based Outreach, is among those signing the letter.

[back to top] 

Faith Leaders' Letter Condemns Young for Wal-Mart Role

By Errin Haines
Associated Press
April 25, 2006                    [back to top] 

ATLANTA - Dozens of faith leaders from across the country have signed a letter condemning former civil rights leader Andrew Young for representing Wal-Mart, saying his role with the company contradicts the philosophy of his close friend and comrade, Martin Luther King, Jr. "It is imperative that those of us who worked closely with Dr. King and who have followed in his footsteps tread carefully as we ponder our actions when interacting with Wal-Mart Stores, Inc. and taking into account its harmful effects in our communities," reads the letter, signed by nearly 60 members of various religious groups, including the United Church of Christ.

Young, himself a minister, was ordained under the denomination and is a lifelong member of the church. Among those opposing his alliance with Wal-Mart is the Rev. Joseph Lowery, who served alongside Young and King in the Southern Christian Leadership Conference during the civil rights movement.

"I am disappointed that he has chosen to defend the wayward ways of Wal-Mart," Lowery is quoted as saying in the letter. "I thought that he was seeking to help them change and become a positive force, not to justify their negatives with 'voodoo' economic theories and excuse their practices which swell the ranks of the working poor here and abroad."

Young has come under fire recently from Lowery and others in the civil rights community after his company, GoodWorks International, was hired earlier this year by Working Families for Wal-Mart to promote the world's largest retailer. Young's company, which he has headed since 1997, works with corporations and governments to foster economic development in Africa and the Caribbean.

He has said his role in civil rights has changed from marching and protesting to championing economic opportunity. Before starting GoodWorks, Young was a two-term mayor of Atlanta, congressman and United Nations ambassador. He helped bring the 1996 Summer Olympic Games to Atlanta, along with millions of dollars and thousands of jobs.

Young was not immediately available for comment, but GoodWorks spokeswoman Magdalene Womack said Tuesday afternoon the company had received the letter, which was sent via fax to GoodWorks offices in Atlanta, Washington and New York.

"We will address it in writing," Womack said.

[back to top] 

Wal-Mart seeks to 'organize' labor its own way

But some employees are irked that the plan could 'turn their lives upside down' if it replaces steady shifts with rotating schedules.

By Parija Bhatnagar,
CNNMoney.com
April 25, 2006                   [back to top] 

NEW YORK (CNNMoney.com) - A group of Wal-Mart employees from Pensacola, Florida say their lives will be turned "upside down" if the retailer implements a new scheduling policy that would require workers to adapt to shift rotations instead of maintaining long-term steady shifts.

At issue is the concept of flexible scheduling, which Wal-Mart (Research) has been testing in a few of its stores over the past year, although the company says it hasn't tested that schedule in Pensacola.

In an anonymous letter to CNNMoney.com, the Wal-Mart workers said such a "flip-flop open-availability" system would "create chaos and instability" in workers' lives.

"While working an ever-changing Wal-Mart schedule, how can one arrange day care for young children? The scheduling will make continuing education extremely difficult," the letter said.

However, industry experts say many retailers over the years have migrated to flexible hours scheduling because of its inherent benefits to both employees and customers.

The workers allege that the policy is designed to force higher-paid full-time workers to reduce their status to part-time, or quit (and be replaced with part-time workers), since this would save Wal-Mart "enormous amounts of money from reduced salaries and benefits paid."

Moreover, the letter claims that work schedules will be computer-generated based on each department's sales. Sales will determine the number of associates and hours assigned to each department, and the schedule associates work. The only set schedules are apparently for department managers and "stocking teams."

When asked by CNNMoney.com about the employees' letter,Wal-Mart spokesman Dan Fogleman saidemployees in Pensacola are not currently affected by the pilot tests. "The current staff scheduling system has been in place there for over 10 years."

He also denied that Wal-Mart was testing "open availability," in any of its stores. "We're definitely not testing open availability. We do solicit input from associates about when they are available. So if someone is taking a class, they can tell their manager about it and the schedule can be adjusted to accommodate them," he said.

However, the company is making changes at the Pensacola store so it will have more sales staff on evenings and weekends. "The reality of retail is that the busiest times are evenings and weekends in this market," Fogleman said. "We're trying to develop an optimal schedule that would best serve our customers. In order to ensure there are appropriate number of employees to serve those customers, we're asking associates that work daytime schedules to be more flexible."

Battling turnover trauma As the nation's biggest private employer with 1.3 million workers, Wal-Mart suffers one of the highest worker turnover rates in the industry, said Burt Flickinger, managing director with retail consulting firm Strategic Resources Group, who cited his firm's own research.

Flickinger said Wal-Mart is cutting hours for full-time employees and looking to hire more part-time workers in a bid to trim both operating and healthcare costs - which can help the bottom line but can also cut the other way, since high turnover and lower staffing can mean lost sales, especially on busy weekends.

According to Wal-Mart executives, 75 percent of the company's workers in the United States are employed full time, although that number has been trending down gradually.

"For busy parents who stock up on baby food and other items, if they can't easily find it in Wal-Mart, they don't have time to go back. They'll just go to the competition," said Flickinger, noting that Saturday and Sunday account for about 40 percent of Wal-Mart sales each week. "It's critical for Wal-Mart stores to be fully stocked and have experienced staff on weekends," he said.

Wal-Mart spokesman Marty Heirs acknowledged the high turnover and said Wal-Mart was taking steps to address it.

"Most retailers have very high turnover rates, but we would like to keep our associates," Heirs said. "We're already doing a few things like reducing the waiting time for employees to qualify for health coverage. We're also increasing wage scales to compete with associates in markets where the wages are higher."

At Wal-Mart's media conferencelast week, Wal-Mart CEO Eduardo Castro-Wright was asked about the controversy surrounding the flexible scheduling policy .

He explained that Wal-Mart was trying to better match its customer traffic patterns with store staffing and that it was doing this "on a store by store basis." The idea is to make sure that stores are appropriately staffed during peak traffic periods such as late nights and on weekends, he explained.

"As we enhance [this policy], we're looking at when customers are in stores and when our associates prefer to work. Some associates can't work [flexible hours] so we will look at their preference." Castro-Wright said, adding that the company would tweak its pilot program before it rolled it out but declined to give a definite timetable.

Oddly, this sounds very similar to what Fogleman said the retailer is trying to achieve in Pensacola. When pressed for more specifics about how the pilot program differs from the system currently in place in Pensacola, Fogleman declined to offer further details.

Analysts weigh in Retail industry watchers said Wal-Mart isn't exactly entering unchartered territory by exploring a flexible scheduling system. The concept has been rampant in retailing for years, said George Whalin, CEO of Retail Management Consultants.

"Generally retailers would like to have employees come to the store when they most need them. They want to staff stores when they are the busiest, like on weekends, near the holidays or when the weather is good or bad," Whalin said. Therein lies the cost-saving component of a flexible scheduling policy.

But he warned that the system works best when there's give and take between management and employees. "People have lives. It's not realistic to dictate to your employees what shifts they'll work," Whalin said. "This will simply lead to more turnover, which is one of the costliest issues facing retailers."

Daniel Butler, vice president of retail operations with the National Retail Federation (NRF), agreed with Whalin that evolving consumer lifestyles have impacted shopping patterns and that the burden is on retailers to adapt their staffing policies to meet customers' needs.

Said Butler, "Until the late 1970s and 80s, people shopped more on weekdays. Then with more two-income households, people were shopping more at night and on weekends. That changed the demand for full-time workers. Until the mid-90s the full-time, part-time ratio was 60-40. Now its more 40-60."

But regardless of the employees' status, retailers have to give workers a schedule that they can count on in order to retain them. "Mandating a flexible scheduling system for everybody doesn't make it work or work better," Butler said.

On the other hand, Butler said he disagreed with allegations that Wal-Mart may be trying to force full-time workers to part-time schedules to save on costs. "Retailers don't force full-time workers to part-time. They typically save money through attrition. It doesn't make sense to replace full-time staff with part timers when the whole point is to have more experienced staffing in stores to meet the nights and weekend demands."

[back to top] 

US regulator hears more Wal-Mart bank critics

By Carey Gillam
Reuters                   [back to top] 

OVERLAND PARK, Kansas - Bankers, labor officials and consumer activists on Tuesday urged U.S. regulators to reject Wal-Mart's plan to start limited banking operations.

At the last public hearing on a bid by the world's largest retailer, critics told the agency reviewing the application that Wal-Mart's <WMT.N> bank would undermine the soundness of the U.S. banking system and give the retailer an unfair advantage over vendors, employees and competitors.

"Wal-Mart has never done anything on a small scale. It has a pattern of entering communities and using predatory pricing practices ... to run competitors out of business," William McNary, president of the advocacy group USAction, told officials from the Federal Deposit Insurance Corp. (FDIC).

Tuesday's hearing in Kansas was the third and final day of testimony. It is expected to be last public step the FDIC takes before making a decision on the application.

The FDIC officials offered no hint of how they might decide on the application but repeatedly asked panelists if they would still have concerns if Wal-Mart was restricted to the activities outlined in its application.

In response, panelists said Wal-Mart could not be contained and would push beyond its currently narrow plan to offer full-service banking.

Still, Wal-Mart said it was confident regulators would approve its application despite the heated opposition.

"After three hearings and dozens of witnesses, one thing is clear -- regulators can choose between approving a routine application or yielding to unfounded speculation and heated rhetoric about issues unrelated to our application," the company said in a statement.

"We are confident regulators will see through the rhetoric, and will approve this application based on its strong, pro-consumer merits," Wal-Mart said.

Wal-Mart has applied to open a bank known as an industrial loan company to process credit and debit transactions. It would transmit payment requests from shoppers to credit card issuers and then transfer payments back to Wal-Mart.

More than 60 other companies have been granted industrial bank charters, including retail rival Target Corp. <TGT.N>.

Wal-Mart's bank would allow the company to save $5 million to $10 million annually, with that amount growing as customers increasingly use electronic payments, a company spokesman said.

Wal-Mart has stressed it has no plans to open bank branches, offer banking services to the public or offer payment processing services to other retailers. But opponents say they don't believe those assurances.

"No one should believe this giant corporation will stick to its ... limited request," said Missouri labor union representative Judy Davidson.

Much of Tuesday's testimony was similar to opposition voiced in recent months by some members of Congress and community banks, as well as groups that regularly criticize the retail giant, such as labor and environmental groups.

Their arguments have ranged from criticism of Wal-Mart's corporate character to the impact a Wal-Mart bank might have on the U.S. payments system. Some have also said that allowing the company to open a bank would violate the historic separation of commerce and banking in the United States.

Copyright 2006 Reuters News Service. All rights reserved. 

[back to top] 

Groups Push for Defeat of Wal-Mart Bank

By DAVID TWIDDY
AP Business 
Tuesday, April 25, 2006               [back to top] 

Community and regional bank officials presented a nearly unified front Tuesday in opposing Wal-Mart Stores Inc.'s application to form its own bank.

Noting the retail giant's history of dominating every business sector it enters, small-town bank executives and statewide banking groups said a Wal-Mart-controlled bank would dry up financial resources in some towns, endanger the country's banking system if it were to fail and give the company an unfair competitive advantage.

"It would be very difficult for banks to compete with huge commercial entities that can bundle financial services with other products and services that enjoy much wider profit margins while, at the same time, prohibiting banks from competing in other industries," Ken Littlefield, a Jefferson City, Mo., bank executive representing the Missouri Bankers Association, told the Federal Deposit Insurance Corp. on Tuesday.

Wal-Mart officials repeatedly have said they don't plan on opening branch banks or getting into consumer lending. Instead, the company says it is looking to Utah to charter a bank to handle the 140 million credit, debit and electronic check payments that Wal-Mart processes every year, potentially saving millions in fees it now pays to two unnamed banks that process most of those transactions.

The company's size and importance in the U.S. economy led the FDIC to schedule its first public hearings on a banking application. The agency held a hearing in Alexandria, Va., in early April. It held Tuesday's in suburban Kansas City because most of the 1,900 comment letters it received came from the Midwest. FDIC officials haven't said when they'll rule on Wal-Mart's application.

Just as in Virginia, the vast majority of speakers on Tuesday said they opposed Wal-Mart's plan, doubting the company would stick with a limited banking business for long. Among those speaking were union officials, community advocates and representatives for farmers and grocers.

The bankers said they were especially nervous about Wal-Mart's plan to sell high-interest certificates of deposit to investors, saying that could quickly drain capital from local banks, forcing them to either cut back on lending or close.

If enough local banks were forced out of a market, they said, businesses that competed with Wal-Mart would be forced to ask their local Wal-Mart for loans and possibly have to provide business plans and other competitive information.

Others questioned Wal-Mart's dedication to workplace and environmental regulations and said the company shouldn't be rewarded for disrupting local economies with additional privileges.

"There's every reason to believe a Wal-Mart bank would operate with the same recklessness of its retail operation," said William McNary, president of public interest group USAction.

In a written statement about the hearing, Wal-Mart said it would continue to work with the some 300 banks that operate branches in 1,150 Wal-Mart stores and be a good corporate citizen.

"After three hearings and dozens of witnesses, one thing is clear — regulators can choose between approving a routine application or yielding to unfounded speculation and heated rhetoric about issues unrelated to our application," the company said.

Community activists were also critical of Wal-Mart's attempt in its initial application to be exempted from federal regulations requiring local community investment.

Jane Thompson, president of Wal-Mart Financial Service, said during a break in the hearings that FDIC officials told the company it could take the exemption because it didn't plan to lend money. She acknowledged it was a mistake and that the company would soon amend its application to provide more details on its local investment plans.

"It was never our intent not to invest in the community," Thompson said.

Not everyone was against the company. Executives for two banks that operate in Wal-Mart stores testified that they've seen steady growth from their relationship with the retailer and trusted they would not be replaced.

"I believe (Wal-Mart officials) feel that the success of their in-store bank partners increase store sales, makes their store stronger and better members of the community," said Craig Baker, executive vice president of Cranston, R.I.-based Domestic Bank, which has three of its six branches in Wal-Mart stores.

Wal-Mart is trying to get federal deposit insurance for a state-chartered bank in Utah, which is considered friendly to so-called industrial banks.

If approved, it would cap a five-year effort by Wal-Mart to enter the banking business. The company has tried unsuccessfully to buy financial institutions in California and Oklahoma and to partner with a bank in Canada. Lawmakers in California, Congress and Canada blocked those attempts, worried about big retailers entering banking without full bank supervision.

This time, Wal-Mart is seeking to use a regulatory loophole that allows any type of company to own a certain sort of bank known as an industrial loan corporation, or ILC.

Regulators say ILCs have grown in 1987 from small, locally owned institutions to banks with $140 billion in assets that are run by such corporations as General Motors, General Electric and Wal-Mart rival Target Corp.

The corporate owners of ILCs don't face the same level of regulatory oversight as other federally insured banks, and members of the Federal Reserve have pushed for the loophole to be closed.

©2006 Associated Press

[back to top] 

Wal-Mart Details New Initiatives

By The Associated Press
04/24/2006                       [back to top] 

Don't call it "upscale."

Wal-Mart's new merchandising and store initiatives are intended to drive the world's largest retailer deeper and closer to its customers, while reaching out to a career-driven, time-pressed (read: higher spending) consumer segment that shops the stores less frequently and then, only for the basics.

"We are really trying to understand that customer," said Eduardo Castro-Wright, president/CEO of Wal-Mart Stores USA, at the company's second annual media conference that took place here last week.

Despite 800-thread count sheets, a two-carat $5,400 diamond ring and $2,300 flat-panel television sets that have been added to the mix in recent months ? and it's new upmarket test store that opened in Plano, Texas, last month ? Wal-Mart is going to great pains to repeat, over and over again, this is not up-scaling, a term that might imply it's leaving its core customer base behind. That would be ridiculous, suggested Wal-Mart Stores CEO Lee Scott outside his office during an impromptu visit with reporters touring Wal-Mart's home office on Monday. "That business is just too important to us" to leave behind.

The "loyalist," one of three broad customer segments Wal-Mart has identified ? and its core customer ? shops in a Wal-Mart store 63 times a year and spends 77 percent of his or her grocery dollars there, explained John Fleming, marketing executive VP. By contrast, the "selective" shopper ? the one Wal-Mart is wooing ? shops at Wal-Mart only 46 times a year and spends just 28 percent of his or her grocery dollar there.

"The loyalist shops items, they shop price points, and they love the big broad assortments that Wal-Mart offers," Fleming explained. "It becomes one-stop shopping for them. The Selective shopper, on the other hand, is looking for solutions. This is a customer who is looking for value for their money. This is a customer who is very focused on convenience. In fact, time becomes their currency ... They shop for value, not just price."

While the company has always used the term "value" in explaining its consumer proposition, it has taken on new meaning lately, as Wal-Mart moves from its low opening price-point position.

"So our objective is to champion a broader range of customers with products, services and a more compelling experience," Fleming said. "It's not about going upscale. It's about understanding the customers who are already in our stores and focusing on the selective shopper ? not at the expense of the loyalist, because that is still a very important segment, and we will continue to develop our relationship with that customer ? but to focus on the selective shopper and ... drive a deeper level of loyalty with the selective shopper."

Copyright The Associated Press 2006. All Rights Reserved

[back to top] 

Wal-Mart Stores, Inc. Establishes Employment Practices Advisory Panel

PR Newswire                    [back to top] 

BENTONVILLE, Ark., April 24 /PRNewswire-FirstCall/ -- As part of its ongoing efforts to foster diversity and equal employment opportunities, Wal- Mart Stores, Inc. today announced the establishment of an Employment Practices Advisory Panel and the appointment of the Panel's first two members, who are highly-respected national experts. The Panel will work with Wal-Mart's senior management to develop and implement progressive enhancements to equal employment opportunity and diversity initiatives for the nation's largest private workforce.

The newly appointed members of the Advisory Panel are Dennis Archer and Vilma Martinez. Archer is chairman and CEO of The Diversity Network and chairman of the law firm of Dickinson Wright PLLC in Detroit. Previously, Archer was the mayor of Detroit, a Michigan Supreme Court Justice and the first African-American president of the American Bar Association. Martinez, a partner at the Los Angeles law firm of Munger, Tolles & Olson LLP, has an extensive history as a Latina civil rights activist and was president and general counsel for the Mexican American Legal Defense and Education Fund for nine years. Martinez specializes in employment discrimination and commercial matters at the federal and state levels.

"Dennis and Vilma have devoted their lives to fighting for opportunity for diverse communities across this country," said Wal-Mart Stores, Inc. CEO Lee Scott. "They have worked to make our society a better place, and we are eager to benefit from their vast expertise to help Wal-Mart continue to build upon our already strong diversity commitment and initiatives."

"Wal-Mart is an innovator and the creation of this special Panel will improve and expand upon the opportunities for Wal-Mart associates around the country," said Archer. "I am delighted to have the chance to work with the company on this important effort."

"The employment relationship is central to the well-being of most of us and our families," said Martinez. "I feel privileged to have the opportunity to help our nation's largest private employer meet its equal employment opportunity goals."

Wal-Mart's creation of the Advisory Panel comes on the heels of the company's recent release of its 2005 Equal Employment Opportunity data showing that Wal-Mart's workforce of more than 1.3 million United States associates consists of more than 150,000 Hispanics, 225,000 African-Americans and 815,000 women. The mission of the Advisory Panel will complement the efforts of Wal- Mart's Office of Diversity, established in 2003, which helps enhance the company's employment practices, supplier relationships and community outreach programs. Additionally, Wal-Mart has continued to improve upon its external diversity initiatives in other areas of the company. Last year, for example, Wal-Mart's legal department transferred roughly $60 million in business to minority and female relationship partners in Wal-Mart's 100 highest-billing outside law firms.

"The formation of the Advisory Panel reflects our ongoing commitment to make sure all of our Associates are given every opportunity to thrive, advance and succeed at Wal-Mart," said Susan Chambers, executive vice president of Wal-Mart's People Division. "The Panel will provide the company with a welcome set of additional eyes and perspectives. I look forward to working with its distinguished members."

Recognized leaders in diversity praised Wal-Mart for taking this action.

"I am pleased by this step taken by Wal-Mart," says Dr. Benjamin Hooks, former executive director of the NAACP and chairman of the Wyatt, Tarrant & Combs Diversity Services Practice Group. "Wal-Mart should be commended on its efforts to diversify its culture and workforce. I encourage Wal-Mart to continue to be a leader in this area."

"I commend Wal-Mart for taking this important step of establishing an Employment Practices Advisory Panel and for selecting such highly distinguished leaders to participate in this effort," stated Janet Murguia, president and CEO of the National Council of La Raza, the largest Latino constituency-based group in the country. "Dennis Archer and Vilma Martinez are two of the most well respected civil rights and employment opportunity experts in the nation. They both have a lifetime of service and commitment to promoting social justice, equality and diversity. With this Panel, Wal-Mart is moving in the right direction to achieve a broader positive impact for their workforce."

[back to top] 

Wal-Mart in $1.5 mln settlement with Michigan AG

Reuters
Mon Apr 24, 2006                 [back to top] 

NEW YORK (Reuters) - Michigan Attorney General Mike Cox said on Monday that Wal-Mart Stores Inc. agreed to pay the largest fine in the state's history to settle claimed violations, of Michigan's item pricing law.

A Wal-Mart representative was not immediately available to comment.

The agreement came after Wal-Mart was accused of failing to individually price items, in violation of Michigan law.

The law requires that items on store shelves must be clearly marked with a price tag, so consumers know how much an item costs before they reach the checkout register and can verify that they were not overcharged after leaving the store.

Cox said in a statement that under terms of the $1.5 million settlement, Wal-Mart will pay $780,000 in penalties and reimbursement of costs incurred by the state.

Additional penalties of $620,000 will be used to pay for independent audits and will be, after a period of two years, waived if Wal-Mart maintains item pricing compliance.

Wal-Mart also agreed to donate $100,000 to Michigan food banks.

Wal-Mart shares were down 25 cents or 0.5 percent, at $45.56 in mid-afternoon trading. The Standard & Poor's retail index was down 0.2 percent.

© Reuters 2006. All rights reserved.

[back to top] 

More Wal-Mart offices soon

ARUNDHATI BAKSHI-DIGHE                [back to top] 

Mumbai, April 24: Global retail chain Wal-Mart will set up two more sourcing offices in India by the middle of this year.

“We are planning to set up one office in Mumbai and the other in Delhi by the middle of this year,” says S. Ramesh, GM (India & Sri Lanka) global procurement of Wal-Mart.

The offices will do quality assurance work for Wal-Mart’s global procurement and sourcing business.

“The Mumbai office will look after sourcing of textiles, apparel, gems and jewellery, while the Delhi office will concentrate on stainless steel and home decoration products and apparel,” he added.

It also plans to hire close to 10 associates for its Mumbai and Delhi offices.

“We plan to have close to 126 people in India by the end of this year,” says Ramesh.

Wal-Mart’s office in Bangalore serves as the company’s global procurement hub for sourcing of merchandise from India, Nepal and Sri Lanka. There are close to 80 employees in the Bangalore office.

In 2005, Wal-Mart purchased approximately $1.5 billion in goods from factories and third-party suppliers in India for its retail stores globally compared with $1.2 billion worth of products in 2004.

About one-third of this amount was purchased directly by Wal-Mart’s global procurement office in Bangalore. Major categories sourced from India include home textiles, apparel, fine jewellery and house wares.

Although the company does not source food products at this point, it has carried out test shipment of black pepper from the country.

Regarding its tieup with the Sunil Mittal-promoted Bharti Group, Ramesh said, “We do not have any direct sourcing from Bharti at this time.”

[back to top] 

Wal-Mart Stores Creates Diversity Panel

By MARCUS KABEL,
AP Business
Mon Apr 24                   [back to top] 

Wal-Mart Stores Inc. is forming a panel of outside experts to advise top executives on promoting diversity in its work force.

Wal-Mart, which also faces a class-action lawsuit alleging discrimination against female employees, named the first two members of the panel Monday. They are former Detroit mayor Dennis Archer, the first black president of the American Bar Association, and Latina civil rights activist Vilma Martinez.

The announcement came two days after the Democratic National Committee weighed in with a resolution criticizing "bare-knuckled competitive practices like those Wal-Mart reportedly follows" and urged big corporations to change those practices.

The DNC aimed its call for change at "large and profitable companies" but only cited Wal-Mart by name, saying the retailer‘s size made it an industry leader with a spillover effect on other employers.

Wal-Mart said the resolution was an unjustified effort by organized labor to make the company into a partisan issue.

Critics said they hoped the creation of the diversity panel meant Wal-Mart was getting serious in the face of the Dukes lawsuit pending in California, which seeks damages for up to 1.6 million current and former female employees it claims were paid less and promoted less than men.

The report for 2005 showed that 32 percent of the 1.34 million Wal-Mart employees in the United States were minorities and 60 percent were women. The report did not provide comparative data for previous years.

It also wants to promote diversity among Wal-Mart‘s huge pool of suppliers and last year had its legal department transfer roughly $60 million in business to law firms with minority and women partners.

© 2006 The Associated Press. All rights reserved.

[back to top] 

Wal-Mart Cleared in Negligent Hiring Case

By MEG KINNARD
Associated Press            [back to top] 

COLUMBIA, S.C. (AP) -- A jury on Tuesday cleared Wal-Mart of negligence in hiring a convicted sex offender who fondled a 10-year-old girl while on the job.

The girl's mother sued Wal-Mart in 2001, claiming the retail giant should have known Bobby Devon Randall was a convicted sex offender. The family sought damages of up to $5 million in connection with the September 2000 incident.

Wal-Mart, based in Bentonville, Ark., said at the time it was not legally required to do background checks and that the employee who fondled the girl lied about his criminal past on his job application.

The company decided in August 2004 that it would begin conducting background checks on new hires nationwide.

Judge Ernest Kinard gave an attorney for the girl's family 10 days to file an appeal.

"I just, legally, from a lawyer's standpoint, do not understand how this jury could have reached this verdict," said David Massey, the family's lawyer.

Wal-Mart attorney Stephen Morrison expressed sympathy for the victim and her family.

What Randall did "was indecent and not the right thing to do," Morrison said. But "it's just a situation where Wal-Mart didn't do anything negligent that caused that to happen in their store."

© 2006 The Associated Press. All rights reserved. 

[back to top] 

Political Consultants Join Wal-Mart Fray

By RON FOURNIER
AP Political 
Sunday, April 23, 2006                    [back to top] 

There is no candidate. There are no ballots. There won't be an Election Day. And yet it may be the hottest, highest-stakes political contest in America today. It's the campaign against Wal-Mart.

A year-old effort to force the nation's No. 1 private employer to change its business practices has evolved into a Washington-style brawl: tens of millions of dollars spent by Republican and Democratic political consultants using polling, micro-targeting, ads, e-mails, direct mail, grass-roots organizing and strategic "war rooms" to ply their trade in the corporate world.

Their fight involves some of society's most vexing trends, including the rising cost of health care, the painful realities of globalization and the waning relevance of organized labor.

"Our opponents have organized the likes of a political campaign against us," said Bob McAdam, vice president of corporate affairs at Wal-Mart. "It would be nonsense for us not to respond in a similar fashion."

Wal-Mart's main opponents are the Service Employees International Union, which started Wal-Mart Watch, and the United Food and Commercial Workers International Union, which funds a separate campaign called WakeUpWalMart.com

After failing to organize employees of Wal-Mart Stores Inc. with traditional tactics, the unions decided to use modern campaign and communications methods to drag the company into the public square and try to shame them into change.

Both groups have hammered the world's largest retailer about its wages, health insurance, treatment of workers and proclivity for buying non-U.S. goods. Wal-Mart has responded with counterattacks and a multimillion-dollar public campaign to polish its image.

On both sides are some of the best political strategists money can buy.

WakeUpWalMart.com is run by Paul Blank, political director for Howard Dean's 2004 Democratic presidential campaign, and Chris Kofinis, a former political professor who helped draft retired Army Gen. Wesley Clark into the same race.

Their campaign has all the markings of the Dean and Clark insurgencies — a snappy Web site, volunteer action lists and an issues-based grass-roots campaign.

Among those lined up against the company at Wal-Mart Watch are Jim Jordan, campaign manager for 2004 Democratic presidential nominee John Kerry, and Terry Holt, a spokesman for the 2004 Bush-Cheney campaign.

Odd bedfellows: A Republican working for unions against Wal-Mart.

"Wal-Mart is giving capitalism a bad name," Holt explained. "It's lost touch with its small-town roots and has become a company that is depending on corporate welfare ... and an all-too-cozy relationship with China."

Under fire, Wal-Mart turned to Reagan adviser Michael Deaver, Bush-Cheney political director Terry Nelson and several Democrats, among them civil rights leader Andrew Young and campaign strategist Leslie Dach.

Talk about odd bedfellows: Democrats working for Wal-Mart against organized labor.

"We were being attacked. We wanted to hire people who knew how to respond," said Wal-Mart's McAdam, formerly a GOP aide on Capitol Hill and political strategist for the tobacco industry.

WakeUpWalMart.com claims 212,000 supporters who can be mobilized with a computer stroke to recruit members and participate in media events designed to shine a bad light on the Bentonville, Ark., company.

The group also passes out UFCW-sponsored workers' rights material outside Wal-Mart stores.

A goal of the UFCW is to show Wal-Mart's 1.3 million U.S. employees — many of whom have a low opinion of unions or fear retribution if they organize — that unionized labor can change their workplace and lives for the better.

"For years, labor leaders were fighting Wal-Mart the old way, but times have changed," Kofinis said. "Instead of organizing workers, they're trying to organize the nation" against Wal-Mart.

In its own way, this campaign over Wal-Mart is as important as the congressional races this year.

Bringing Wal-Mart to heel with 21st-century tactics would signal a fresh approach for organized labor after a decades-long decline in membership.

At stake for Wal-Mart is the future course of a company with $312.4 billion in sales in the fiscal year that ended Jan. 31. Its stock has fallen 20 percent over the past two years, and the company has had trouble sustaining its historically high rates of profit growth.

Analysts say bad publicity from the union-backed campaigns may be hurting Wal-Mart, though unrelated business pressures are also a factor.

Wal-Mart denies that the union-backed campaign has hurt its bottom line. But the company sees the effort as a threat.

After Maryland's legislature passed a labor-backed bill requiring companies — Wal-Mart in particular — to spend more on workers' health insurance, the Arkansas company came out with improvements in its health care coverage.

Amid criticism, Wal-Mart also has announced plans to:

_Help competing local companies stay in business.

_Expand its share of the Hispanic market.

_Sell more environmentally friendly products.

_Increase diversity in its work force.

A multimillion-dollar advertising campaign featuring testimonials of happy customers and employees cast Wal-Mart as a good corporate citizen.

Nelson was hired to wage a grass-roots campaign by recruiting Wal-Mart shoppers and local leaders sympathetic to the corporation's cause.

In the union camp, both groups send opposition research on Wal-Mart to reporters, e-mail supporters and stage events such as rallies and documentary film screenings.

They have had an impact.

Maryland-style health care bills have been introduced in more than 30 states. Democratic candidates in Ohio, Arizona and Pennsylvania have spoken out against Wal-Mart, as have elected officials in Wisconsin, Georgia, Connecticut and several other states.

Then there is Sen. Hillary Rodham Clinton.

The potential 2008 presidential candidate served on Wal-Mart's board for six years when her husband was governor of Arkansas. Just two years ago, the New York senator called her time on the board "a great experience in every respect."

But now she does not want anything to do with the company. Her re-election campaign returned a $5,000 contribution from Wal-Mart, citing "serious differences with current company practices."

To this, Wal-Mart officials acknowledged that the company has become a political issue — at least for Democratic candidates who need labor's money and organizing might.

"While not commenting specifically on Mrs. Clinton, apparently there are those who want to appeal to union leaders regardless of what office they're running for and whether they want to do what union leaders want done," McAdam said.

Will the company be a major issue in upcoming campaigns?

"I think there are those who want to make it so," the Wal-Mart executive said. "But I think the true test of whether that's true or not will play itself out in the midterm elections and the presidential elections to come."

©2006 Associated Press

[back to top] 

Wal-Mart's big Folsom plans

Retail giant proposes to build Supercenter, remodel existing store.

Sacramento Bee
04/23/2006                  [back to top] 

Apr. 23--Confirming one rumor and blowing up another, Wal-Mart Stores Inc. said Friday that it plans to build a Supercenter, complete with a full-service grocery department, on Iron Point Road east of Costco in Folsom.

The world's largest retailer also announced plans to remodel and expand the city's existing Wal-Mart, on Riley Street, by 28,000 square feet. The remodeled store will not become a Supercenter, but will include an expanded grocery section, spokesman Kevin Loscotoff said.

The Supercenter, almost half the size of Arco Arena at about 200,000 square feet, would be built on slightly more than 25 acres owned by Elliott Homes between Iron Point and Highway 50. The store would be east of a Circuit City store that is planned adjacent to Costco.

Wal-Mart officials say the Supercenter will employ about 400 people. The Riley store employs about 220 people and will employ at least 375 after the expansion.

Wal-Mart has more than 1,700 Supercenters nationwide, but only a handful so far in California.

Folsom's would be the first Supercenter, which sells deeply discounted merchandise and groceries, along the Highway 50 corridor. Wal-Mart, which claims about 20 percent of the nation's grocery market, has a Supercenter in Roseville and is about to open another in Antelope. It also plans to build a Supercenter in Orangevale. Supercenters also are on the drawing board in West Sacramento, Dixon, Lodi, Yuba City and Galt.

Amy Feagans, Folsom's neighborhood services director, said Wal-Mart representatives met with city officials Thursday to discuss the project. She said the review process for the store probably will take nine to 12 months after applications are submitted to the city. Loscotoff said construction time typically is 10 to 14 months after approval.

Wal-Mart stores have become a lightning rod for controversy in recent years. Critics blame the stores for crushing competition from smaller retailers, and labor unions say the Arkansas-based company and its nonunion work force is responsible for bringing about reduced pay and benefits in the grocery industry.

The potential impact on traffic along busy East Bidwell Street and on existing businesses in town also is expected to prompt opposition to the project.

When Wal-Mart announced plans - which later were scuttled, at least temporarily - last year for a Supercenter in Elk Grove, Local 588 of the United Food and Commercial Workers Union, headquartered in Roseville, helped lead community protests against the plan.

Local 588 officials could not be reached for comment Friday on the proposed Folsom store.

Joe Gagliardi, chief executive of the Folsom Chamber of Commerce, said the Supercenter was a positive sign for the city and that he was thrilled with Wal-Mart's plans to expand the Riley store.

Copyright (c) 2006, The Sacramento Bee, Calif.

[back to top] 

Wal-Mart Evolves Into Big Political Issue 

By RON FOURNIER,
AP Political
23 April, 2006                    [back to top] 

WASHINGTON - There is no candidate. There are no ballots. There won‘t be an Election Day. And yet it may be the hottest, highest-stakes political contest in America today.

A year-old effort to force the nation‘s No. 1 private employer to change its business practices has evolved into a Washington-style brawl: tens of millions of dollars spent by Republican and Democratic political consultants using polling, micro-targeting, ads, e-mails, direct mail, grass-roots organizing and strategic "war rooms" to ply their trade in the corporate world.

"Our opponents have organized the likes of a political campaign against us," said Bob McAdam, vice president of corporate affairs at Wal-Mart. "It would be nonsense for us not to respond in a similar fashion."

After failing to organize employees of Wal-Mart Stores Inc. with traditional tactics, the unions decided to use modern campaign and communications methods to drag the company into the public square and try to shame them into change.

On both sides are some of the best political strategists money can buy.

WakeUpWalMart.com is run by Paul Blank, political director for Howard Dean ‘s 2004 Democratic presidential campaign, and Chris Kofinis, a former political professor who helped draft retired Army Gen. Wesley Clark into the same race.

Among those lined up against the company at Wal-Mart Watch are Jim Jordan, campaign manager for 2004 Democratic presidential nominee John Kerry , and Terry Holt, a spokesman for the 2004 Bush-Cheney campaign.

"Wal-Mart is giving capitalism a bad name," Holt explained. "It‘s lost touch with its small-town roots and has become a company that is depending on corporate welfare ... and an all-too-cozy relationship with China."

Talk about odd bedfellows: Democrats working for Wal-Mart against organized labor.

WakeUpWalMart.com claims 212,000 supporters who can be mobilized with a computer stroke to recruit members and participate in media events designed to shine a bad light on the Bentonville, Ark., company.

The group also passes out UFCW-sponsored workers‘ rights material outside Wal-Mart stores.

A goal of the UFCW is to show Wal-Mart‘s 1.3 million U.S. employees — many of whom have a low opinion of unions or fear retribution if they organize — that unionized labor can change their workplace and lives for the better.

"For years, labor leaders were fighting Wal-Mart the old way, but times have changed," Kofinis said. "Instead of organizing workers, they‘re trying to organize the nation" against Wal-Mart.

In its own way, this campaign over Wal-Mart is as important as the congressional races this year.

Bringing Wal-Mart to heel with 21st-century tactics would signal a fresh approach for organized labor after a decades-long decline in membership.

At stake for Wal-Mart is the future course of a company with $312.4 billion in sales in the fiscal year that ended Jan. 31. Its stock has fallen 20 percent over the past two years, and the company has had trouble sustaining its historically high rates of profit growth.

Analysts say bad publicity from the union-backed campaigns may be hurting Wal-Mart, though unrelated business pressures are also a factor.

Wal-Mart denies that the union-backed campaign has hurt its bottom line. But the company sees the effort as a threat.

After Maryland‘s legislature passed a labor-backed bill requiring companies — Wal-Mart in particular — to spend more on workers‘ health insurance, the Arkansas company came out with improvements in its health care coverage.

Amid criticism, Wal-Mart also has announced plans to:

_Help competing local companies stay in business.

_Expand its share of the Hispanic market.

_Sell more environmentally friendly products.

_Increase diversity in its work force.

A multimillion-dollar advertising campaign featuring testimonials of happy customers and employees cast Wal-Mart as a good corporate citizen.

Nelson was hired to wage a grass-roots campaign by recruiting Wal-Mart shoppers and local leaders sympathetic to the corporation‘s cause.

In the union camp, both groups send opposition research on Wal-Mart to reporters, e-mail supporters and stage events such as rallies and documentary film screenings.

They have had an impact.

Maryland-style health care bills have been introduced in more than 30 states. Democratic candidates in Ohio, Arizona and Pennsylvania have spoken out against Wal-Mart, as have elected officials in Wisconsin, Georgia, Connecticut and several other states.

Then there is Sen. Hillary Rodham Clinton .

The potential 2008 presidential candidate served on Wal-Mart‘s board for six years when her husband was governor of Arkansas. Just two years ago, the New York senator called her time on the board "a great experience in every respect."

But now she does not want anything to do with the company. Her re-election campaign returned a $5,000 contribution from Wal-Mart, citing "serious differences with current company practices."

To this, Wal-Mart officials acknowledged that the company has become a political issue — at least for Democratic candidates who need labor‘s money and organizing might.

"While not commenting specifically on Mrs. Clinton, apparently there are those who want to appeal to union leaders regardless of what office they‘re running for and whether they want to do what union leaders want done," McAdam said.

Will the company be a major issue in upcoming campaigns?

"I think there are those who want to make it so," the Wal-Mart executive said. "But I think the true test of whether that‘s true or not will play itself out in the midterm elections and the presidential elections to come."

© 2006 The Associated Press. All rights reserved

[back to top] 

FDIC ponders Wal-Mart's fourth - and still controversial - banking bid

by Raksha Varma
East Bay Business Times
April 21, 2006                             [back to top] 

Community bankers are getting anxious as the Federal Deposit Insurance Corp. continues to ponder the industry's latest concern - should Wal-Mart become a bank?

The world's biggest retailer said it has no intention of opening branch banks or focusing on retail products. But Bay Area banks, such as Bank of Alameda and San Jose-based Bridge Bank, don't buy it.

"Once the camel's nose is underneath the tent, community banks are going to lose their battle," said Steve Andrews, president and CEO of Bank of Alameda. The former chairman of California Independent Bankers represented the state banking trade association in public hearings begun by the FDIC on April 10.

"Things can change dramatically," Andrews added. "Nothing can stop the company from offering the same products most banks do today."

In its fourth attempt to enter the banking industry, the giant retailer asked the FDIC last July for permission to open an industrial loan corporation in Utah, one of seven states in which such specialty banks are permitted. Industrial loan corporations are state-chartered banks insured by the FDIC. They can lend money and may be managed by non-financial institutions that remain unregulated by the Federal Reserve.

Because of a record response - 2,900 letters - to the application from consumer groups, unions and banks, the FDIC chose to hold public hearings, the first in the 73-year-old institution's history.

Community bankers are furious because the request challenges the "mixing" of banking and commerce, although a number of non-financial institutions, such Target Corp., already have industrial loan corporations for the purpose of decreasing their transaction costs.

"It's not an argument," said Wal-Mart Stores Inc. spokeswoman Gail Lavielle. "Sixty other non-financial institutions do this. Opening an ILC means the company can cut its costs and sponsor its debit card transactions."

If Wal-Mart opens an in-house bank, it could cut fees that it presently pays third-party companies to handle 140 million credit, debit and electronic-check payments annually.

"I'm not an expert, but I think the impact on our local banking community could be tremendous," said Dan Myers, president and CEO of Bridge Bank. "Wal-Mart said it's going to limit itself to debit card transactions and so on. But, that's probably not the limit. That could put ideas into the heads of other retailers, too."

'Dangerous' for community banks Community bankers fear that the giant retailer could offer checking accounts, mortgages, car loans and small business loans - and offer better deals on them.

"The store could slip into retail banking," Andrews said. "For a small community bank, that could be dangerous. Wal-Mart could start to offer better deposit rates."

But Wal-Mart said those assertions border on "ridiculous."

"Community banks are our partners, not our competitors," said Lavielle, who declined to name Wal-Mart's community bank partners.

There are about 300 community banks in Wal-Mart's 1,150 stores today, and the retailer has just signed 350 more 15-year leases - leases that cannot be terminated by the store, only by the bank.

Similarly to Wal-Mart's retail expansion model, one that caused many small businesses to shut their doors once the store started offering a large spread of products at unbeatable prices, a banking expansion model could hurt community banks. But the equation does not stop there. Industry experts argue that the proposed bank could also bulldoze large institutions.

Better rates for consumers "Big banks are afraid to admit Wal-Mart may be in a position to offer better rates to consumers, because of its excellent credit," said Adam Dener, a top financial consultant examining the proposed bank at New York-based firm Capco. "There's a significant amount of pressure on them, and I'm surprised more are not talking."

Unlike community banks that are speaking out against the request, large banks such as Charlotte, N.C.-based Bank of America Corp. and San Francisco-based Wells Fargo & Co. are refusing to comment on the situation, instead referring their comment to large trade associations.

Dener said Wal-Mart's "one-stop shop" strategy could spell trouble for larger banks, adding that stores are much more desirable locations for customers to do banking than stuffy bank branches.

"This opens the doors," he added. "Nothing can stop others from getting into this. In fact, Starbuck's could be the next banking company. Imagine what that means not only for banks, but for the employees of retail outlets, like Safeway and Starbuck's. Retailers are going to see a tremendous advantage in this space, because it means one less stop in a customer's busy life."

Varma is a reporter for the Silicon Valley/San Jose Business Journal.

All contents of this site © American City Business Journals Inc. All rights reserved.

[back to top] 

Wal-Mart bids to open a bank, others set up shop

by Jim Freer
South Florida Business Journal -
April 21, 2006                                       [back to top] 

SunTrust Bank has set dates for opening its first two branches in South Florida Wal-Marts, providing some local certainty in the heated debate over the giant retailer's future in banking.

Tropical Financial Credit Union and Dade County Federal Credit Union also are preparing to add branches in Wal-Mart Super Centers during this year's third quarter.

They are making plans as the Federal Deposit Insurance Corp. prepares for the second of two public hearings on Wal-Mart Stores' (NSYE: WMT) application to open a limited service bank, known as an Industrial Loan Co. (ILC), based in Salt Lake City, Utah.

The hearing is to be April 25 in Overland Park, Kan. At an April 10-11 hearing in Arlington, Va., Bentonville, Ark.-based Wal-Mart presented plans for its proposed Wal-Mart Bank.

Bank trade groups, consumer-oriented groups and several dozen members of Congress testified or presented statements opposing Wal-Mart's application. They have said they are concerned Wal-Mart will open branches in stores around the country and use its size and retailing resources in competition against locally based banks and multi-state banks.

Miramar-based Tropical Financial has branches in five South Florida Wal-Marts. Tropical is interested in additional Wal-Mart branches, despite others' concerns Wal-Mart might later take sites from bank and credit union tenants, said Greg Blount, the credit union's president and CEO.

"If they truly wanted to take over the operations, they would have to buy out their existing leases with us and other financial institutions and pay a premium," Blount said.

Most of Tropical's Wal-Mart branches have five-year leases with options for two five-year renewals. Dade County Federal has that arrangement at its branch in a Miami Wal-Mart, said George Joseph, the credit union's president.

Atlanta-based SunTrust (NYSE: STI) would not disclose terms of its leases.

"While we have no position on Wal-Mart's filing for an ILC, we do not believe it will affect our in-store plans," said Susie Findell, a spokeswoman for the country's seventh biggest bank.

April 19, Wal-Mart spokesman Marty Heires reiterated the company's statements it plans to use a bank only to process credit and debit card transactions at its stores.

In its application, Wal-Mart said it does not plan to open its own branches in its stores or at other sites.

Wal-Mart expects the FDIC will approve its application with the condition it would not be able to open branches, Heires said, adding Wal-Mart plans to expand partnerships in which about 300 banks and credit unions have branches in about 1,150 stores.

The FDIC declined comment on whether it might approve the application or attach conditions.

Richard Bove, an analyst at Punk Ziegel & Co., in Pinellas Park, is among banking observers who expect Wal-Mart will find a way to circumvent laws and enter the potentially lucrative business of full-service banking.

SunTrust keeps up operations SunTrust will offer all its consumer and business banking services at branches in South Florida Wal-Marts, said James Rasmussen, the bank's chairman and CEO for South Florida.

"This will be an opportunity to bring new households to SunTrust, and bring additional services to Wal-Mart customers who already are our customers," he said.

In addition to the four future Wal-Marts where it has contracts, SunTrust has "three others in the pipeline where we have not signed agreements," said Paula Pearson, the bank's executive VP for retail and business banking in South Florida.

SunTrust branches in Wal-Marts will supplement its network of about 90 South Florida branches, which it also will keep expanding, Pearson said.

All contents of this site © American City Business Journals Inc. All rights reserved

[back to top] 

At Wal-Mart, mantra is 'transformation'

By Michael Barbaro
The New York Times
FRIDAY, APRIL 21, 2006           [back to top] 

ROGERS, Arkansas A year ago, at Wal-Mart's first conference for journalists, the company's chief executive struck a feisty tone, at times defiant, regarding critics of the company's wages and health care benefits.

Describing newspaper headlines that said, in effect, "Wal-Mart's low prices come at too high a cost," the chief executive, H. Lee Scott Jr., said, "I'd suggest a better headline: 'Wal-Mart is great for America.'"

That conviction may not have changed, but at this year's conference, which concluded Tuesday, Scott's tone certainly did change, a reflection of how much life has changed for Wal-Mart over the past year. Scott called Wal- Mart a company "in transformation" and offered what would have seemed a year ago to be an unthinkably long list of changes under way at the company, the largest retailer in the United States.

In just the past six months, the company has expanded health insurance to the children of part-time workers, promised sweeping reductions in energy use and made plans to support local businesses, including competitors, near its proposed urban stores.

To be sure, the changes could help Wal-Mart's bottom line, but Scott said his goal was "to be better for our communities, better for our customers and better for our associates," as Wal-Mart calls its employees.

Why so much change so quickly?

Wal-Mart is loath to credit its critics with influencing it, but Scott's message of change - he used the word "transformation" five times in his speech - coincides with the first anniversary of the formation of two union-backed groups, Wal-Mart Watch and Wake Up Wal-Mart, which have helped turn the company's actions into a social, political and economic issue.

Organized union-backed opposition to Wal-Mart has existed, in one shape or another, for at least a decade, but it escalated sharply in 2005. Wake Up Wal- Mart and Wal-Mart Watch have staged protests, organized news conferences, set up Web logs and dug up and circulated internal company documents, all intended to prod Wal-Mart to change.

"If real, substantive change on important issues is what it will take to mute Wal-Mart criticism, then we are happy to be muted," said Nu Wexler, a spokesman for Wal-Mart Watch, who added that Wal-Mart still needed to improve its wages and health insurance.

Wal-Mart says the changes are a response to the needs of its 1.3 million workers and many shoppers, who are increasingly concerned not just with prices but also with the company's image.

At times on Tuesday, Scott showed some of his impatience with Wal-Mart's critics, particularly those backed by unions. In his harshest criticism of state health care mandates, he said that a Maryland law aimed at the company was "ridiculous" and that it would not change Wal-Mart's plan to open as many as 370 stores this year in the United States.

The law, passed in January, received heavy support from unions and requires Wal-Mart to spend 8 percent of its payroll on health insurance. A retail trade group, of which Wal-Mart is a member, has filed a lawsuit over it.

"It is going to be tough to legislate Wal-Mart out of a community," Scott said at the close of the media conference near the company's headquarters in Bentonville, Arkansas.

Power over Wal-Mart's future, Scott said, "is not with the legislature," but with more than 100 million American consumers who shop at the company's 3,500 stores every week. As he did last year, Scott described Wal-Mart as a first and crucial rung on the economic ladder, giving power to people around the world, from farmers in Costa Rica to retail clerks in Japan. "In one word," he said, "Wal-Mart means opportunity."

Not all of the changes Scott covered in his speech related to issues like health insurance and the environment. Wal-Mart being Wal-Mart, much of the focus was on growth.

One group of consumers that Wal- Mart will intensely focus on is Hispanic Americans, who Scott said "have a greater affinity for Wal-Mart stores than any other part of the U.S. population."

Internal Wal-Mart figures show that sales last year at 275 stores that serve predominantly Hispanic communities rose 9 percent, a rate that far exceeded overall growth for the chain, roughly 3 percent. In a shift, the company has begun designing stores with those customers in mind, expanding the Hispanic music and food departments and creating a variety of Hispanic-themed gift cards. Wal-Mart said it had identified 1,300 stores with a significant base of Hispanic shoppers.

Scott, invoking the advice of Wal- Mart's founder, Sam Walton, said it had to transform itself. "Everything around you is always changing," he said, reciting a line posted inside Wal-Mart offices around the world. "To succeed, stay out in front of that change."

[back to top] 

Solantic adds another Wal-Mart clinic

by M.C. Moewe
The Business Journal of Jacksonville
April 21, 2006                                          [back to top] 

YULEE -- Solantic will open an urgent-care facility inside the Wal-Mart Supercenter on State Road 200 in Yulee, the third location in a pilot program launched by the retailer to see if the clinics will be popular with shoppers.

"Naturally, we would like to be a part of Wal-Mart's in-store clinic expansion plans and feel opening the Yulee location continues the momentum started last fall with our Central Florida centers," said Karen Bowling, president and co-founder of Solantic.

Solantic, which doubled its number of clinics last year, is one of four companies nationwide that signed agreements with Wal-Mart Stores Inc. to open medical clinics in its stores. The company opened Wal-Mart locations in East Orlando and Kissimmee in fall 2005 but most of its 12 locations are free-standing.

The Yulee location is scheduled to open in August with exam rooms and a portable digital X-ray machine. It will offer lab tests, employment drug testing, physicals and workers' compensation services. The new center will be open 9 a.m. to 9 p.m. weekdays and 10 a.m. to 6 p.m. weekends and holidays.

Wal-Mart spokesman Kevin Gardner said the Yulee location will be his company's 13th clinic nationwide and 49 more are planned to open by the end of the year. "We still consider this a test," he said. "We're evaluating the models and looking at the space available in the stores."

While all of the Wal-Mart clinics are under the supervision of doctors, Solantic is the only company that will staff its clinic with physicians. The majority of the pilot clinics are in Florida Wal-Mart stores with others in Arkansas, Oklahoma and Indiana.

More information about the pilot program could be announced at the end of this month or beginning of May, Gardner said.

Should Solantic be included in the expansion it would likely help further the company's goal to become a nationally recognized walk-in medical clinic brand.

Solantic opened its first center in February 2002 and has seven clinics in Jacksonville.

The Yulee location is the logical next step in Solantic's growth, Bowling said. "We are headquartered in North Florida, and as a result, we have been able to keep our fingers on the pulse of the areas that are experiencing active development patterns. With a shortage of family physicians and pediatricians, Yulee is an area that is currently experiencing a need for more convenient, physician-staffed health-care options. The Wal-Mart location provides both a unique and wonderful opportunity for Solantic to step in and help fill that need."

The Wal-Mart centers allow shoppers who have signed in to see a physician to be signaled by pager or cell phone when the doctor is ready. Prices range from $55 to $150 depending on the care received, which includes treatments for upper respiratory infections, stitches and X-rays. All Solantic facilities have a menu board in the front that lists the different treatments with a corresponding price.

The Wal-Mart clinics are staffed by three employees, Solantic officials said, and vary in size, starting around 400 square feet.

"It's a good approach -- very convenient for the patient and the quality of care is at the same level as that found in private-practice settings," said Dr. Doug Whitter, a physician at the Solantic Wal-Mart location in Kissimmee. "We offer the same services as a typical physician's office and one element that patients seem to really like is that it's much more personal -- due simply to the smaller, more intimate setting."

[back to top] 

Wal-Mart begins preaching a new creed

The world's largest retailer is thinking small about something other than prices

Andrew Clark
The Guardian
Thursday April 20, 2006             [back to top] 

Finding a spot to leave your car around the local Wal-Mart store in Middlefield, Ohio, can be a problem - because a section of the car park is reserved for horse-drawn wooden buggies. The superstore is in the middle of America's fourth-largest Amish community, and Wal-Mart has erected hitching posts for the religious community's black carriages. Inside, the shelves are stocked with barley soup, blocks of ice for non-electrical refrigerators and a denim-type fabric used by Amish people for weaving.

The world's largest retailer maintains that it is changing. Organic baby clothes, energy-saving light bulbs and sustainable seafood are appearing in stores. Wal-Mart is aiming to halve its lorries' energy consumption in a decade and is testing wind and solar power at stores in Texas and Colorado. Wal-Mart, which owns Britain's Asda supermarkets, is desperate to shake off the image of a multinational behemoth forcing customers and employees to conform to a cult-like corporate orthodoxy. It wants to be seen as trendy, progressive and responsive to local communities. "Union-funded critics say the changes under way at this company are a publicity stunt," says Wal-Mart's chief executive, Lee Scott. "They could not be more wrong."

He advises critics to talk to people in Breck Road, Liverpool, where a new Asda has created 300 jobs, of which 60% went to long-term unemployed people.

Wal-Mart has 138 million customers a week worldwide, employs 1.8 million people and had sales of $312bn (£175bn) last year. But it is under attack - and feeling it.

A critically acclaimed movie, Wal-Mart: The High Cost of Low Price, presents the company as a fiercely anti-union organisation hammering smaller retailers and squeezing suppliers to the bone in an endless quest to keep prices down.

This week the company improved its employee healthcare cover in the face of political criticism. Wal-Mart insures only 48% of employees, compared with an average of 68% for large US firms. Part-time staff - who make up a rapidly rising 25% of Wal-Mart's workforce - have to wait two years to enrol.

Even in its home town of Bentonville, deep in rural Arkansas, Wal-Mart faces sniping. The company this week hired the ballroom of a local hotel to spell out its mission to 70 international journalists. Disgruntled employees set up camp in the hotel bistro, telling of harassment, poor race relations and ageism.

Past and present "associates" from Florida, Maryland and Texas told of a ruthless employer forcing them to work unsocial hours, offering minimal healthcare coverage and paying pitiful wages.

Greg Pierce, a 29-year-old former customer services manager, told the Guardian: "We were told when we applied that there'd be awesome benefits and awesome pay - but as soon as they get you into the system, you're caught."

The Rev Markel Hutchins, a black civil rights leader, noted that Wal-Mart's customers were among the poorest in America but said: "There are too few African Americans and too few Hispanics in the upper levels of Wal-Mart. Buying the odd table at an African American dinner just isn't good enough."

At Wal-Mart's head office, an overpowering smell of popcorn greets visitors and a large sign on the wall reminds staff to smile whenever a customer is within 10 feet. Dozens of glass-walled supplier rooms contain hopeful entrepreneurs trying to get their products into Wal-Mart's 6,465 shops worldwide.

In Wal-Mart's nearby distribution centre, staff gather every day at a mock-up of a Sam Walton grocery store, for the "company cheer".

Wal-Mart is trumpeting its community initiatives. It has begun using local architects to blend stores into cityscapes: an Arizona store is built with desert sandstone, an outlet in Long Beach, California, has an art-deco look and in Florida a "fisherman's pier-style" Wal-Mart has gone up.

Mike Huckabee, the Republican governor of Wal-Mart's home state, jokes that there are three things you will never hear from a native of Arkansas: "I don't think duct tape will fix that"; "Baby, I don't think we need another dog" and "I don't think there's anything we need today from Wal-Mart."

He brushes aside sceptics. "I find it incredible that in a capitalistic environment people can be critical of a company for delivering lower prices. It's like saying you want to punish Disneyworld because it's better value than the county fair. Or that professional baseball's got to be stopped because it gives Little League players an inferiority complex."

Work experience

Greg Pierce, 29, former customer services manager, Florida "When I joined Wal-Mart, I told them I had young children and I needed to be at home during the day - we agreed I would work nights. Within a week, I was scheduled to work at 7am. They hired me as a cashier knowing I had a knee injury. Soon, they asked me to push shopping carts - and my knee snapped out of place. They told me the injury was a pre-existing condition and gave me no help or time off. I stood for nine hours a day with crutches and a cast, trying to scan items."

Maria Lopez, 70, sales assistant, Texas "After six years earning $10.93 (£6.17) an hour in electronics, they made me transfer to the front of the store - which involved heavy work like moving boxes. I hurt my shoulder lifting a case of bottled water - and they made me go for physical therapy in my own time.

They refused to believe I was too badly hurt to work until I had surgery to repair a chipped bone in my shoulder. When you get older at Wal-Mart, they do everything they can to push you out."

[back to top] 

Wal-Mart sending Smiley to the back seat

Businessreport.com
Posted: 04.20.06               [back to top] 

It had to come to an end someday. Wal-Mart's 11-year honeymoon with the ubiquitous, happy yellow Smiley face is on the rocks. In a switch to more celebrity- and actor-driven advertising, the world's largest retailer will show Smiley less frequently bouncing across your TV screen. The company wants to convey more of a calm shopping atmosphere and emphasize its lifestyle advantages in an effort to woo well-heeled customers. Smiley "was a character that we dressed up, and we have tried to move from that to an emotion, a feeling," Wal-Mart chief marketing officer John Fleming tells the Wall Street Journal. Fleming oversees a $1.6 billion budget, but left unsaid in the story is the extraordinary deal the company had through those shining yellow years. Smiley was the 1963 creation of the late Harvey Ball, who earned a one-time fee of $45 from State Mutual Life Assurance Cos. Of America to create the character. Ball died in 2001, having never protected the rights to the image and having never earned another penny on the icon, meaning Wal-Mart never had to pay a penny of licensing fees for that bright, shining face. What a deal.

[back to top] 

Wal-Mart boss scoffs at critics, says changes are substantive

By Marcus Kabel and
Anne D'Innocenzio
The Associated Press
Thursday, April 20, 2006              [back to top] 

ROGERS, Ark. — Wal-Mart is making changes aimed at growing and keeping customers happy, Chief Executive Lee Scott said Wednesday, rejecting charges from union-backed critics that the world's largest retailer was pulling a publicity stunt.

Scott said a raft of initiatives at the company launched in the past six months — from boosting the number of organic products its sells to committing to greater diversity in the work force — would help the business and its millions of customers.

"We did not become one of the most successful companies in the world by doing things the same way for 44 years. We have succeeded by sticking to our core values while always looking to improve," Scott said at a media conference hosted by Wal-Mart.

Scott challenged union critics to talk with the 130 million U.S. customers who visit its stores weekly and ask them "if what Wal-Mart does for their lives and communities is a publicity stunt."

Scott spoke to about 70 journalists attending Wal-Mart's second media conference, which it started last year amid twin pressures of weak sales growth and bad publicity. A year later, Wal-Mart is struggling to regain the growth rates of years past. The company remains beset by organized critics, including labor unions.

WakeUpWalMart.com, a group funded by the United Food and Commercial Workers union, dismissed Scott's comments.

"After two more days of publicity stunts, Wal-Mart CEO Lee Scott again missed an incredible opportunity to change Wal-Mart and change America for the better," WakeUpWalMart.com spokesman Chris Kofinis said.

Scott outlined a number of changes in Wal-Mart's strategy aimed at getting existing customers to buy more products by offering trendier and better-quality items. Other steps include better tailoring stores to their surrounding communities and taking a leading role in reducing waste and greenhouse gases.

Wal-Mart executives said major growth opportunities exist in the Hispanic market, which is expected to hold about 10 percent of U.S. buying power by 2010, and in environmentally friendly products.

Scott said Wal-Mart is spending $45 million a year in Spanish-language advertising and the company is building marketing programs around major events such as Cinco de Mayo and World Cup soccer.

Scott said Wal-Mart had long underestimated the sales potential of green products, citing energy-efficient light bulbs as an example. Company officials said spending $2 on an efficient bulb rather than 19 cents for a standard one can save a customer $8 to $10 in power costs per bulb. If every Wal-Mart customer bought one efficient bulb, it would save U.S. consumers $3 billion in utility bills, Scott said.

[back to top] 

Is Wal-Mart boxed in?

Can the company provide 'always low prices' without paying 'always low wages'?

By Marc Gunther,
FORTUNE
April 20, 2006                [back to top]  

ROGERS, Ark. (FORTUNE) - Wal-Mart is working hard to get outside its box. It's not going to be easy.

The world's largest retailer, with $312 billion in sales last year, is trying to transform itself, inside and out—changing the look of its stores, selling such new products as Fair Trade coffee and $1500 flat-screen TVs, revamping its environmental practices, opening up to critics and trying, within limits, to improve the health care coverage for its employees.

Wal-Mart CEO Lee Scott

"There are a lot of changes going on at Wal-Mart, and I mean a lot," CEO Lee Scott told reporters Wednesday.

All this change is unfolding as well-organized union and activist groups have made Wal-Mart their No. 1 target. Its reputation has taken a beating.

Business could be better, too. Revenues and profits are growing as new stores open, but same-store sales growth has slowed. And don't even ask about the stock price. Shares are down by about 15 percent in the last three years, even as the S&P 500 has climbed by more than 40 percent.

This week, Wal-Mart (Research) is playing host to about 70 reporters at a hotel near its Bentonville, Ark., headquarters. Lately, the company also has engaged in discussions with environmental groups like Greenpeace and gay rights advocates from the Human Rights Campaign.

The theme of this week's media powwow was "Champion the Customer." (More on that, and why it's a not as simple as it sounds, in a moment.)

Less boxy big boxes The most visible manifestation of the new face of Wal-Mart is the look of the stores. Instead of cookie-cutter big boxes, Wal-Mart has built a Colorado store with a Southwestern design and a Florida store that resembles a fisherman's pier. The parking lot in a store in Ohio's Amish country has hitching posts for a horse and buggy.

There's no mystery about why Wal-Mart is sprucing up its buildings. The company wants to open more than 300 new U.S. stores in its 2007 fiscal year, but partly because many of its current stores are ugly, the company has run into political and community opposition, particularly in urban or left-leaning areas.

Inside, things will look different, too. Wal-Mart execs took pains to say that they are not "going upscale." But the company is expanding its range of products to add fine wines, organic kiwi, luxury bedding, big screen LCD TVs and fashionable clothes. (CEO Scott wore a $12 George tie, bought from Wal-Mart.)

By far the most exciting changes at Wal-Mart come under the heading of sustainability. CEO Scott is pushing this, big time. "Sustainability will be integrated into our culture," he said. Some initiatives are straightforward. The company is reducing energy costs in its stores, cutting fuel expenses and designing environmentally-friendly new outlets. "It's good for business," Scott said.

Others are more far-reaching and innovative. Wal-Mart has promised to buy more fish from sustainable fisheries. It persuaded Unilever, which makes the laundry detergent All, to reduce the size of its containers by two-thirds, reducing packaging, waste and costs. It is placing big orders for organic cotton. It is selling lots of energy-saving light bulbs. It wants to promote sustainable forestry and mining.

Like everything Wal-Mart does, sustainability will have a big impact—especially as the company makes green products more affordable.

"We believe that all customers care about products that are good for them, and their families, and for future generations," said Andy Ruben, Wal-Mart's VP of corporate strategy and sustainability.

None of this, though, addresses Wal-Mart's biggest image problem, which grows from the perception, if not the reality, that it ought to treat its workers better.

This is a complicated issue, especially when it comes to health care. About 48 percent of Wal-Mart's workers are covered by the company's health insurance. Another 30 percent, the company estimates, are covered by a relative's insurance or by Medicaid. This leaves about 20 percent without insurance, meaning that they rely on the government or charity for help.

Put another way, Wal-Mart outsources a chunk of its health care costs. The company has been trying to respond and, just this week, announced plans to offer a new low-cost health insurance plan with premiums of $11 a month for the employee and $9 for kids. But the plan will be offered to only half of its employees, and critics say the deductibles are too high. So the argument rages on.

Wal-Mart says the problem needs a national solution, while acknowledging that it wants to do better. "Every employer's responsibility is to provide access to affordable health care to its associates," said Susan Chambers, executive VP of Wal-Mart's people division.

As for wages, Wal-Mart says its average wage for store associates is $10.11 a hour. Critics dispute that, and dissident workers have told reporters that they earn less than $10 an hour after five years at the company and can't afford health care. Either way, the undeniable fact is America's biggest employer is leaving most of its 1.3 workers to struggle from paycheck to paycheck.

Finally, much of what is sold at Wal-Mart is made in overseas factories, where there's little or no protection of workers' basic rights. Wal-Mart has a program to monitor conditions in its global supply chain but other companies—Gap (Research), Nike (Research), Timberland (Research), Reebok, to name a few—do it better, experts say. This issue is, or should be, a worry for Wal-Mart.

Champion the customer This brings us back to the theme of the media event: "Champion the customer." The company displayed quotes from founder Sam Walton to underscore the point: "The customer is the boss." "Customers are number one all the time."

Well, maybe. But Wal-Mart's resolute determination to put the customer first practically requires the company to squeeze its workers and suppliers. Yes, Wal-Mart is famously efficient, the world champion at logistics and brilliant in its use of information technology. But you can't deliver "always low prices" unless you work your people very hard and pay them what amount to poverty-level wages.

As Charles Fishman writes in "The Wal-Mart Effect," a fine new book about the company, the culture of "always low prices" explains pretty much everything you know about Wal-Mart, for better or worse. "That's a testament to the shaping power of that one idea, which Wal-Mart has turned into an obsession, almost a corporate fetish," he writes.

Could Wal-Mart be boxed in by the very idea that made the company so successful?

[back to top] 

Wal-Mart Eyes Hispanic Consumers

Sandra O’Loughlin
Brandweek
April 19, 2006                [back to top] 

BENTONVILLE, ARK.-- As Wal-Mart seeks to broaden its appeal to consumers, one important segment it is hoping to reach is the Hispanic community, the company said Wednesday.

To that end, the retail behemoth is planning upcoming initiatives to reach Hispanics, building marketing programs around major events like Cinco de Mayo and World Cup Soccer.

“We are doing a lot of marketing research and looking at the data very closely,” said Wal-Mart CEO H. Lee Scott at the company’s second annual media conference held this week in Bentonville, Ark.

“We are learning a great deal about Hispanic trends through our stores in Mexico and Central America,” Scott added. “We are also spending about $45 million per year in Spanish-language advertising.”

Scott told reporters that, so far, the approaches are working. He said that over a thousand Wal-Mart stores had predominantly Hispanic shoppers.

“In the stores with a dominant Hispanic customer base, our sales were up more than 9% last year,” Scott said. “And right now, Hispanics have a greater affinity for Wal-Mart than any identifiable segment of the U.S. population.”

© 2006 VNU eMedia Inc. All rights reserved.

[back to top] 

Wal-Mart CFO: No Plans To Rein In Pace Of Growth

By James Covert,
Dow Jones Newswires
04-19-06                            [back to top] 

BENTONVILLE, Ark. -(Dow Jones)- Wal-Mart Stores Inc.'s (WMT) aggressive store growth in recent years has helped depress its return on capital, but the company has no plans to slow down, a top executive said.

The Bentonville, Ark., retailer will continue to increase its square footage at an 8% clip annually, Chief Financial Officer Tom Schoewe told reporters at a media conference hosted by the company here Wednesday. This year, that means adding about 60 million square feet, with as many as 370 of its big, boxy stores to be opened in the U.S. alone.

Wal-Mart's giant supercenters are being built increasingly close together as they increase in numbers, with the result that new supercenters steal sales from older supercenters nearby - a process known as "cannibalization" in the industry. That phenomenon fueled a decline last year in the company's return on investment, a performance measure it defines as net income divided by asset productivity.

Wal-Mart's fast-growing international division is posting rapid gains in return on capital. And while returns at the company's Sam's Club stalled for a time a few years ago, they have been posting steady, modest gains since. As for the declines at the U.S. supercenters, Schoewe said the bright side is that the growth has increased the company's market share and bodes well for profits in the longer term. Wal-Mart, which operates about 3,900 U.S. stores, currently has approval for 1,400 store sites in the U.S. alone.

"The 8% square-footage plan is one we're committed to," Schoewe said. "There's reasonably good visibility into that plan."

Meanwhile, Wal-Mart aims to increase its return on capital in other ways. In addition to a new initiative to make its merchandise more appealing to higher- income customers, Wal-Mart is looking to boost the ratio of goods it buys directly from overseas manufacturers. While some of the retailer's competitors average 20% to 25% on that front, Wal-Mart is "well, well behind that," Schoewe said, declining to give a precise figure.

Wal-Mart also expects to improve returns by reducing its inventory on hand. The company has failed over the past six to eight fiscal quarters to meet a goal to grow inventory at half the rate of sales, Schoewe said.

"I think the chances of us meeting that objective are greater this year than they have ever been before," he said. "We're going to wring some of that excess out of the system."

Part of the problem has been inventory that has languished at nearby warehouses, Schoewe said. But stores also have too much inventory in backrooms and on risers, which are high above shelves and out of customers' reach, he said.

Asked by a reporter whether there would be a day when Wal-Mart might become too big, President and Chief Executive Lee Scott said he saw no reason to think so, noting that other big retailers overseas - such as Tesco PLC (TSCO.LN) - have larger shares of their markets than Wal-Mart currently does.

"We're going to grow this company for as long as the customer allows us to grow," Scott said.

[back to top] 

Despite Opposition, Wal-Mart Vows To Keep Expanding

Julie Farby
All Headline News
April 19, 2006                      [back to top] 

Rogers, AK (AHN)—Wal-Mart CEO Lee Scott says Wal-Mart Stores Inc will not bow to opponents who say the world's largest retailer is too big, and will continue to grow as long as customers keep coming to stores.

Saying the giant retailer was in the midst of a "transformation," as it tries to reach customers who shop its stores for food but look elsewhere for fashionable clothing or housewares, Scott says Wal-Mart is also trying to counter negative perceptions that it damages the environment, and provides low-paying jobs and poor benefits.

At Wal-Mart’s second-annual media conference, Scott says, "Union-funded critics say the changes under way at this company are a publicity stunt…They couldn't be more wrong."

According to the Reuters report, in the past year, Wal-Mart has announced employee health-care plans with lower premiums; vowed to use only renewable energy and create zero waste; and launched a program to build 50 stores in blighted neighborhoods.

Copyright © All Headline News - All rights reserved.

[back to top] 

US Rep Frank Tells FDIC To Block Wal-Mart Application

By Damian Paletta,
Dow Jones Newswires
04-19-06                               [back to top] 

WASHINGTON -(Dow Jones)- The ranking Democrat on the House Financial Services Committee told the Federal Deposit Insurance Corp. Wednesday to block Wal-Mart Stores Inc.'s (WMT) attempt to obtain a limited banking charter.

U.S. Rep. Barney Frank, D-Mass., wrote in a letter to FDIC Acting Chairman Martin Gruenberg that the agency should deny all charter applications from nonbanking companies if they don't receive at least 85% of their revenues from financial activities.

"I believe that this is necessary because of the importance of keeping the separation of banking and commerce, including industrial, commercial and retail activities," he wrote.

Wal-Mart is seeking an industrial loan charter to process credit cards and other payments and has vowed not to open any bank branches. The FDIC held two hearings on Wal-Mart's application earlier this month and is considering whether it should offer deposit insurance to the potential ILC. Wal-Mart has pointed out that competitors such as Target Corp. (TGT) already have such a charter.

Wal-Mart must also obtain permission from the state of Utah, where it wants to base the ILC.

A Wal-Mart spokesman said the company had no immediate comment. An FDIC spokesman didn't return a call for comment.

Frank said that all ILC applications to the FDIC that don't meet the 85% standard should be rejected in addition to Wal-Mart's.

[back to top] 

Wal-Mart offers to help fix US health care

By Emily Kaiser
Wed Apr 19, 2006                [back to top] 

ROGERS, Arkansas (Reuters) - Wal-Mart Stores Inc., at the center of debate over corporate responsibility for health care, said on Tuesday that it wants to use its cost-cutting expertise to help make the U.S. health care system more efficient.

Wal-Mart, the world's biggest retailer, has become a lightning rod for labor unions, environmentalists, anti-sprawl groups and others who contend that the retailer pays poverty-level wages, pushes employees onto government-funded Medicaid health insurance, and devours green space for its massive stores.

Maryland recently passed legislation that requires Wal-Mart to spend more on employee health care, and similar bills have been proposed in dozens of other states as they try to defray rising costs.

The Bentonville, Arkansas-based retailer, the largest U.S. private sector employer, has been taking steps to change such negative perceptions, including adding a lower-priced health care plan for employees, but so far the efforts have done little to quiet critics.

At the start of the retailer's second annual media conference here on Tuesday, top executives spoke on issues ranging from health care to fashion, but one of Wal-Mart's most vocal critics -- Wake Up Wal-Mart, a union-backed group -- held its own press event at the same hotel, where a handful of Wal-Mart employees called on the company to provide better pay and benefits.

"Maybe, if you could live a day in the life of an average Wal-Mart associate, you would understand the fear we have of getting sick because we can't afford health care, or how hard it is to support a family on Wal-Mart's wages," the employees wrote in a letter to Wal-Mart CEO Lee Scott.

Wal-Mart said health care is a national problem and required a joint effort from government, corporations and workers to find ways to make the system more efficient.

The retailer said the key is to figure out what is driving up health care costs -- just as Wal-Mart does with its vaunted supply chain network -- and then wring inefficiencies out of the system.

Wal-Mart tracks expenses so closely that cardboard boxes at its distribution centers bear a message reminding employees that each box costs the company 75 cents.

The retailer offered up its information technology expertise to help develop a system for keeping electronic medical records as another means of reducing costs.

Wal-Mart also said that lessons could be learned from health clinics it is opening in dozens of stores around the country, many of which serve uninsured patients who would otherwise go to the emergency room -- a major drain on health care resources.

The conference continues on Wednesday, with speeches from CEO Scott and other executives.

© Reuters 2006. All rights reserved.

[back to top] 

Wal-Mart unhealthy, sez Quinn

By Michael Saul
New York Daily News
April 19, 2006                    [back to top] 

Cost-cutting colossus Wal-Mart is not welcome in New York at any price, City Council Speaker Christine Quinn declared yesterday. "I don't want Wal-Mart in the City of New York unless they change their corporate behavior," said Quinn (D-Manhattan), eliciting applause from the crowd at a breakfast forum in midtown Manhattan sponsored by Crain's Business New York. "It is well documented across the country that Wal-Mart frequently uses the public insurance programs of the cities they are in as their own health insurance programs," Quinn charged. "We can't put that additional strain on our Health and Hospitals Corp., which is working as hard as it can to take care of uninsured New Yorkers."

Wal-Mart executives, who were in the audience, quickly responded, saying Quinn's characterization of the company was false.

"Our list of charities is quite long," said Philip Serghini, a senior manager at Wal-Mart. "In terms of just making a sweeping comment that we're a bad corporate citizen, it's really not true."

Serghini said Wal-Mart's employee health benefits are "very competitive" with other retailers in New York City. "And, the bottom line, is New Yorkers want the option to [shop] at Wal-Mart," he said. "They don't want to have that decision made for them."

Among other topics Quinn discussed at the forum:

She blasted Gov. Pataki for his "lack of leadership" on Ground Zero redevelopment.

She voiced strong support for a proposal to expand the Javits Convention Center on Manhattan's far West Side.

She said she has yet to take a position on the proposed Nets arena and surrounding development in Brooklyn.

[back to top] 

Wal-Mart flies welcome flag: Retailer, amid critics, fields queries from media, boosters

By Stacey Roberts and Lynda Edwards
Arkansas Democrat Gazette
April 19, 2006                                [back to top] 

ROGERS — Journalists from around the world descended on the Embassy Suites hotel for Wal-Mart Stores Inc. ’s second-annual media day Tuesday, where Gov. Mike Huckabee praised the company for its philanthropic efforts, particularly in the economically depressed Delta region. When a reporter asked Huckabee about New York senator and former Arkansas first lady and Wal-Mart board member Hillary Clinton returning political donations made to her by Wal-Mart, Huckabee looked surprised and asked, “Did she do that ? To all Wal-Mart executives, I will not return any political contributions you give me.”

Union-funded WakeUpWal-Mart. com took the opportunity to call a news conference during the media day to urge the company to change its labor and insurance practices.

Three current employees and a former Wal-Mart worker joined the Rev. Markel Hutchins, a former aide to the Rev. Martin Luther King, in calling on Hutchins’ friend Andrew Young to make the company “a better place for workers.”

Wal-Mart distribution center employee Ollie Wels, 37, of Brooksville, Fla., shared the story of his wife’s job-related injury at the same distribution warehouse. Wels said his wife was ordered to climb onto a conveyor belt to fix a jam when the belt started unexpectedly and threw her onto the warehouse floor. Wels ’ wife suffered an injury to her shoulder that required surgery and is fighting the company over her workers’ compensation benefits.

Meanwhile, across town at the Fairfield Inn and Suites, Young, a former Atlanta mayor and United Nations ambassador, was telling the National Steering Committee for Working Families For Wal-Mart of his efforts to stem the tide of companies leaving the South for other areas 10 years ago.

“The South was abandoned by everyone,” he said. “No one was investing in downtown Atlanta.”

Young kept pitching the region as an underutilized economic market. The only company that responded to the message was Wal-Mart, he said.

Young is the chairman of the steering committee for Working Families For Wal- Mart, a nonprofit group supporting and partly funded by the world’s largest retailer. The group met face to face for the first time Tuesday.

As company after company moved plants and facilities to other areas of the United States or out of the country, Wal-Mart was expanding stores and distribution centers, Young said.

“Sam Walton proved you could make more money serving the poor than you could serving the rich,” he said.

Wal-Mart’s readiness to serve the working poor when other companies wanted to focus on attracting only the country’s wealthier households is one reason Young has thrown his name and considerable leadership skills behind the Working Families For Wal-Mart organization.

“Ninety-six million people voted in the presidential election, in both parties,” Young said. “More than 100 million people visit Wal-Mart each week. No one is making them shop there, no one is asking them to go. Wal-Mart is a great working model of the American dream and we don’t think they should be trashed.”

The group met with H. Lee Scott, Wal-Mart’s president and chief executive officer, on Tuesday morning. Scott spent a few minutes asking questions of the committee and expressing his appreciation for their efforts on Wal-Mart’s behalf, Young said.

Scott also told the committee that some criticism of the company was good. Constructive complaints have caused the company leadership to consider departments and ideas that might have been overlooked previously, committee member Bishop Ira Combs Jr. said. Combs is a leader in the Greater Bible Way Temple of the Apostolic Faith in Jackson, Mich., an area devastated by factory closings.

WakeUpWal-Mart. com spokesman Chris Kofinis called the committee “hired rightwing attack dogs” when it was formed in December. WakeUp-WalMart. com is conducting a campaign to persuade Wal-Mart to adopt labor reforms.

Other critics hold Wal-Mart responsible for creating a working poor labor pool forced to use public medical assistance because of the high costs of the company’s medical insurance programs.

Working Families For Wal-Mart has planned some events nationwide in the coming year but plans to expand its grassroots membership through recruiting efforts outside stores and through the Internet, Young said.

“What comes of this hopefully is a business model that assists people living in stressful economic times [to ] maintain a healthy family life,” he said. “None of the problems affecting the poor are created by Wal-Mart, yet they have accepted the challenge of addressing them.”

[back to top] 

Atlanta minister questions Young's support of retailer

By Marilyn Geewax
Atlanta Journal-Constitution
April 19, 2006                                    [back to top] 

ROGERS, Ark. — As Wal-Mart Stores Inc. kicked off a two-day conference for journalists Tuesday, its new grass-roots support group, headed by former Atlanta Mayor Andrew Young, held its first meeting. But while Young was at one hotel explaining to reporters why he supports Wal-Mart, another African-American minister from Atlanta, Markel Hutchins, was at another hotel criticizing Wal-Mart's business practices.

Hutchins, who calls Young his "mentor," said he and other black leaders are disappointed in Young for using his position as an "iconic civil rights leader" to help a corporation that many union leaders and others say underpays its 1.3 million workers.

Hutchins said Wal-Mart is "driving down wages, lowering benefits [and] shipping U.S. jobs overseas."

"We're all scratching our heads," he said, because Young's representation of Wal-Mart is "very strange."

Young strongly disagrees with critics of Wal-Mart, which he says provides good entry-level jobs and low prices for people of modest means.

He also noted that Wal-Mart was willing to open stores and employ people in the rural South when other big department stores, such as Sears, were pulling out of small towns.

"I'm a Southerner," he said. "The South was abandoned by everyone else."

Hutchins, a Baptist minister and former president of the Atlanta-based National Youth Connection, appeared with WakeUpWalmart.com, a Washington-based, union-supported group.

The dueling press conferences staged by the groups underscored how hard it is for Wal-Mart, the nation's largest retailer, to escape controversy or shake off its dogged critics.

The company invited dozens of journalists to participate in its second annual media conference, held to allow executives to tell their side of the story on a number of issues, including worker compensation and environmental policies.

The event is being held just a few miles from the firm's Bentonville headquarters in northwest Arkansas.

Working Families for Wal-Mart was launched with Wal-Mart's funding in December. On Tuesday, Young chaired the first meeting of 10 members of the group's steering committee, made up of business and community leaders who support Wal-Mart.

Young's consulting firm has a contract for an undisclosed sum with the group. His responsibilities include writing opinion articles and speaking with reporters about Wal-Mart's positive impacts on low-income people.

Committee spokesman Kevin Sheridan said that so far, tens of thousands of Wal-Mart shoppers have used the Internet or postcards to show support for Wal-Mart by submitting their names and addresses to Working Families for Wal-Mart.

The steering committee met in private in a hotel conference room. Wal-Mart Chief Executive Lee Scott joined the gathering to thank the members for their work, Young said.

After Scott left, Young and the other committee members told reporters they discussed ideas for helping Wal-Mart develop closer ties to their communities.

Late in the afternoon, Young released a written statement noting that Wal-Mart plans "to build more than 50 stores in struggling urban areas, expecting to create up to 25,000 jobs in areas desperately needing employment."

"Even as a lifelong Democrat and union supporter, I have to say it's time for Washington, D.C., union leaders to let working families decide where to shop and work," he said in the statement.

[back to top] 

Wal-Mart Works to Polish Image, but Detractors Gear Up Too

The retailer's executives have been forced to shift their focus to combating negative news.

By Abigail Goldman
LA Times
April 19, 2006                     [back to top] 

ROGERS, Ark. — In a hotel meeting room not far from Wal-Mart Stores Inc.'s headquarters, company executives told a gathering of 70 reporters Tuesday that Wal-Mart was working hard for working families.

Nearby, union organizers and other foes trotted out statistics, current and former Wal-Mart employees, and community leaders to try to prove that the company is a bane to those same families.

The dueling messages were aimed at the reporters attending Wal-Mart's second annual media conference.

For the executives, managing the steady drumbeat of negative news is consuming almost as much of their time as running the company, which has more than 6,500 stores in 16 countries and nearly $316 billion in annual sales. The past year in particular has been brutal.

"It's been an extremely trying year when the chief executive of the world's largest retailer has to devote himself full time to defending the company's business model," said Mark Husson, an analyst with HSBC Securities in New York. "By any measure it's an extraordinary amount of very senior management time being taken up in a noncommercial, unproductive manner."

Increasingly keen to change public perceptions, Wal-Mart again opened its doors to the media as it continues its global expansion. This year's conference, which concludes today, is a series of meetings featuring top Wal-Mart executives extolling the company's virtues.

"In the past, we've been forced to respond to criticism, but in the last year, we've taken a more proactive approach to sharing information and our critics have had to respond to us," said Wal-Mart spokeswoman Sarah Clark. "With success comes criticism, but we know if we didn't tell our story, no one else would and we didn't want to let our critics define our reputation."

Wal-Mart certainly has had its hands full, having to contend with:

• A leaked memo that outlined proposals to trim the company's healthcare costs by discouraging unhealthy workers.

• A scathing anti-Wal-Mart documentary that screened nationwide in churches, living rooms and schools.

• Farmers, bankers and rural Americans who raged against the company's proposal to open a limited-purpose bank to save money on credit card transactions.

• State houses around the country which debated forcing the company to pay more for employees' healthcare or pay into state funds for that purpose.

The company has fared no better on Wall Street, where its stock has been relatively unchanged for the last 6 1/2 years. Shares of Wal-Mart rose 58 cents Tuesday to $46.40.

The trying times are taking their toll on Chief Executive Lee Scott, who has been traveling the globe fending off attackers. He recently said he would take a month off to go fishing.

Among those coming to Wal-Mart's defense Tuesday was Arkansas Gov. Mike Huckabee.

"Wal-Mart has really become the whipping boy of labor unions across the country who would love to demonize the Wal-Mart brand and the Wal-Mart culture," Huckabee told the gathering. "Wal-Mart would tell you they're not a perfect company. But one of the reasons they're successful is that they reinvent themselves every week."

Former U.N. Ambassador Andrew Young, chairman of the 16-member steering committee of Working Families for Wal-Mart, said at a small news conference that none of the problems affecting the poor were caused by the company.

"We all have an interest in Wal-Mart; we all want Wal-Mart to succeed," Young said, gesturing at his fellow committee members who came to Arkansas from around the country. "We don't think it ought to be trashed. We think it ought to be perfected."

Part of what Wal-Mart is battling is better-organized opponents. Two of its biggest detractors are Wal-Mart Watch, backed by the Service Employees International Union, the Sierra Club, the National Partnership for Women & Families and other activist groups, and WakeUpWalMart.com, funded by the United Food and Commercial Workers union.

Like Wal-Mart, those groups are fine-tuning their message for the coming year.

Andrew Stern, the founder of Wal-Mart Watch and the president of the Service Employees union who last year broke his and six other unions away from the AFL-CIO, said the next step was moving from a campaign-type organization to a permanent one.

"We spent a year trying to be heard, trying to make our case, trying to get legislators, businesspeople and reporters to pay attention to what we thought was a big problem in the American economy," Stern said. "Now we are looking at how we can provide very specific ways for helping Wal-Mart change its business model, instead of being perceived as just being critics."

To that end, Wal-Mart Watch is likely to ask the company to work more closely with local leaders to minimize the environmental and traffic problems associated with new stores. Also on the agenda: challenging Wal-Mart to set an example for the retail industry by providing affordable health insurance to all employees.

WakeUpWalMart.com continues to push similar demands, including paying a "living wage," offering affordable health coverage and increasing the amount of U.S.-made products it sells.

On Tuesday, the group set up camp steps away from Wal-Mart's meeting hall, flanked by workers describing their experiences with the company.

"I'm here because I can think of 100 people offhand — single mothers — who are forced to go on public assistance because Wal-Mart, which could afford to give people health insurance, chooses not to," said Greg Pierce, a 29-year-old from Ocala, Fla., who quit working at Wal-Mart a week ago.

Wal-Mart isn't the first American company to face withering attack by a groundswell of organized opposition and individual critics.

Standard Oil Co.'s dominance in a host of enterprises provoked widespread public outcry in the early years of the 20th century. Henry Ford, came under intense criticism in the late 1930s for heading the only nonunion American carmaker. In more recent years, Nike and Gap faced a barrage of criticism, particularly on college campuses, for what critics said were sweatshop conditions at its overseas factories.

Each company mostly or partly won over opponents after instituting change — either voluntarily or by force, said Nelson Lichtenstein, a professor of history at UC Santa Barbara and editor of "Wal-Mart: The Face of 21st Century Capitalism."

Standard Oil fell to the new antitrust laws demanded by the American public. Ford unionized, and Nike and Gap opened themselves and their factories up to inspection, review and oversight by independent observers.

If history is any guide, Wal-Mart probably will be forced to make changes as well, Lictenstein said.

"If they see that the political winds are moving against them, if the Democrats win big or something, then they'll start to deal," he said.

At Tuesday's media gathering, normally tight-lipped Wal-Mart executives took questions and described their efforts to remain relevant to the hundreds of millions of shoppers who pass through their doors each week.

Those plans include offering trendier and more-upscale merchandise; working with communities to design stores that better fit in with local architecture; employing local contractors and suppliers — particularly minority-owned businesses — to broaden the company's appeal in urban areas; and offering healthcare coverage for as little as $20 a month for families.

"One visit to Arkansas to be lectured on how America is better off with Wal-Mart isn't going to change anything, but if they're doing a whole raft of things, then Wal-Mart starts to look proactive and progressive rather than reactive and regressive," said analyst Husson. "If that's the strategy there is a tipping point where we get to where enough of that stuff will move public opinion and may even move press opinion."

[back to top] 

Wal-Mart workers decry poor working conditions

By Jennifer Turner
NWAnews.com
April 19, 2006                  [back to top] 

ROGERS — While Wal-Mart Stores Inc. set out to spread a positive message at the retailer’s second annual media conference on Tuesday, some Wal-Mart workers painted a different picture. Three current Wal-Mart associates and one former assistant manager joined civil rights activist Markel Hutchins at the Embassy Suites on Tuesday to tell reporters about the poor working conditions, costly health insurance and low morale they said workers endure.

Hutchins called on Wal-Mart CEO Lee Scott and the Walton family to "embrace the power they have to improve the lives of 1.3 million workers and their families."

Greg Pierce quit his job as customer sales manager at a store in Ocala, Fla., last Monday after being denied money, benefits, vacation time, sick time, personal time and workers’ compensation benefits. "The morale has just gone completely down because of the way the workers are being treated, and it’s time to speak out," he said.

Pierce is urging more Wal-Mart employees to speak out about poor working conditions in an effort to convince the company to change how it treats its employees.

Cynthia Murray, a sales associate at Wal-Mart in Laurel, Md., said that even after working at the store for more than five years, she still cannot afford the company’s health care on her $9.47 hourly wage. "I’ve watched Wal-Mart change the way they treat their employees," she said. "We all are hard workers, and we just want a fair deal."

When asked why they don’t quit their jobs and work for a company with better benefits, the panel agreed that they couldn’t afford to leave.

Ollie Wells, who works at a Wal-Mart distribution center in Brooksville, Fla., said he needs the flexibility of his weekend shift to help his wife — also a Wal-Mart employee — take care of their four children.

The workers stressed that more importantly, quitting their jobs would not solve the overall problem. "The argument ‘if you don’t like it, just leave’ is really in some way not patriotic at its core," Hutchins said. "We have the power to change this company for the better, and following the civil rights movement, the campaign to change our nation’s largest employer is one of the next great struggles for social and economic justice liberation for all Americans."

As part of the campaign sponsored by WakeUpWal-Mart. com, the Wal-Mart workers and Hutchins released a joint letter to Wal-Mart CEO Lee Scott asking him to "understand the painful challenges his workers face every day."

[back to top] 

Wal-Mart Puts on a Happy Face

By Pallavi Gogoi and Robert Berner
Business Week
April 19, 2006                                [back to top] 

The retailer is launching several initiatives, including a health-care package for part-timers, to improve its image. It may not be enough. Cynthia Murray, a 49-year-old store associate at a Wal-Mart (WMT ) store in Laurel, Md., chuckled when she heard of her company's plan to offer health-care coverage to more part-time employees. "I've worked full time for six years at Wal-Mart and I can't afford the high-deductible plans," she says. "How is a part-time worker going to afford it?" Murray earns $9.47 an hour, answering phones and taking care of people in the fitting room. Murray doesn't have any health-care coverage and says she hardly ever sees a doctor.

After years of sharp criticism for its poor wages and benefits from policymakers, unions and its own employees, Wal-Mart is working overtime to improve its standing. On Apr. 18, the world's largest retailer opened its second annual media conference, gathering a large group of journalists in Rogers, Ark., near its Bentonville headquarters. The company unveiled several initiatives, including the expansion in health-care coverage.

INCREASED ELIGIBILITY. Wal-Mart employees will be eligible to get health-care benefits after one year of working at the company, down from two years previously. Part-timers will be able to add their children to their coverage for the first time. The company also plans to cut co-pays on some generic medications to $3, from $10, and offer 20% discounts on prescription drugs otherwise not covered.

"We think this is a really big deal," says Susan Chambers, executive vice-president of human resources at Wal-Mart. "If you're not familiar with the retail sector, this is not the norm." The changes, which take affect on May 13, will affect more than 150,000 part-time associates eligible for initial or enhanced coverage during a special enrollment period in mid-May (see BW Online, 12/29/06, "Wal-Mart's Organic Offensive").

The moves drew some plaudits. "It's a huge announcement...and is a big step towards expanding health-care access to the nation's uninsured," says Nicole Garratt, president of World Health Care Congress, an organization that hosts leadership summits for CEOs and senior executives from the healthcare industry. Mark Miller, analyst at William Blair & Co., says the move is a step in the right direction and may even make financial sense for Wal-Mart because it could improve morale.

"You can't look at health-care costs as an individual item," he says. "After all, it is one that has potentially related benefits like better customer service and creating a better shopping environment."

But the reaction of employees like Murray suggests Wal-Mart may have a tough time in making substantial changes in its workers' health coverage. She earns about $16,000 a year, working four days a week. Her husband also works and doesn't have health care. She says the financial burden of Wal-Mart's plans are simply too much. The cheapest policy she can get in Maryland, she says, would run $110 every two weeks, out of a paycheck of $606.

FEW TAKERS. The company's critics are not backing off. "It's an empty public relations stunt," says Chris Kofinis, communications director at WakeUpWalMart.com, a movement started by the United Food & Commercial Workers, the largest union in the U.S. Kofinis says Wal-Mart's low wages make it almost impossible for workers to pay the premiums and high deductibles of its health-care plans. "Wal-Mart knows that it doesn't have to spend much on this health-care coverage because hardly anyone will sign up," says Kofinis. Wall Street may have agreed. The stock barely budged, up 5 cents to $46.45.

A spokesman for Wal-Mart says the company offers as many as 18 different health plans. Premiums can be as low as $11 a month and deductibles range from $350 to $2,000.

Health care is just part of Wal-Mart's effort to improve the perception of the company. CEO Lee Scott has opened up to the media in recent months and has talked publicly about Wal-Mart's image more in the past year than ever before. Wal-Mart recently said it will build 50 stores in neighborhoods with high unemployment or crime rates and establish economic-opportunity zones around 10 of those stores. It also plans to offer development grants to companies within the zones and offer them free advertising in newspapers and on Wal-Mart's in-store radio network (see BW Online, 4/04/06, "Wal-Mart's Urban Renewal").

On Tuesday, at the media event, Wal-Mart executives outlined several other steps to quell community opposition to its stores. They plan to tailor stores to better fit into neighborhoods and work more closely with communities in planning the stores and hiring local contractors. In the past, the company acknowledged it has gone into communities with cookie-cutter stores. "We have to work with communities better than we ever have," said Eric Zorn, president of Wal-Mart Retailing, speaking at the media conference (see BW Online, 10/07/05, "Wal-Mart Gets the Fashion Bug"

LEGISLATIVE PRESSURE. Health care for employees, though, is one of the most sensitive issues at Wal-Mart. More than 20 states have introduced legislation aimed at forcing the company to spend more on health care. A recently leaked memo shows that Wal-Mart's 1.3 million employees, who make an average of $20,000 a year, spend 8 % of their income on health care, nearly twice the national average.

In addition, 46% of employees' children are either uninsured or on Medicaid, the memo said. In February, CEO Scott met with state governors at a meeting of the National Governor's association and urged them not to pass legislation that would burden the retailer, and pledged to work with the governors to move workers off state Medicaid rolls.

The Wal-Mart spokesman says that 615,000 employees have insurance through the company. "And with these new initiatives, the number would seemingly grow," he says. Still, he says there's good reasons the percentage of those employees covered would never reach 100%. "It is important to look at who works for Wal-Mart," he says. "There are a lot of students, second-income providers, and senior citizens, who already have other options elsewhere, like military retirement plans, Medicare, or even parents' insurance plans."

[back to top] 

Wal-Mart Executive: No Target For Ratio Of Full-Time Workers

By James Covert,
Dow Jones Newswires
04-18-06

BENTONVILLE, Ark. -(Dow Jones)- Wal-Mart Stores Inc.'s (WMT) ratio of full- time workers has slightly declined over time, but the retailer doesn't have any particular target for what that ratio should be, a top executive said.

About 75% of Wal-Mart's employees work full time, and while the company bases its budgets on that number, it has no plans to move it lower, said Eduardo Castro-Wright, president of Wal-Mart's U.S. stores, at a media conference here.

The ratio of part-time workers has "very minimally" declined because most applications for Wal-Mart jobs - about 70% - are for part-time work rather than full-time, Castro-Wright said.

"It's not a metric we use to measure our business. It is really a local decision based on the availability of associates at that store," Castro-Wright said.

"There are places where most applicants are looking for part-time work. In other stores, that same equation is reversed. We truly don't have an objective and certainly don't manage to that metric."

Castro-Wright's comments followed a recent analyst report from JP Morgan which estimated that about 80% of Wal-Mart's labor force was full time and that the retailer aimed to lower that percentage to 60%.

Wal-Mart defines full time as working 34 hours a week or more.

Copyright (c) 2006 Dow Jones & Company, Inc.

Wal-Mart Goes Upscale to Increase Sales

By ANNE D'INNOCENZIO
and MARCUS KABEL
AP Business 
April 18, 2006                      [back to top] 

ROGERS, Ark. -- Under pressure to boost growth, Wal-Mart Stores Inc. is retooling its strategy to pry more money out of the hands of wealthier, more style-conscious customers by offering a broader array of more fashionable goods.

Wal-Mart Stores USA CEO Eduardo Castro-Wright said Tuesday that the world's largest retailer, whose famous tag-line is "Always Low Prices," would unveil an array of higher-priced lawn chairs and fluffy towels, as well as trendier clothing, including a new hip-hop brand for young males called Exsto.

The goal with Exsto, which will hit the shelves in July, is to mimic the success of Metro 7, which is targeted at young women and has scored well since its launch last year.

Other moves outlined by Castro-Wright, who spoke to about 70 journalists on the first of a two-day media conference, include reducing merchandise inventory to reduce clutter, and relocating key regional executives to the areas for which they are responsible, in order to better tailor stores to the communities they serve.

Wal-Mart held its first media conference last April under the twin pressures of sluggish sales growth and bad publicity. A year later, Wal-Mart is still struggling to regain the growth rates of years past. The company remains beset by organized critics, including labor unions.

But the company is hoping that a raft of initiatives, such as those outlined Tuesday, will revive consumer interest and refurbish its image, boosting sales and its stock price. On Tuesday, shares of Wal-Mart rose 58 cents to $46.40 on the New York Stock Exchange, in the middle of its 52-week range of $42.33-$50.87.

So far this fiscal year, Wal-Mart has averaged a modest 3.1 percent in same-store sales growth, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer's health.

On Wednesday, company executives are expected to discuss hot-button labor issues, such as employee health care. Chief Executive Lee Scott will close the proceedings with a speech titled "Change, Growth and Success for Wal-Mart and the Working Families We Serve."

On Tuesday, company executives said they were trying to understand their customer even better and have segmented them into three different groups -- the loyalist, the selective shopper and the skeptic.

The loyalist shopper shops at Wal-Mart stores 63 times a year, and the skeptic much less so. But the company's biggest focus is the selective shopper, who shops 46 times a year and buys only basic goods, according to John Fleming, executive vice president of marketing.

As part of its merchandising efforts, Wal-Mart is improving the baby departments, offering organic cotton baby clothes under its store brand George. In January, the company relaunched its furniture departments to offer more compelling merchandise.

Meanwhile, Wakeupwalmart.com, a union backed group, sought to steal some of Wal-Mart's thunder before the meeting. The group brought in civil rights activist Rev. Markel Hutchins, from Atlanta, Ga., along with several former and current workers of Wal-Mart to blast the company for what they believe are meager wages and health care benefits.

Copyright 2006 Newsday Inc.

[back to top] 

Wal-Mart Demotes Price-Slashing 'Smiley' In New Ads

By KRIS HUDSON
and ANN ZIMMERMAN
April 18, 2006                     [back to top] 

Pity poor Smiley.

For 11 years the star of Wal-Mart Stores Inc.'s "always low prices" advertising, the frenetic, yellow, grinning face is only a bit player in much of the retailer's current campaign touting stylish "lifestyle" themes.

Upstaging him aren't the giddy Wal-Mart customers and employees with whom he shared camera time in the past. Instead, Wal-Mart's ads are using actors and celebrities to make low-key pitches such as "Save more, smile more" or "I came in for eye drops and discovered something eye opening."

Greeter wears 'Smiley' at an Ohio Wal-Mart. In a sweeping overhaul of its mass advertising in the past year, Wal-Mart and its two ad agencies, Bernstein-Rein Advertising Inc. of Kansas City, Mo., and Omnicom's GSD&M, based in Austin, Texas, set out to entice well-heeled customers to shop for more than just basic goods like cleaning supplies, sweat socks and boxer shorts. The retailer, based in Bentonville, Ark., is aiming to spur more sales of high-margin general merchandise -- such as trendy apparel and housewares -- in a bid to boost its sluggish growth in same-store sales, or sales at stores open for more than a year.

One way to do that, as reflected in Wal-Mart's new ad strategy, is to appeal to shoppers' interest in an intriguing yet calm shopping environment rather than sending Smiley careening across their television screens.

Smiley "was a character that we dressed up, and we have tried to move from that to an emotion, a feeling," said John Fleming, Wal-Mart's chief marketing officer. "We'll see how it goes and evaluate it."

The "Save More, Smile More," ad, for instance, didn't scream Wal-Mart's low prices. Instead, it focused on well-priced products, with low-key smiles part of the landscape -- whether on a baby or in soapsuds. "With that ad, it moves from Wal-Mart smiling at you to the customer smiling," says Wal-Mart spokeswoman Gail Lavielle.

Mr. Fleming, a 19-year veteran of Target Corp., is the key executive behind the ad strategy, and the man who demoted Smiley to a supporting role. Mr. Fleming joined Wal-Mart's online division in 2000, and, after being named head of marketing last May, he now oversees a division that had a $1.6 billion ad budget last year.

In recent months, Mr. Fleming has recruited fresh marketing talent to Bentonville, including Frito-Lay veteran Stephen Quinn and Julie Roehm, who previously managed marketing of the Chrysler, Jeep and Dodge auto brands.

Mr. Fleming's most high-profile move came last fall when Wal-Mart, in an effort to promote its new fashion line Metro 7, for the first time advertised in the haute-couture pages of Vogue. The move seemed utterly incompatible with Wal-Mart's cost-conscious demographic and a heretofore less-than-cutting-edge clothing image. Smiley is nowhere to be found in the Vogue ads.

Smiley's demotion has been undertaken with little fanfare, but it is a big deal nonetheless. Wal-Mart employees have grown accustomed to the character, which Wal-Mart reintroduced each year with different themes: Zorro Smiley, Cowboy Smiley, even Ms. Smiley. Yet he had become a bit of a distraction because of his popularity with another group: Wal-Mart's critics. Among recent unauthorized parodies of Smiley, a marketing poster for an anti-Wal-Mart documentary last year featured a rampaging Smiley in a business suit.

While Mr. Fleming and others insist that Smiley might eventually regain a prominent role in the retailer's advertising and that he retains a strong presence in its print ads and store signs, some marketing experts speculate that the time has come for the icon to hang up his blue vest. "In my judgment, it has run its course," said Rajiv Lal, a professor of retailing at Harvard Business School.

Wal-Mart used Smiley regularly in his heyday to tout price rollbacks, the prolonged or permanent price reductions in featured products. He reflected the cornerstone of the Wal-Mart discount strategy. Instead of occasional short-term discounts, Wal-Mart always priced its products as cheaply as possible. When it found ways to cut costs on an item even more, it passed those cuts or rollbacks on to the customers, too.

The new Wal-Mart ad campaign, launched last summer for back-to-school, for the most part has shied away from focusing on price as it touts improved merchandise quality instead. "We own low prices," Mr. Fleming said, while recently touring Wal-Mart's new high-end store in Plano, Texas, that is supposed to lure more affluent customers.

"We are not just about price, but the broad value proposition for all customers," Mr. Fleming said. "We don't want to lose prices, but evolve the message of value -- in products, service and customer experience."

Whether Wal-Mart's new message is clicking with consumers isn't yet clear. Charles Grom, a retail analyst at J.P. Morgan, recently wrote about the retailer's anemic March same-store-sales increase of less than 1% at its supercenters and discount stores. He said he didn't think Wal-Mart's ad campaign was resonating with shoppers.

Some Wal-Mart watchers say the ads are too much, too soon and may unrealistically raise shoppers' expectations of what Wal-Mart stores have to offer. While the company is planning to remodel 1,800 stores in 18 months and is trying to roll out its new fashion line to more stores, all that is still a work in progress. If shoppers arrive expecting more than they get, they might be disappointed. Asked whether all the marketing changes are causing controversy inside Wal-Mart, Mr. Fleming quipped, "I just wear a bulletproof vest."

Smiley's recent benching reflects a history of ups and downs for corporate mascots prominent enough to become synonymous with their companies. Burger King Holdings Inc.'s fast-food chain Burger King had retired the burger king himself for several years until recently recoronating him in a series of quirky "Wake up with the king" breakfast ads. And McDonald's Corp.'s Ronald McDonald has seen his prominence in the burger chain's ad strategy ebb and flow through the decades.

The challenge for Wal-Mart won't be whether to retire Smiley or eventually reinstate him, some branding experts say. Rather, it will be overcoming the perception that decades of Wal-Mart advertising has cemented for shoppers -- that it is all about low prices.

For example, it took Target a decade to position itself as a low-cost yet chic retailer, and Wal-Mart will need a lengthy, consistent campaign as well to change its image, said Robert Passikoff, president of New York-based Brand Keys Inc. Wal-Mart is "doing all the right things," he says. "But they have a brand image and brand values that are so deeply entrenched that changing the direction is like trying to turn around the Queen Mary."

[back to top] 

Judge Denies Webb's Motion to Retry Wal-Mart Case

BRAIN
APRIL 18, 2006                  [back to top] 

SAN RAFAEL, CA —Judge Michael Dufficy last week denied the motion for a retrial of the case against Wal-Mart and Dynacraft. Plaintiffs’ attorney Mark Webb had filed the motion on the grounds of judicial prejudice.

A jury rejected claims in February that Wal-Mart and Dynacraft knowingly sold bicycles with defective quick-release levers that caused the front wheels to fall off. The jurors awarded no damages to the plaintiffs. Judge Dufficy had presided over the trial.

In the retrial hearing, Webb argued that the judge and the defense attorneys made a simple, straightforward product liability case into an assault on him, a poor single practitioner who was just trying to bring justice to children who had been badly injured. He also claimed that several rulings and comments from the bench during the trial showed that the judge was predisposed to the defendants.

In her arguments against the motion, Dynacraft attorney Joanne Early argued that judicial prejudice must be raised during the trial, not after the verdict, and that the plaintiffs had not raised the issue during trial.

The case will now likely go to the appeals court

[back to top] 

Wal-Mart suppliers are feeling the pinch

By Robert Reed
Bloomberg News
TUESDAY, APRIL 18, 2006                 [back to top] 

CHICAGO Wal-Mart Stores is shaking up major suppliers with a plan to buy less of everything from paper towels to jeans.

Procter & Gamble, Levi Strauss, the battery maker Spectrum Brands and the trucking company YRC Worldwide have cut forecasts or lost sales since Wal-Mart outlined plans last month to reduce inventory in its 3,800 U.S. stores.

Clorox, Kellogg, Playtex Products, the beverage supplier Cott, and Prestige Brands, a maker of health care products, also may be hurt by the change, Goldman Sachs Group said in a report last month. Wal-Mart's plan to reduce buying is part of a broader effort to upgrade merchandise and add more exclusive brands to improve sales.

Wal-Mart is focusing on inventory to reduce costs, according to a note by a Goldman analyst, Adrianne Shapira. The company's chief executive, H. Lee Scott, also is concentrating on luring upscale shoppers with a new advertising campaign and upgraded stores. Eduardo Castro-Wright, president and chief executive of Wal-Mart Stores USA, told investors and analysts at a retail industry conference recently that his company wanted to make it easier to shop in the stores.

"There will be a very large emphasis on partnering with suppliers to reduce store clutter," Castro-Wright said. "It is driven by what the customer needs."

Wal-Mart, based in Bentonville, Arkansas, will work with suppliers to determine the right amount of store inventory, he said.

Wall Street has taken notice and is starting to assess the effect on vendors. Wal-Mart's "inventory focus is rippling through its partners," Shapira said.

An 18 percent cut in inventory could trim Wal-Mart's need for working capital by $6 billion, she said in the report. That could give it a "sizable source of capital flexibility and lift returns by 43 basis points, a key inflection point to drive stock performance," she said.

P&G, the largest U.S. maker of household goods, already may be feeling the pinch. In March, P&G cut its forecast for organic sales growth, which excludes acquisitions and divestitures, by 1 percent, citing "recent customer inventory reductions." A P&G spokesman, Doug Shelton, said last week that the customer was Wal-Mart.

If Wal-Mart buys fewer disposable diapers and paper products, it also could hurt Kimberly-Clark, which makes Huggies diapers and Scott tissue, said William Schmitz, an analyst in Greenwich, Connecticut, with Deutsche Bank Securities.

YRC, the largest U.S. trucking company, cut its first-quarter profit forecast in March because of a drop in shipments. The company forecast net income of up to 70 cents a share, down from an earlier forecast of up to $1.05.

"Some of our largest retail customers have made significant inventory adjustments in the quarter," said the company, based in Overland Park, Kansas.

Spectrum Brands, which is based in Atlanta and makes Rayovac and Varta batteries, said this month that second- quarter profit missed forecasts partly because of "inventory adjustment initiatives" by one of its largest customers. A Spectrum Brands spokesman, Dave Doolittle, would not identify the customer that cut back orders.

While many companies have not blamed any company, at least one named Wal-Mart.

In its earnings report last week, Levi Strauss said that fourth-quarter revenue fell 5.8 percent, in part because of reduced sales to Wal-Mart. Levi Strauss, based in San Francisco, said Wal-Mart had given more space to its private clothing brands, which include George.

But not everyone is convinced that Wal-Mart is the culprit for profit and sales cuts at makers of consumer goods.

"Since P&G's announcement, other companies have noted similar issues," Christopher Ferrara of Merrill Lynch wrote in a report Wednesday. "We think the market is overplaying this."

[back to top] 

Wal-Mart: One size may not fit all

No. 1 retailer begins Arkansas conference aimed at improving image by stressing need to reach out to customers.

By Parija Bhatnagar,
CNNMoney.com 
April 18, 2006                     [back to top] 

ROGERS, Ark. (CNNMoney.com) - As Wal-Mart's marketplace become more diverse, company executives conceded that the retailer's "one size fits all" strategy is losing relevance with consumers.

Eduardo Castro-Wright, president and CEO of Wal-Mart Stores, addressed the issue during his presentation to members of the press Tuesday during Wal-Mart' (Research)s second annual media conference.

"We're really trying to understand the customer," said Castro-Wright. "The [Wal-Mart] loyalist shops across the store. The selective shopper is shopping for great value and prices but she's shopping mostly for food. We're trying to help them to shop the rest of the store."

Wal-Mart's biggest customer challenge, however, is trying to appeal to what he called the "skeptic" shopper, or someone who hasn't yet become a regular Wal-Mart customer.

Industry watchers say the pressure is on for Wal-Mart to grow its customer base outside of its core low-to-mid income shoppers and aggressively court higher income consumers in order to boost slowing sales and profits at Wal-Mart stores.

Castro-Wright said Wal-Mart has a game plan and offered a preview of "exciting new customer merchandise that's coming up."

Although Wal-Mart executives repeatedly denied that the low-cost leader is "not going upscale," some of the new products that will hit stores this year include higher-priced lawn and garden furniture and home electronics, better quality towels and bedding collections made of Egyptian cotton, and a new line of trendy urban clothing for men called "Exsto" expected to debut in July.

Another big push for Wal-Mart going forward would be in the organic category. Executives said the retailer was expanding its offering of organic food products, including baby food.

Castro-Wright, formerly CEO of Wal-Mart's Mexico unit, Wal-Mart de Mexico, was promoted to his current position early this year. Analysts said he's the one tasked with improving not just sale but also revamping the shopping experience for customers.

This includes everything from redesigning stores and updating merchandise to attract a higher-income shopper to removing store clutter and reducing the long lines at the checkouts which can result in lost sales as frustrated shoppers abandon their shopping carts.

Reducing the clutter To that end, Castro-Wright said the retailer would focus on reducing inventory and using new technology to better manage store clutter and reduce costs tied to unsold goods.

In a question and answer session with reporters, Castro said the company has heard from suppliers about how Wal-Mart is making inventory reduction a priority.

"We said (to suppliers) that this is about the need to clear stores of clutter," he said.

Earlier, Arkansas Gov. Mike Huckabee welcomed the media to the conference, saying the retailer has helped "empower millions of consumers" across the nation.

"The secret of Wal-Mart's success is that 138 million people must like it because they shop there every week. They wouldn't shop there if they didn't." he said.

Chief financial officer Tom Schoewe is among Wednesday's scheduled speakers. His presentation is expected to focus on customer service as a path to growth.

Last but not least, CEO Lee Scott will tie up any loose ends as the conference's final scheduled speaker.

Todd Jones, an analyst with investment firm PNC Advisors, which holds Wal-Mart stock in its $50 billion portfolio, said he perceived the media conference to be a positive for Wal-Mart.

"I think it's in Wal-Mart's best interest to portray its business in a positive way to the public. Last year's conference was a step in the right direction," said Jones.

But he specifically wants to hear Wal-Mart's game plan to improve its merchandise, and how it intends to get customers to shop for higher-priced and higher-margin items such as electronics, in addition to food and household products.

"Wal-Mart hasn't had much success in this area yet. I want to know how they intend to revamp their product strategy while staying focused on being a low-cost provider," said Jones.

[back to top] 

Walmart Employee Firing in Question

WorldNow and WTEN
April 18, 2006                    [back to top] 

A Former Walmart employee in Rotterdam is fired for being what she calls a good samaritan. What many people feel is a good deed, the Walmart company disagrees.

Shannon Kennedy worked at a security position at the Rotterdam store. Once a purse snatcher attacked and stole a woman's pocketbook Kennedy followed the suspect into the parking lot.

Kennedy also called police and followed the purse snatcher in her car for about a block. Kennedy didn't catch the thief but police found the victims wallet.

Just days later, the company fired her based on the fact that Kennedy broke company policy by leaving the store.

"I left Walmart property to pursue a man who took a woman's pocketbook."Walmart Communications: We do admire her dedication to our customers, but we certainly do want to put her safety first and it's the reason we have this policy in place against off-site persuits," Kennedy said.

NEWS10 contacted Sharon Weber with Walmart Corporate Communications and they stressed the safety of their employees. "We do admire her dedication to our customers, but we certainly do want to put her safety first that's why we have a policy in place," Weber said.

All content © Copyright 2000 - 2006 WorldNow and WTEN. All Rights Reserved.

[back to top] 

Wal-Mart focuses on customers to build sales

By Jennifer Waters,
MarketWatch
Apr 18, 2006                    [back to top] 

ROGERS, ARK. (MarketWatch.com) -- Wal-Mart Stores Inc. executives, trumpeting that change is part of their culture, are stepping up the transformation of their stores, merchandise and marketing toward a better-heeled and trendier consumer as they work to build sales. The retailer, known for its "Always low prices. Always." Slogan, is hauling out a variety of higher-priced and better-made products at its stores and on its Web site this spring and into the fall as it turns its attention toward drumming up new business and wrenching more out of already-faithful customers. Taking pages out of the playbooks of both Target Corp. and Best Buy Co., Wal-Mart (WMTWal-Mart Stores, Inc. News , chart, profile, more

Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: WMT ) is stepping up its product mix as it focuses on specific customers and their needs and wants. For example, there will be there will be fluffier towels and hipper men's wear. Like Target (TGTtarget corp com News , chart, profile, more

Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: TGT ) , Wal-Mart will offer a broader array of higher-priced and better-quality products. And in mimicking Best Buy (BBYBest Buy Co., Inc. News , chart, profile, more

Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: BBY ) , which introduced a customer-centricity program three years ago, Wal-Mart will identify and converge on certain customer groups based on their shopping patterns and the communities in which they live. Wal-Mart is calling its initiative a "store of the community" and will direct its marketing efforts toward ethnic groups as well as household income and shopping patterns. "We're championing a broader range of customers with more relevant products, more relevant services and a more compelling, helpful in-store experience," John Fleming, executive vice president of marketing and consumer communications, told reporters Tuesday. His comments were part of two days of presentations Wal-Mart's top executives are delivering to media.. Fleming, who spent the first two decades of his career at Target Corp., is spearheading the retailer's efforts to zero in on certain customer bases, from the loyalists who shop the stores 63 times a year to the skeptics who rarely, if ever, visit a Wal-Mart store. In between are the selective shoppers, offering the biggest opportunity to Wal-Mart, who purchase certain items regularly, such as body-care products or paper towels, but don't cross the aisles into electronics or apparel. "This is not about going upscale," said Fleming, deflecting concerns that the retailer is abandoning its well-established core customer who tends to be extremely price sensitive. By focusing on the selective shopper, who is time starved, career-driven and a value hunter, Fleming believes Wal-Mart can drive a deeper loyalty out of her for a longer period of time. Calling it the "one-stop promise," he said the stores will cater to the changing needs of customers. For example, a greatly expanded baby department lures mothers-to-be in with pregnancy-related items such as buying guides, prenatal news letters, maternity clothes and a baby registry. It then holds her longer with nursery furniture such as cribs that turn into daybeds and eventually into full-sized beds, and high-tech strollers. Wal-Mart will even order baby announcements and help mothers send out thank-you notes through the baby registry in hopes that she sticks with the retailer as her child grows. Already, the baby category has grown over 100% in the last two years. Wal-Mart also is taking an if-you-provide-it-they-will-come approach by offering a substantially wider array of products and price points, hoping that consumers who don't typically look to Wal-Mart for, say, high-quality patio furniture will do so this year. While the retailer will continue to offer six-piece set of folding patio furniture at $88 in the stores, as well as bigger and better sets running upward of $298 to $398 each, there also will be swankier sets costing much more. For $898, customers can buy a five-piece woven set with a glass-table inset and an umbrella, but only online. "The customer expects the same value proposition at an $88 a set that they would at an $898 a set," said Doug Degn, executive vice president of general merchandise. Among other merchandise initiatives expected to hit stores in July is a line of MTV-type fashions for men called Exsto, a brand that complements the women's stylish Metro 7 line. Wal-Mart executives were surprised by the success of the Metro 7 line of skirts, tops and pants. Claire Watts, executive vice president of merchandising and apparel, said that the clothing sold so well after its fall launch that the company ran out of merchandise and was forced to pare down its original plans to place the line in 1,000 stores by February. "We could only take it to 865," Watts said. "But we'll roll it out in up to 1,500 stores by September." Recognizing that some of its stores are built in heavily ethnic areas, Wal-Mart is also matching merchandise with the community. "When we talk about a 'store of the community,' it is particularly important when we look at the ethnic customer segments that we have," said Pat Curran, executive vice president of store operations. She said that of Wal-Mart's 3,900 U.S. stores, about 1,500 serve "significant" African-American populations and 1,300 are in heavy Latino neighborhoods. Another 300 have a large concentration of Asian-Pacific-American shoppers, she said. Those stores will carry items such as ethnic foods and health and beauty aids directed toward the specific populations. Stores in Latino neighborhoods, for example, sell eight varieties of chorizo and a number of tortilla brands, including those produced in local neighborhoods, while also carrying a variety of baby and family products.

Jennifer Waters is a reporter for MarketWatch based in Chicago.

[back to top] 

Religious investors challenge Wal-Mart, laud its diversity report

By Catholic News Service
Apr-17-2006                             [back to top] 

NEW YORK (CNS) -- Just days after announcing four shareholder resolutions seeking several changes in Wal-Mart's corporate policies, the Interfaith Center on Corporate Responsibility in New York released a statement praising the retail giant for publishing detailed data on its minority hiring and promotion practices.

"Wal-Mart today placed its entire EEO-1 report (an annual federal equal employment opportunity report) on walmart.com, setting a new standard in corporate transparency not only for retailers but for all Fortune 500 companies," said Sister Barbara Aires April 11.

She is a member of the Sisters of Charity of St. Elizabeth in New Jersey, the order that filed a shareholder resolution calling on Wal-Mart to make its EEO-1 report public.

"Although we may drop this resolution, we will continue our dialogue with management on shaping human resources policies that set new standards for openness and opportunity," she said.

The interfaith center is a 35-year-old international coalition of 275 faith-based institutional investors -- including Protestant denominations, Catholic religious orders and dioceses, foundations and health care corporations -- who use their investment portfolios not only as a source of income but to promote better corporate practices in companies in which they hold stock. Its Wal-Mart Working Group is composed of more than 70 members who hold Wal-Mart stock.

As the world's largest retailer, Wal-Mart "has tremendous potential to be influential" said Vidette Bullock Mixon, director of corporate relations for the United Methodist Church's General Board of Pension and Health Benefits, which is also a member of the center.

"Our vision for Wal-Mart is that high standards will be established, so that the dignity of the millions of workers who depend on Wal-Mart is protected," she said.

The Methodist board has taken the lead in introducing a shareholder resolution calling for development of a public "sustainability report" addressing Wal-Mart's approach to a series of social, environmental and economic goals.

"A comprehensive sustainability report would give shareholders data on a wide variety of social issues facing the company, including environmental pressures, global supply chain issues and related social and economic issues," the center said.

The center said its members have been engaged in dialogue with Wal-Mart on sustainability reporting since 2003. Wal-Mart CEO Lee Scott told members at a meeting in 2005 that the company is committed to developing such a report. More recently, the center said, the company has set April 2007 as a target date for doing so.

Other center members who have introduced shareholder resolutions for Wal-Mart's next annual stockholder meeting in June are:

-- The Sisters of the Holy Names of Jesus and Mary, Washington state province, and the Benedictine Sisters of Boerne, Texas: a compensation disparity resolution, calling on Wal-Mart to undertake a study and report back to stockholders on the total compensation packages of its top executives and how their earnings compare with those of the lowest-paid employees.

-- Green Century Capital Management: a resolution on safer chemicals, calling on Wal-Mart to issue a report evaluating policies and procedures to identify carcinogenic or other toxic chemicals in the products it sells and to encourage its suppliers to provide safer products.

The Interfaith Center for Corporate Responsibility said its members have more than 2 million shares of Wal-Mart stock, worth about $90 million. Although that represents only about 0.05 percent of the company's outstanding shares, the center claims modest success over the years in getting Wal-Mart to adopt more socially responsible policies and practices.

In a 12-page white paper posted on its Web site -- www.iccr.org -- the center outlined its dealings with Wal-Mart over the past 15 years. It said through shareholder resolutions and meetings with senior management in 1996 the center was instrumental in getting the company "to take responsibility for labor conditions in its supplier factories by monitoring its direct suppliers, not simply including labor standards language in supplier contracts."

It said that two years ago it convinced Wal-Mart to include among its standards for suppliers a requirement that they respect workers' rights to form a union and bargain collectively, and that is now part of the company's standards.

The center said its members also tried to file a resolution this year calling for Wal-Mart to conduct a comprehensive analysis of the impact of its health insurance program, in light of recent studies showing that Wal-Mart employees are more reliant on public health services than employees of other companies.

The resolution, initiated by the Basilian Fathers of Toronto, was rejected by the Securities and Exchange Commission after Wal-Mart challenged it as an intrusion into ordinary business operations.

Copyright (c) 2006 Catholic News Service/USCCB. All rights reserved.

[back to top] 

Wal-Mart 1st mall seeks to tap island's market

ShanghaiDaily.com
2006-04-17                         [back to top] 

RETAIL giant Wal-Mart will open its first shopping mall in south China's Hainan Province, taking its initial step toward tapping the island's market.

The Commercial Property Limited of Shenzhen International Trust and Investment Co, the Chinese partner of Wal-Mart-SITIC General Merchandise Co Ltd, on Saturday signed a deal with Hainan Provincial Administration of State Farms and Land Reclamation to set up a Wal-Mart shopping mall in Haikou, capital of Hainan.

It will be the retailer's 68th outlet on China's mainland.

The planned shopping mall will be built near Jinniuling Park on bustling Haixiu Middle Road, covering 45,333.6 square meters, sources from SITIC Commercial Property Limited said. The project will break ground for construction in the later half of the year and the shopping mall will begin operation in late 2007.

The shopping mall is said to be able to offer more than 1,300 job opportunities for local people.

US-based Wal-Mart entered China's mainland in 1996.

SITIC Commercial Property Limited is a real estate company SITIC established to support Wal-Mart's fast expansion in the mainland.

Separately, the world's largest retailer cut Chief Executive Officer H. Lee Scott's pay 11 percent to US$15.7 million last year after it posted its smallest net income gain in five years, Bloomberg News reported.

Scott's compensation included a salary of US$1.29 million, a bonus of US$3.94 million, long-term stock plan payments of US$4.4 million and other compensation of US$977,911, according to a US Securities and Exchange Commission filing on Friday. He also received stock options worth US$5.07 million.

Wal-Mart's earnings rose 9.4 percent last year, the slowest growth since 2001. The company posted sluggish comparable-store sales gains as less-profitable food outsold clothing and home goods.

Copyright © 2001-2005 Shanghai Daily Company

[back to top] 

Wal-Mart changes some healthcare benefits

Under pressure, retailer cuts some prescription co-pays, extends coverage

The Associated Press 
April 17, 2006                        [back to top] 

WASHINGTON - Wal-Mart Stores Inc. said Monday it will relax eligibility requirements for part-time employees who want health insurance, allowing an additional 150,000 workers to gain coverage if they choose.

Until now, the employees have had to work for Wal-Mart for two years to qualify for employer-sponsored insurance. Beginning next month, they will have to work at the company for one year. The coverage also will extend to their children.

The changes were announced by one of the company’s vice presidents, Susan Chambers, at a meeting of business and health care executives.

Wal-Mart has been strongly criticized by unions and others for providing what they describe as inadequate health benefits. However, Chambers said Wal-Mart’s health insurance costs have risen at a rate of 19 percent annually over the past three years.

“Keep in mind that covering part-time employees is not the norm in retail,” Chambers said. “But every American deserves health care, and we want to lead by taking these steps. We hope that others in the retail community will work with us to do the same.”

Chambers did not provide details about how much the change would cost the company. She said it’s now picking up about 70 percent of the costs for each employee’s health care, and she expects that percentage to increase.

Unions contend the company’s benefits are too stingy, forcing taxpayers to pick up more of the cost as the workers lacking coverage turn to the government.

“This is what’s so cruel: They’re basically expanding health care coverage to workers who can’t afford it because their pay is so poor and the health care deductibles and premiums are so high,” said Chris Kofinis, spokesman for WakeUpWalMart.com, a group funded by the United Food and Commercial Workers union.

Chambers said the version of the health plan that the company expected most employees to sign up for would be available for $23 a month. Workers’ children would be included for $15 more, whatever the size of the family.

But Kofinis countered that the coverage also calls for a deductible that requires the worker to pick up the first $1,000 in medical expenses, and the deductible rises to a maximum of $3,000 for families. He said many workers just can’t afford that amount, and will pass on the new coverage.

There are some exceptions to the deductible. Namely, workers can visit a doctor up to three times in a year, and they can get three prescriptions filled with a $20 copay before they have to start meeting the deductible, a public relations staffer working with Chambers noted.

Wal-Mart’s latest announcement on health care coverage is the third time in less than a year that it has moved to improve health benefits. The announcements reflect growing outside pressure on the company, which was exhibited in the state of Maryland recently. There, the state’s legislature passed a law that requires companies with more than 10,000 Maryland employees to spend at least 8 percent of their payroll on employee health care or pay the difference into the state’s Medicaid fund.

Chambers also told fellow business executives that the company would expand in January the list of generic drugs available at $3 a prescription. It would enhance contributions to health savings accounts, and it would provide workers with a 10 percent discount on fresh fruits, vegetables and other healthy foods.

© 2006 The Associated Press. All rights reserved.

[back to top] 

Wal-Mart Will Expand Health Coverage After Criticism

Lauren Coleman-Lochner
Bloomberg
April 17                                      [back to top] 

Wal-Mart Stores Inc., countering criticism for not providing most employees health-care coverage, said it would reduce the cost of some medicines and shorten the time before part-time workers become eligible.

Wal-Mart will cut prescription co-payments to $3 on some medicines and reduce by half the waiting time for part-timers starting on May 13, human resources head Susan Chambers told the World Health Care Congress today, the company said in a statement.

Wal-Mart, the largest private employer in the U.S., faces increasing regulation by states and pressure from unions to offer health coverage to more of its 1.6 million workers. Maryland has passed legislation requiring the company to spend at least 8 percent of its payroll on health care, and California is weighing a similar measure.

``You have to continue to watch the costs.'' said Don Gher, chief investment officer at Bellevue, Washington-based Coldstream Capital Management, which holds Wal-Mart shares among $900 million in assets. ``Definitely over the past year and a half or so there has been a real creep up in the selling, general and administrative expenses line because of better benefits.''

As of Jan. 1, 615,000 of Wal-Mart's workers, or about 47 percent, were enrolled in its health programs, spokesman Dan Fogleman said.

Public Assistance

Wal-Mart pays about two-thirds of worker premiums, according to its Web site. The retail industry average is 77 percent, according to a 2005 Employer Health Benefits survey by the Henry J. Kaiser Family Foundation and Health Research and Educational Trust, two non-profits that conduct health-care research. measure.

``Keep in mind that covering part-time employees is not the norm,'' Chambers said in the statement. ``But every American deserves health care and we want to lead by taking this step. We hope that others in the retail community will work with us to do the same.''

Wal-Mart has more of its workers enrolled in public health- care programs than any other company in at least 17 states, according to a labor union survey.

The AFL-CIO survey of 23 states found that Wal-Mart was the leader among those with employees receiving government health benefits in Arizona, Connecticut, Georgia, Pennsylvania, New Jersey and 12 others. In Maine and Nebraska, separate surveys showed Wal-Mart at or near the top of the list.

Cuts Waiting Time

Labor groups, U.S. lawmakers and advocacy organizations have criticized the company for providing inadequate health insurance, saying many Wal-Mart workers must rely on public assistance programs such as Medicaid.

Wal-Mart, the world's largest retailer, will reduce the waiting period for part-timers to be eligible for health coverage to one year from two. The company previously said it would begin covering part-timers' children. Both changes are effective May 13.

Starting in January 2007, the company will reduce the co-pay on some generic drugs to $3 from $10, give 20 percent discounts on drugs not covered, and provide workers 10 percent discounts on healthy foods at its stores.

The company also said it's adding a special benefits enrollment period in May to supplement its October enrollment slot.

Wal-Mart added a lower-cost health plan for $11 a month and is opening more than 50 health clinics in its U.S. stores.

In a Feb. 26 speech to the National Governors Association in Washington, Chief Executive Officer H. Lee Scott urged lawmakers to help companies reduce health costs.

Shares of Wal-Mart rose 19 cents to $45.96 at 2:52 p.m. in New York Stock Exchange composite trading.

[back to top] 

Wal-Mart tries to woo the press

As the retail behemoth readies for a two-day media conference, it hopes to offset some damaging public relations setbacks.

By Parija Bhatnagar
CNNMoney.com staff writer
April 17, 2006                              [back to top] 

NEW YORK (CNNMoney.com) - Once upon a time, Wal-Mart couldn't have cared less about the media. Now, for the second year in a row, the once notoriously media-shy retail powerhouse is laying out the red carpet for the press corp on its home turf in Arkansas.

What the press wants And analysts speculate that the tone of this year's gabfest, slated for April 18-19 in Rogers, Arkansas could be decidedly different from last year.

"My sense is that last year's event was more of a lecture by Wal-Mart (Research) to the media about why [the chain is] good for America. I think this year it's going to be more consultative. I expect Wal-Mart executives to ask reporters what they would like to get more information about from the company," said Mark Husson, analyst with HSBC.

At the same time, industry observers caution that Wal-Mart's efforts to get warm and fuzzy with the media are simply a means to protect its image amidst damaging public relations setbacks, like the blow it suffered in Maryland earlier this year after the state became the first in the country to set a so-called "Wal-Mart healthcare bill," in response to what critics say is Wal-Mart's inadequate healthcare coverage. The law will fine big companies for not picking up their fair share of employee healthcare coverage. [See Related Stories box]

To that end, the retailer has become more proactive in publicly disclosing information about the company's wage, benefits and hiring policies, the three areas where the company faces the most aggressive backlash from its critics, including union-funded watchdog groups Wake-Up Wal-Mart and Wal-Mart Watch.

Wal-Mart, the largest U.S. private-sector employer with 1.3 million employees in the United States, recently released data for the first time that detailed how many women and minorities it employs.

However, union activists may be disappointed to learn that it's the Wal-Mart shopper - and not its labor policies - that company executives will focus on during their presentations.

According to Wal-Mart's conference agenda, chief financial officer Tom Schoewe's presentation Tuesday afternoon is entitled "If you're not focused on the customer, you are not focused on growth and return on investment."

Indeed, the challenge for Wal-Mart is that although it's the world's largest retailer with $315 billion in annual revenues, both its sales and profits growth have slowed.

Later that day, Eduardo Castro-Wright, president and CEO of Wal-Mart USA, will talk about "Improving the customer's shopping experience." Castor-Wright, formerly CEO of Wal-Mart's Mexico unit, Wal-Mart de Mexico, was promoted to his current position early this year.

A new Wal-Mart experience Analysts said Castro-Wright's presentation is the one to watch, since he's the one tasked with improving slowing sales at Wal-Mart stores, as well as revamping the shopping experience for customers.

This includes everything from redesigning stores and updating merchandise to attract a higher-income shopper to removing store clutter and reducing the long lines at the checkouts which can result in lost sales as frustrated shoppers abandon their shopping carts.

John Fleming, Wal-Mart's chief marketing officer follows Castro-Wright. He's expected to talk about "What customers want."

On day two, the focus shifts to Wal-Mart's role in communities where it seeks to do business. Executives are likely to talk-up Wal-Mart's new "jobs and opportunity zones," initiatives that it claims are geared to help local businesses and add jobs to downtrodden areas.

Labor issues finally get some attention when Susan Chambers, Wal-Mart's executive vice president of benefits administration, takes the podium Wednesday morning.

Union groups went after Chambers late last year after Wal-Mart Watch released a Wal-Mart internal memo in which she suggested to the company's board of directors that Wal-Mart could hold down spending on healthcare and benefits if it hires more part-time workers who aren't immediately eligible for healthcare coverage. She also advocated wooing younger, presumably healthier workers and discouraging unhealthy people from working at Wal-Mart.

Last but not least, CEO Lee Scott should tie up any loose ends as the conference's final scheduled speaker, with a presentation titled "Change, growth and success for Wal-Mart and the working families we serve."

HSBC's Husson said he'd be interested to know how Wal-Mart plans to accelerate its overseas growth strategy, which he identified as one of the most critical issues facing the retailer in the years ahead as the U.S. market grows saturated. Wal-Mart already operates more than 3,800 U.S. stores.

"I want to know what their vision is for 2015 when 40 percent of Wal-Mart's sales will come from overseas, versus 20 percent today," Husson said.

Paul Blank, WakeUpWalMart.com's campaign director, said his group was planning to crash Wal-Mart's media party with "a few events" but declined to offer further details. Representatives from Wal-Mart Watch were also heading to Arkansas to pitch their case against Wal-Mart to the media.

Todd Jones, an analyst with investment firm PNC Advisors, which holds Wal-Mart stock in its $50 billion portfolio, said he perceived the media conference to be a positive for Wal-Mart.

"I think it's in Wal-Mart's best interest to portray its business in a positive way to the public. Last year's conference was a step in the right direction," said Jones. But he specifically wants to hear Wal-Mart's game plan to improve its merchandise, and how it intends to get customers to shop for higher-priced and higher-margin items like electronics, in addition to food and household products.

"Wal-Mart hasn't had much success in this area yet. I want to know how they intend to revamp their product strategy while staying focused on being a low-cost provider," said Jones.

[back to top] 

Protesters lambaste Wal-Mart workers’ health-care benefits

By Jason M. Rodriguez
Quad-Cities Online
April 16, 2006                          [back to top] 

DAVENPORT -- Caroline Vernon wants Wal-Mart to change its policy on health care for its employees. "It shows how disconnected they are with the American worker," said Ms. Vernon, who is the Wake Up Wal-Mart leader for change for the Quad-Cities area. "We want Wal-Mart to change Wal-Mart. We want them to be responsible to the community in which they operate."

Ms. Vernon, of Davenport, joined more than 25 other activists at the corner of 53rd Street and Elmore Avenue Saturday afternoon. Several held up a 9-foot-long check for $10,059,698 made out to Wal-Mart and signed by Iowa tax payers. Others held up miniature versions of the check. All of the checks were stamped with "Stop Payment On This Check."

The more than $10 million figure is what Wake up Wal-Mart says the state of Iowa uses in public assistance programs because of the low wages and poor benefits corporation pays.

This is the second Wal-Mart demonstration the group has held at the 53rd and Elmore store in five months.

"It's all about raising awareness in the community," Ms. Vernon said, adding the location of the demonstration was changed from the Wal-Mart parking lot last time to the corner of 53rd and Elmore for visibility purposes.

The group picked Saturday because it as the final day for people to pay their taxes, which is what Wake Up Wal-Mart claims helps subsidize the company’s lackluster benefits.

The last time the group was at the 53rd and Elmore store, a Wal-Mart spokeswoman said company executives have met with a consultant group to improve the company's benefits. She estimated the company spent $4.8 billion on benefits in 2005.

Ms. Vernon said some progress has been made to force big companies such as Wal-Mart to provide better health care benefits. In Maryland and California the Fair Share for Health Care bill was passed into law. The law expands health care for workers, stops large, profitable companies from shifting their health care costs onto taxpayers, and makes sure all large, profitable employers pay their fair share for health care, according to the Wake Up Wal-Mart web site.

Ms. Vernon said a similar bill is stalled in the Iowa senate.

"This is a common sense bill that will require very large corporations to either provide affordable benefits to their workers or pay a fixed rate to the state to offset the cost to Medicaid," she said. "We want folks to contact their representatives and write to the governor to pass this. We need a legislator to introduce the bill on the Illinois side."

She is proud of the local progress Wake Up Wal-Mart and her grassroots corporate reform organization, Progressive Action for the Common Good, has made.

"The fact that we have the bill now in the Iowa legislature is very promising," she said.

[back to top] 

Wal-Mart Tries to Modify Corporate Culture

By ANNE D'INNOCENZIO
AP Business
Sunday, April 16, 2006             [back to top] 

After years of accusations that it caused the demise of thousands of smaller merchants, Wal-Mart Stores Inc. is undertaking an unusual strategy: helping competing local establishments stay in business.

Wal-Mart recasting itself as a friendly neighbor? It's the latest course change by the world's largest merchant as it tries to modify its corporate culture — and the perception that it's a ruthless competitor obsessed with maintaining its dominance of the retail industry.

Wal-Mart's proposal to help rival small businesses, from bakeries to hardware stores, focuses on blighted urban markets where the retailer plans to open 50 stores within the next two years. The efforts will range from giving those businesses financial grants to producing free radio ads that will be broadcast on its stores' radio network.

The image makeover extends to Wal-Mart's selling floor as well. In recent months, for example, it has embraced organic products from baby clothes to fish caught in ecologically friendly ways.

And the company, which has long been shrouded in secrecy, is trying to appear more transparent. Late last year, it sponsored a debate among a group of economists about whether Wal-Mart is good or bad for the economy. And it's holding its second annual media conference starting Tuesday near its Bentonville, Ark., headquarters, to share information about the company, from its plans to improve its stores to updates on its employee health care proposals.

The changes are Wal-Mart's response to critics, particularly union-backed groups, who have long argued that the company has exploited the business model of folksy founder Sam Walton, putting profits before its own employees and towns and cities where it does business.

"The notion that Sam Walton cared about its workers, and the community, those positive aspects have gone," said Chris Kofinis, spokesman for WakeUpWalMart.com, a campaign group funded by the United Food and Commercial Workers. He described the recently announced moves as a series of public relations stunts.

Analysts say that although Wal-Mart is used to succeeding, it has no guarantees in this endeavor, especially since its core business model — built around offering incredibly low prices — won't change.

"The culture remains frugal and very focused on costs and price ... It is going to be very hard to change the culture of the company," said Charles Fishman, author of "The Wal-Mart Effect," a book on the company's impact on the national economy. "Their image of themselves is powerfully fixed, and our image as shoppers is very powerfully fixed."

In fact, as part of its ongoing cost-cutting campaign, Wal-Mart plans to become more reliant on part-time workers, which currently account for about 20 percent of its work force.

Some analysts say Wal-Mart actually won't be fixated in the future on offering the cheapest prices, but will try instead to offer the best value in different merchandise categories. A few years ago, customers would not have imagined Wal-Mart selling $5,000 diamond rings or $2,000 plasma TVs, but the retailer is now offering attractive deals in more upscale products.

"I think that Wal-Mart has come to the realization that it cannot be focused on low-prices alone," said C. Britt Beemer, chairman of America's Research Group. "They need a broader offering."

Wal-Mart, whose officials declined to be interviewed, has a lot at stake. Its stock has fallen 20 percent over the past two years, and is now trading at about $45. And the company is finding it harder to sustain profit growth in the high teens as in previous years as it struggles with higher expenses. For the year ended Jan. 31, Wal-Mart said net sales were up 9.5 percent to $312.4 billion and net income rose 9.4 percent to $11.2 billion, or $2.68 per share.

Wal-Mart has also had very public legal problems, from child labor law violations to charges of gender discrimination. It's also fighting legislation aimed at making the company more generous with its health care benefits; the legislation was in response to charges that many Wal-Mart employees have had to turn to state Medicaid programs for health care.

Meanwhile, the discounter also faces very vocal opposition to some of its store openings and suffered embarrassing revelations that former top executive Tom Coughlin stole money from the company.

That's why some critics look at some of Wal-Mart's recent generous overtures with skepticism. Kofinis questioned Wal-Mart's expansion plans for the inner city. He wondered about Wal-Mart's real intent behind its proposals for local businesses and store expansion in urban markets.

Opponents have also questioned the company's recently announced improvement of health care benefits for part-time workers, which includes shortening the waiting time to be on the company's health plan. Opponents say that move is undermined by Wal-Mart's much less publicized plan to rely on more part-time workers, who are less expensive than full-time workers to keep as they don't enjoy the same level of benefits.

Kofinis believes a larger percentage of part-time workers — JPMorgan's Charles Grom estimates it could be up to 40 percent over the next 12 to 18 months — will lead to an unhealthy environment at Wal-Mart.

"You are basically creating a turnstile environment, that is based on exploitation and one that minimizes building positive relationships with the company," Kofinis said.

©2006 Associated Press

[back to top] 

Wal Mart to open shopping mall in Hainan

Ling Zhu
www.chinaview.cn
2006-04-16                       [back to top] 

HAIKOU, April 16 (Xinhua) -- Retail giant Mal Mart will open its 68th China shopping mall in Haikou, capital of Hainan Province, south China. It will be the first of the kind in this southern Chinese island province.

The Commercial Property Limited of Shenzhen International Trust and Investment Co. Ltd.(SITIC), the Chinese partner of Wal Mart-SITIC General Merchandise Co. Ltd, on Saturday signed an agreement on cooperation in the new Wal-Mart shopping mall construction with Hainan Provincial Administration of State Farms and Land Reclamation.

The planned shopping mall will be built near Jinniuling Park on bustling Haixiu Middle Road, covering an area of 45,333.6 sq m, sources from SITIC Commercial Property Limited said.

SITIC Commercial Property Limited will construct a large plaza for shopping and supportive facilities, with the combined floor space amounting to 100,000 sq m, on the land provided by the Hainan Provincial Administration of State Farms and Land Reclamation.

On its completion, the shopping mall is said to be able to offer more than 1,300 job opportunities for locals.

The project will break ground for construction in the latter half of the year and the shopping mall will begin operation late next year.

Wal-Mart, with headquarters in the United States, entered China in 1996 and has opened 56 shopping centers across China so far. SITIC Commercial Property Limited is a real estate company SITIC established to support Wal Mart's fast expansion in China. Enditem

[back to top] 

Wal-Mart CEO Got $3.94 Million Incentive Payment For Past Fiscal Year

Dow Jones Newswires
04-14-06                                 [back to top] 

WASHINGTON -(Dow Jones)- Wal-Mart Stores Inc. (WMT) President and Chief Executive Lee Scott got a $3.94 million incentive payment for the company's most recent fiscal year, in addition to a $1.29 million salary, the retailer disclosed Friday.

Scott also received a long-term payout worth $4.4 million under a stock incentive plan, Wal-Mart said.

For the previous fiscal year, Scott got a $1.24 million salary and a $4.12 million incentive payment, according to Wal-Mart's proxy filed with the Securities and Exchange Commission.

The CEO also got $977,911 in other compensation for the 2005 fiscal year, which ended Jan. 31. That included $104,051 for the cost of Scott's personal use of Wal-Mart aircraft and $590,685 in above-market interest credited on deferred compensation, Wal-Mart said.

Copyright (c) 2006 Dow Jones & Company, Inc.

[back to top] 

Wal-Mart CEO to Take Monthlong Vacation

By Marcus Kabel
Associated Press
April 14, 2006                     [back to top] 

(AP) — Lee Scott will take an unusually long one-month vacation in May from his job as chief executive of Wal-Mart Stores Inc., his first break of that length since taking over the helm of the world's largest retailer in 2000, Wal-Mart said Thursday. Scott, 57, will leave his two deputies in charge and remain in touch while he travels with his family and possibly goes fishing, spokeswoman Mona Williams said.

"Lee has a well-qualified team in place and that enables him to take a longer than usual vacation," Williams said in an e-mail to The Associated Press.

"He will stay in touch while he is away and return in time for the shareholders meeting (June 3)," Williams added.

Williams did not respond to an e-mailed question about whether Scott's long break was a sign that he may be considering leaving.

Fund manager Patricia Edwards said it was an unusual move that could be aimed at testing the waters for a change at the top, at a time when Wal-Mart faces organized critics and is trying to revive sales growth that has fallen behind the pace of smaller rivals like Target Corp.

"An absence of this length by a CEO is unusual, not just at any Fortune 500 company. This is an embattled company and so you could argue it needs the CEO's presence even more," said Edwards, a portfolio manager and analyst at Wentworth, Hauser & Violich in Seattle, which manages $6.4 billion in assets and holds about 64,000 Wal-Mart shares.

Scott's duties will be shared while he is gone by Vice Chairman Mike Duke, the head of Wal-Mart's international division, and Vice Chairman John Menzer, who runs the domestic stores division. Both are widely seen as potential future contenders for the CEO position.

The Bentonville, Ark.-based Wal-Mart promoted Duke and Menzer to vice chairman positions last year and effectively swapped their responsibilities for U.S. and international operations, a move seen as giving each man a better overall grasp of the organization.

Scott is a 25-year veteran of Wal-Mart who rose through the ranks of its formidable logistics operations.

In January 2000, he replaced President and CEO David Glass and became a member of the Wal-Mart Board of Directors in 2001.

Scott's job has changed in the past year as he has had to spend more time defending Wal-Mart against increasingly organized attacks from unions and other critics of wages, benefits and business practices of the giant retailer.

[back to top] 

Wal-Mart Loses Major Battle To Union

The Toronto Star (CP)
April 13, 2006                     [back to top] 

MONTREAL (CP) — The Quebec Superior Court has rejected Wal-Mart's effort to overturn the union certification of its store in St-Hyacinthe. Employees of the store east of Montreal were certified by the province's labour relations board on Jan. 14, 2005. They chose to be represented by the United Food and Commercial Workers union.

At the time, it became the second unionized Wal-Mart location in North America, following the lead of a store in Saguenay, Que., which has since closed.

The world's largest retailer said some employees had been excluded from the 200-member accredited union local. If these people were included, the company argued there wouldn't have been union certification.

After hearing from the two sides, the court concluded there was no need to intervene because the labour board's decision didn't seem unreasonable.

Wal-Mart spokesman Yanik Deschenes said company lawyers were reviewing the court's decision and hadn't decided whether to appeal. Meanwhile, a conciliator is assisting the union negotiate a first collective agreement with the union. Another negotiation session is planned for the end of April.

An arbitrator was named last December by the provincial labour minister. The move could mark the first step in having a collective agreement imposed on both sides.

A union spokesman has previously said the two sides were not far apart, though some financial matters remained unsettled. But the union also said a conciliator had reported to the government last November that a negotiated settlement would not be possible.

U.S.-based Wal-Mart, the second-largest company in the world in terms of revenue with more than 4,000 stores worldwide, has been facing increasing pressure to accept unionized stores. But it has largely resisted.

[back to top] 

Wal-Mart Sticks With Fast Pace Of Expansion Despite Toll on Sales

By Kris Hudson
The Wall Street Journal
April 13, 2006                              [back to top] 

After decades of relentless expansion in the U.S., Wal-Mart Stores Inc. is cannibalizing its own business in many markets. But the huge retailer says the strategy of opening new stores that compete with older ones is paying off and will continue, despite Wall Street's rising dissatisfaction. When the Bentonville, Ark., company opens new Wal-Mart stores in markets already served by older ones, same-store sales -- sales at stores open for at least a year -- average two percentage points below those for stores free of competing new stores. More broadly, Wal-Mart's return on capital spending -- mostly on new stores -- has fallen in recent years, meaning that the company is earning less for every additional dollar it spends on expansion.

In the year ended Jan. 31, same-store sales grew 3.4%, down from a peak of 9% in the late '90s and compared with 5.6% for archrival Target Corp. last year. Wall Street has taken note. The retailer's stock is down about 28% from its five-year high in early 2002, even as net income has risen 68%. In 4 p.m. composite trading on the New York Stock Exchange yesterday, Wal-Mart shares were at $45.90, up 40 cents.

Some Wal-Mart watchers want the company to slow its expansion and channel more resources into improving the appearance of existing stores and upgrading its merchandise to entice shoppers to spend more. "What hurts the company and ultimately the value of its stock price is if you're paying more for the real estate but getting less and less out of it," says Morgan Stanley analyst Gregory Melich.

But Wal-Mart executives, who wouldn't comment for this article, have vowed to maintain the pace of expansion, arguing that new stores add to Wal-Mart's aggregate sales and profit even if the result is less from each store individually.

"We would much prefer to increase growth rather than increase already very high -- way higher than acceptable -- returns," Wal-Mart Chief Financial Officer Tom Schoewe told analysts at the retailer's annual meeting last June. "And, in fact, if those returns were to come down a bit and we could grow faster, that would be just fine by me and...for our investors."

Wal-Mart points out that cannibalization saps only one percentage point from same-store sales growth nationally. However, that's a notable sacrifice when the retailer's same-store gains already are slowing, some analysts say.

Other big-box retailers that grew explosively in the 1980s and 1990s have met the same predicament Wal-Mart faces. Atlanta-based Home Depot Inc. reported in 2002 and 2003 that it sacrificed four percentage points of same-store sales to cannibalization as it raced to open 180 to 200 stores a year. Since then, Home Depot has slowed the pace to 80 to 100 new stores a year and turned for growth to new businesses such as wholesale supply. Meanwhile, the home-improvement retailer's stock has doubled.

But Wal-Mart isn't slowing down. It plans this year to expand its square footage globally by 8% -- its typical annual goal. In recent years, that has translated to 8% annual growth in the U.S., as well. At that pace, Wal-Mart alone -- not counting its Sam's Club stores -- will account for about 27% of the 150 million square feet of retail space forecast to be constructed in the U.S. this year, according to Property & Portfolio Research Inc. Included in its plans this year are up to 370 new Wal-Mart stores (the company won't say where), including store relocations and expansions, to add to the existing 3,900. Wal-Mart also has more than 1,500 potential store sites in the U.S. in various phases of review for construction.

When deciding where to put all these new stores, Wal-Mart has two options: continue to cannibalize in markets it already dominates -- Wal-Mart executives call it "market development" -- or push further into new markets like California and the Northeast, where land and labor typically cost more, government approvals take longer and shoppers are less enamored of the retailer.

Either way, the company is looking at a likely continuing drop in return on its investments. From 2003 to 2005, Wal-Mart's yearly capital spending grew by $4.3 billion, while its operating cash flow grew by just $1.6 billion. In several years previously, growth in operating cash flow exceeded capital spending.

At Target, meanwhile, operating cash flow grew at nearly double the rate of capital spending from 2003 to 2005. Target opens fewer stores each year than Wal-Mart, and it tends to choose densely populated locales because its merchandise appeals more to higher-income urban shoppers than Wal-Mart's.

Returns on capital spending can be measured in many ways, but Wal-Mart's are declining by most. That means the retailer has "picked all the low-hanging fruit" of U.S. store sites, according Morgan Stanley's Mr. Melich. "To the extent that you see cannibalization, that's a hint that more of those [new] stores are coming in the markets where they already have a strong presence."

In the past, Wal-Mart executives have argued that rather than remaining happy with two stores with $100 million in annual sales each in a given market, Wal-Mart would often prefer to add a third store there. That's because, even if the three would then generate only $80 million each in annual sales, the combined sales of $240 million would still exceed the $200 million from the original two stores.

Further, they have said, a cannibalized market's sales and profits will increase with time as the population grows and shorter lines and reduced congestion lure more customers. "It's a near-term hit for a long-term opportunity, basically," says Goldman Sachs analyst Adrianne Shapira.

Consider the situation in and around Wal-Mart's home base of Benton County, Ark. There, the company was operating three stores before adding two last year. Same-store sales at each of the established stores were down an average 7.4% by September. However, the entire cluster of five stores, including the new ones, saw an 18% jump in combined sales, a 9% rise in profit and a 10% increase in operating cash flow in the same span.

Wal-Mart is striving to bolster its returns by buying more goods directly from overseas and paring its inventory costs by billions of dollars. "It is costing us more...per square foot to build these stores," Wal-Mart Treasurer Joseph "Jay" Fitzsimmons said at a Morgan Stanley conference in November. "We compensate for that in part because these stores are more productive. They have a tendency to be in the coastal areas or the urban areas, and we're getting more sales volume out of it. But that doesn't make up for the entire increase in the fixed asset cost."

Eventually, the retailer may conclude that it's time to slow the pace of expansion. "At some point, the returns get so diminished by adding that one more store that...it's not the highest and best use of your dollars," says Patricia Edwards, managing director and retail specialist at investment-management firm Wentworth, Hauser & Violich in Seattle. "The question is how much of a trade-off they're willing to make between return on invested capital and their quest for world domination."

Wentworth Hauser, which manages $6.6 billion, held 1.2 million Wal-Mart shares in 2004 but has since sold the majority and now holds about 59,000.

 [back to top] 

Mark Webb Files Motion to Retry Wal-Mart and Dynacraft

BRAIN
APRIL 13, 2006                     [back to top] 

SAN RAFAEL, CA—Plaintiffs' attorney Mark Webb will return today to Marin Superior Court for a hearing on his brief to retry the Wal-Mart/Dynacraft case. The families of eight boys who were injured when the front wheels of their bicycles came off have requested a new trial, accusing presiding judge Michael Dufficy of bias.

According to the San Francisco Chronicle, the 57-page motion includes numerous alleged acts of favoritism by the judge, such as excluding evidence of Dynacraft's prior federal safety violations and scolding the plaintiffs' lawyer in front of the jury.

That jury rejected claims in February that Wal-Mart and Dynacraft BSC knowingly sold bicycles with a defective quick-release lever that caused the front wheel to fall off. The jurors awarded no damages to the boys' families.

The full-suspension bikes were imported by Dynacraft and sold under the Next brand name at Wal-Mart stores.

[back to top] 

O.C. would get supercenter

City officials and Wal-Mart confirmed Tuesday a proposal to build a two-story, 170,000-square-foot megastore at the corner of Brookhurst Street and Chapman Avenue.

By MADISON PARK and NANCY LUNA
The Orange County Register
Wednesday, April 12, 2006                            [back to top] 

The nation's largest retailer is eyeing Garden Grove for its first Wal-Mart supercenter in Orange County.

City officials and the retailer confirmed Tuesday a proposal to build a two-story, 170,000-square-foot mega Wal-Mart at the corner of Brookhurst Street and Chapman Avenue. The supercenter format features a full line of groceries, a bakery, a deli, produce, a meat department, canned and frozen goods as well as general merchandise such as appliances and toys.

The supercenter could be an economic boon to the city if it survives any community opposition. Wal- Mart has faced turmoil in the past with other cities, experts say.

"It's not going to be easy," industry analyst Burt Flickinger said of the approval process.

Supercenters add up to 450 full- time jobs to a region and thousands of dollars in revenue.

Garden Grove City Manager Matt Fertal said the supercenter could generate more than $500,000 a year in tax revenues as it lures customers with its one-stop shopping format of 116,000 grocery and general-merchandise items. By comparison, conventional grocers typically offer about 47,000 items.

"Our customers want a single-shopping experience," Wal-Mart spokesman Kevin McCall said. "Our lives are busy and hectic. To have to go to three different stores is time consuming."

Flickinger, managing director at New York consulting firm Strategic Resource Group, predicted a "price competition" among local groceries if the supercenter is approved.

"It will be good for consumers," he said.

According to city documents, the Arkansas retailer's plans call for demolishing a building once occupied by Vons. Sketches for the double-decker store include an indoor ground-level parking lot for 695 cars and elevators and escalators that accommodate shopping carts.

The second floor would be dedicated to general merchandise and groceries, while the first level would have a 9,700-square-foot outdoor garden center, a multilevel format more common in Wal-Mart supercenters in Asia and Hawaii, Flickinger said.

The unique two-story design will be a first for Orange County and the state, Wal-Mart said.

"It will allow us to maximize the size of the property and provide the greatest amount of parking and groceries within the store," McCall said.

Supercenters often feature a restaurant such as McDonald's or Subway, a vision center, a hair salon and a space for a bank - but those services have not been determined yet for the Garden Grove location, McCall said.

"We're looking at several years" before the store is built, he added.

Nearby retailers in the shopping plaza, including a Sav-On, a Payless Shoes Store and several small restaurants, would not be demolished, said Karl Hill, Garden Grove's planning manager.

Flickinger said he was surprised with Wal-Mart's location choice.

The Garden Grove store will be near a Stater Bros., a low-price format known to have higher-quality meats and bakery goods compared with Wal-Mart, he said.

Stater Bros. is a "tough foe" for supercenters, he said. "The meat is the real Achilles' heel for Wal-Mart supercenters."

Stater Bros. officials did not return calls Tuesday.

McCall said Garden Grove is a great fit for its supercenter, a concept routinely placed in cities with few grocery options.

"It's an underserved community in terms of choices for grocery stores," McCall said.

The supercenter's entrance could be a blow to traditional grocers already facing an erosion of shoppers in a fragmented industry where convenience stores, big-box discounters and niche-lifestyle formats are growing rapidly.

"While supermarkets continue to be the main source for purchasing groceries, other formats are nibbling away at the traditional supermarket share of the grocery basket," according to a 2005 supermarket trends report by the Food Marketing Institute.

Garden Grove resident Dennis Eller, 55, leaving a Sav-On on Tuesday afternoon, said he would probably shop at the supercenter during off-peak hours because he expects the store to trigger more traffic along Chapman Avenue.

Other city shoppers greeted the news with enthusiasm, including Samantha Roark, 22, who recently moved from Arizona to Garden Grove and was disappointed by the lack of supercenters in the region.

"You can do all your shopping in one place in a super Wal-Mart," she said. "Instead of wasting gas traveling all over town. It's one-stop shopping."

But shoppers shouldn't get too excited yet.

An environmental impact report must be submitted to the city before any proposal is approved. A report could be complete by the end of the year, the city said.

Wal-Mart could face an uphill battle as Southern California cities have rallied against the billion-dollar retailer in the past, especially in Los Angeles.

In 2004, Inglewood residents shot down a proposed supercenter by referendum.

The retailer also faced building woes in Rosemead, which along with Chino, will have one built by late summer. The two supercenters will be the closest to Orange County.

A Garden Grove official reached Tuesday welcomed the idea of a supercenter for the city, which has struggled over the years to generate new tax revenue.

"I support business in Garden Grove. Currently, I support Wal-Mart in the Vons-Pavilion Center," Garden Grove City Councilwoman Janet Nguyen said.

By the end of 2006, Wal-Mart expects to operate roughly 20 supercenters in California.

Copyright 2005 The Orange County Register 

 [back to top] 

Public Weighs-in On WalMart Plans For Amherst

WBEN Newsroom
Wednesday, April 12, 2006                  [back to top] 

Amherst, NY (WBEN) - A full-house for a public hearing on plans by WalMart to build a supercenter on Millersport Highway in Amherst.

The proposal spawned comments both for and against the huge project. Those in support said the spot is perfect for such a development, while critics cited the poor drainage in the area, and "excess development...akin to a disease" in the town.

Copyright © 2005. Entercom Buffalo, LLC. All Right Reserved. 

 [back to top] 

WalMart Fights: Class Warfare?

WBEN Newsroom
Wednesday, April 12, 2006                [back to top] 

Buffalo, NY (WBEN) -As Amherst continues to press against WalMart, they have become the latest of several communities nationwide to do so, and they emerge as part of a national trend that appears to put more fighting like this in upscale communities.

" It is true that a lot of communities that are pushing aganst Walmart's entry into their communities are doing so out of a belief that WalMart is going to endanger main street America, but in some ways pushing WalMart out of a community is a luxury," says Zachary Corser, a professor at the University of Virginia, who studies WalMart battles.

You can hear more from Corser in Dave Debo's report, available on the audio link above.

A Harvard Business School study shows that WalMart cuts its prices approximately 5 percent in more urban or surburban stores, while slashing prices 8 percent in rural markets.

Corser says the strategy gives rural and poorer areas more incentive to welcome the stores.

"WalMart's focus on lower prices really does change the entire retail market of lower prices and to a cretain extent more wealthy suburban communities can't afford to not have WalMart, whereas the people who don't have to stretch their paycheck really can affford to keep WalMart at arms length," Corser tells WBEN.

Not all battles are an example of class warfare though, says Boston College's James Hoops.

Last April, a voter referendum defeated WalMart in Englewood California, a traditonally African-American community with high unemployment.

"Of course you can find plenty of examples of well of communities resisting WalMart, but I think it'll be tough to show that there's a correlation with social status,"Hoops says.

"It may just be that anti-WalMart sentiment has a different basis in different social strata, with suburbanites fearing sprawl, lower property values and what not as opposed to inner city voters wanting development but fearing that Wal-Mart and minimum wage jobs may be just another form of misery," Hoops said.

Copyright © 2005. Entercom Buffalo, LLC. All Right Reserved.

[back to top] 

Wal-Mart says 'no' to a site in Queens

Michael Saul
New York Daily News
Wednesday, April 12th, 2006                 [back to top] 

Wal-Mart executives considered opening a store in the empty Caldor in Flushing, Queens, but ultimately decided against it, a company official said yesterday. "We did look at the site," Mia Masten, Wal-Mart's director of corporate affairs, said of the building at Main St. and Roosevelt Ave. "It doesn't meet our criteria."

Masten said Wal-Mart, which has drawn opposition in the five boroughs because of concerns about its labor practices, is "very interested" in New York City and is examining "several" locations. But she declined to identify any specific sites, saying, "We don't have any final deals."

City Councilman John Liu, a Queens Democrat, said Wal-Mart is "not welcome in Flushing" and that he and the community would "fight 'em tooth and nail."

While Wal-Mart made it clear yesterday it rejected the Caldor site, the idea of moving there struck some observers as a clear warning signal. Because the building already exists, Wal-Mart could have settled in with little to no government oversight, several officials said.

[back to top] 

Wal-Mart Sues 'Wal-ocaust' T-Shirt Seller

Wal-Mart Files Suit Over Warped Version of Logo Appearing on T-Shirts With the Word 'Wal-ocaust'

The Associated Press                [back to top] 

ATLANTA - Wal-Mart has filed a federal lawsuit over a warped version of its logo appearing on T-shirts and on a Web site with the word "Wal-ocaust" in blue over an Iron Eagle clutching a yellow smiley face.

Charles Smith, a 48-year-old computer repairman from Conyers, Ga., began selling T-shirts reading "I (heart) Wal-ocaust" last year, and he displays the more elaborate logo on his Web site.

When Wal-Mart Stores Inc. found out, it requested a cease-and-desist order, calling the phrase and logo tasteless. Smith responded with a federal lawsuit in March asking a judge to decide if he can continue.

Wal-Mart's recently filed countersuit says Smith "seeks to cloak his illegal commercial activities under the mantle of the First Amendment." It asks the court to dismiss Smith's complaint and stop him from displaying or producing the logo. It also seeks undetermined damages.

"Smith's tasteless enterprise demonstrates that he is attempting to profit from his repulsive wares, not merely expressing his misguided opinions about Wal-Mart," the lawsuit says.

Smith acknowledges the logo is tasteless, but he and his attorneys, part of Ralph Nader's Public Citizen Litigation Group, consider this a free speech battle.

"Poor taste is nothing compared to immorality," Smith, 48, of suburban Conyers, wrote on his Web site, http://www.walocaust.com. He says he has made a total of $5.10 from the sale of a single "Wal-ocaust" T-shirt.

Copyright 2006 The Associated Press. All rights reserved.

[back to top] 

Wal-Mart trims inventory in bid to cut costs

Move to cut merchandise creates headaches for broad range of suppliers

The Associated Press
April 12, 2006                         [back to top] 

NEW YORK - As Wal-Mart Stores Inc. looked across its operations recently to find ways of cutting costs, it found it had a problem that afflicts many businesses: too much inventory.

So the world's biggest retailer is on a campaign to cut the amount of merchandise it buys, a move that's creating some short-term pain for a broad range of suppliers from consumer product makers Procter & Gamble Co. and Spectrum Brands Inc. to cosmetic company Elizabeth Arden Inc.

Wal-Mart declined to offer details of its strategy, which it announced in October and is now implementing. But industry analysts expect it to affect all merchandise categories, from shampoo to toys and jeans. It does carry some risks for Wal-Mart — if it isn't well executed, consumers used to finding their favorite toothbrush or detergent brand may be disappointed.

Wal-Mart's spring cleaning comes as it struggles with slowing sales and disappointing profit growth due in part to higher expenses. Its stock price has fallen 6 percent over the past 12 months.

Leaner inventory will help clear out store clutter and help Wal-Mart focus on specific brands and products that consumers want, company spokeswoman Gail Lavielle said. She described the company as looking at inventory on "a case-by-case basis," but declined to comment further.

Analysts speculated that Wal-Mart will look at ways to eliminate minor brands and not carry as deep a selection of a certain item. For example, it might stock only the most popular brands of batteries, or may not carry as many styles of black jeans. Customers shouldn't see any major changes, though they might notice the selection isn't quite as wide as it was previously.

Wal-Mart is expected to use its savings from reduced inventory to improve store interiors. Less inventory will also help reduce the company's asset base, in turn boosting its return on investment, a key metric that drives stock price, analysts said.

Because many suppliers count Wal-Mart as their largest customer, any change it makes will naturally have the biggest impact.

"It's challenging for everyone," said Michelle Bogan, retail strategist at Kurt Salmon Associates, a global consulting firm. "Whenever Wal-Mart scales back, it is hard for suppliers to be flexible enough to respond quickly. The volumes are big."

That means slower sales for suppliers as they readjust production to meet fewer deliveries to Wal-Mart; it also entails having to rethink their product lines, perhaps focusing on specific packaging sizes that are the most popular.

Whether companies will suffer something more lasting remains to be seen. Most suppliers contacted by The Associated Press declined to comment about the issue.

On March 13, P&G — which counts Wal-Mart as its biggest customer and is the maker of such products as Tide detergent and Pampers diapers — lowered what called an organic sales growth forecast for its fiscal third quarter, citing customer inventory reductions. Organic sales growth excludes the impact of acquisition, divestitures and foreign exchange.

In 2005, sales to Wal-Mart accounted for about 16 percent of P&G's total revenue, according to Securities and Exchange Commission filings. No other customer represents more than 10 percent of its total sales, the filing said.

P&G declined to identify the customers cutting inventory. But analysts say drugstore operator CVS Corp. is taking steps similar to Wal-Mart's.

Last week, Spectrum Brands lowered its second-quarter earnings outlook in part because of inventory cutbacks by retail customers. Wal-Mart, Spectrum's largest customer, accounted for 18 percent of its consolidated sales in 2005, according to SEC filings.

Shares in Spectrum, whose brands include Rayovac batteries, Remington electric shavers and Tetra fish food, fell to a new 52-week low Friday, a day after its announcement.

Meanwhile, Elizabeth Arden stock took a hit last month, falling close to 5 percent following a ratings downgrade from brokerage Brean Murray Carret, which predicted the cosmetic maker's performance would suffer due to inventory destocking at mass retailers. Wal-Mart is Elizabeth Arden's biggest customer, representing 13 percent of the company's total revenue, Gary Giblen, an analyst at Brean Murray Carret, wrote in a research note.

Wal-Mart's goal is to have its sales increases outpace inventory increases, the opposite of the company's trend in some recent quarters, said Bob Buchanan, a retail analyst at A.G. Edwards & Sons. Philip Zahn, senior director at Fitch Ratings Inc. estimated that Wal-Mart is now turning its inventory over an average of 7.8 times a year, slower than the 8.1 times in 2002; the higher the turnover, the faster goods are being sold. This has occurred even as Wal-Mart has expanded further into food, which has a higher turnover rate than less perishable items like apparel.

Rival Target Corp. turns its inventory over an average of 6.2 times a year, though its share of food is much lower than Wal-Mart's, Zahn estimated.

Until Wal-Mart's inventory strategy is more understood, P&G and other vendors will face some uncertainty. But at least one small supplier — Endless Games Inc., a maker of classic games like Family Feud and Password — believes it will benefit from Wal-Mart's inventory cuts. Kevin McNulty, vice president of sales at Endless Games, expects that Wal-Mart will cut down on duplications, which will only help the board game industry.

"I would hope that this would mean you don't need five versions of Twister or Monopoly. That it would open up to other new and innovative games," said McNulty.

McNulty is counting on such moves to make room for the company's latest offering — a spiritual game called Your Best Life Now, based on Joel Olsteen's book "Your Best Life Now: 7 Steps to Living at Your Full Potential."

© 2006 The Associated Press. All rights reserved.

[back to top] 

Wal-Mart Eyes Site in Flushing, Then Decides To Look Elsewhere

By David Lombino
The New York Times
Sun April 12, 2006            [back to top] 

Wal-Mart appears to have backed out of a plan to move into a vacant retail space in Queens, a location that likely would have bypassed City Council review of a new store. It's the second location that America's largest retailer has been known to have eyed in Queens, and the second time in 14 months that Wal-Mart has backed down.

The Arkansas-based chain has no store in New York City. Shoppers who want to patronize Wal-Mart have to go to New Jersey or Long Island, which reap the sales tax revenues. Labor unions and some politicians in New York have opposed the presence of a Wal-Mart in the city, criticizing the company's treatment of its employees.

A report dated April 11 in a trade publication that tracks construction activity, the Dodge Report, said that "Wal-Mart store #4206" would be located on Roosevelt Avenue and Main Street in Flushing.

The vacant site was formerly home to a now defunct retailer, Caldor. The report said the Wal-Mart project was in its "final planning" stages, and a renovation costing between $5 million and $10 million would begin this July. It listed contacts at Wal-Mart's headquarters in Bentonville, Ark., and an architectural firm in nearby Rogers, Ark.

In a statement yesterday, a Wal-Mart director of corporate affairs, Mia Masten, said: "In the process of looking at sites throughout the five boroughs, we did examine the site of the former Caldor store in Flushing, Queens, and decided it does not meet our criteria."

Because the Flushing site is already zoned for retail use, a Wal-Mart store in an existing structure likely would have bypassed City Council land use review, according to development experts.

The City Council has been an obstacle to Wal-Mart entering the lucrative New York market. Last year, the council was instrumental in blocking Wal-Mart's entry into Rego Park, Queens. The council also passed legislation requiring large grocery stores to pay some medical insurance premiums for their employees, a move that was seen as directed at Wal-Mart.

Yesterday, representatives from Wal-Mart met with the senior staff of City Council Speaker Christine Quinn at City Hall. According to a spokeswoman for Ms. Quinn, Maria Alvarado, Wal-Mart representatives were asked "point blank" about the Flushing site and said they had no serious plans for it.

When Ms. Quinn later yesterday learned about the Dodge Report on the Flushing project, she asked the Wal-Mart representatives to return to her office with more information.

Ms. Alvarado said Ms. Quinn judged Wal-Mart's nondisclosure of its interest in the Flushing site to be "disingenuous at best," and at worst, "lying."

Ms. Alvarado said Ms. Quinn believes it is "absolutely unacceptable" for Wal-Mart to build a store anywhere in the five boroughs without consulting with the City Council first, even it is not legally required to do so.

Ms. Quinn has expressed concerns about Wal-Mart's purchasing and employment practices and questioned whether the retailer should ever be permitted to open a New York store.

Yesterday's "introductory meeting" between Ms. Quinn's staff and Wal-Mart representatives was planned weeks in advance, according to Ms. Alvarado.

According to city property records, the Flushing site is now owned by Vornado Realty Trust, one of the city's most active real estate developers, and the owners of the Rego Park site that Wal-Mart tried to occupy. Messages to Vornado were not returned. The site has 183,743 square feet of retail space spread over four floors, and has 343 parking spaces.

A representative of the United Food and Commercial Workers, a union that has staunchly opposed Wal-Mart, Pat Purcell, said bypassing the City Council would be "penny-wise, pound foolish" for Wal-Mart, because it would likely anger the legislative body that would presumably need to approve future projects.

Council Member John Liu, a Democrat of Flushing, said he has consulted with the owners of the Caldor site and does not believe it would be suitable for a Wal-Mart.

Even if it were, Mr. Liu said, "Wal-Mart is not welcome in Flushing anyway."

"There is no need that would be satisfied by Wal-Mart coming into downtown Flushing," he said. "The only purpose it would serve would be to displace economic activity, not supplement economic activity."

[back to top] 

Wal-Mart Digs Its Heels In

Kate DuBose Tomassi
Market Scan
04.12.06                                [back to top] 

Goldman Sachs analyst Adrianne Shapira reiterated an "outperform" rating on Wal-Mart Stores shares after company meetings led her to believe the company is dealing with its sliding return on investment capital.

The analyst said her recent meetings with the company's chief financial officer further bolsters her conviction in management's efforts to stem sliding ROIC, which could lead to multiple expansion.

Wal-Mart thinks it can reverse the slide this year through margin expansion and inventory control, she said.

"Specifically, better store-shelf, back room, and distribution center space management will be a key focus over the next 12 to 24 months, especially for slower turning items," said the analyst.

Checks with key suppliers like Proctor & Gamble and logistical suppliers like transportation company YRC Worldwide indicate the company's cutting of excess inventory is already underway.

Moreover, key to driving margin expansion and increasing ROIC will be the company's continued global procurement, said the research analyst.

"The growing importance of this division was best exemplified by the recent appointment of Lawrence Jackson, a seasoned executive, to lead the group," she said.

[back to top] 

Wal-Mart bank may face curbs if OK'd Analysts

FDIC would likely put limits on services

By Reuters
April 12, 2006                 [back to top] 

WASHINGTON -- US regulators yesterday wrapped up the first set of unprecedented public hearings on Wal-Mart's plan to open a bank, but gave scant indication of how they might come down on the retail giant's application.

Based on questions posed by the Federal Deposit Insurance Corp. to witnesses over the past two days, some lobbyists and analysts said if the agency approves Wal-Mart's plan it will not be without strict limits on the bank activities allowed.

Wal-Mart may be explicitly prohibited, for example, from opening full-service bank branches in its stores, some speculated.

In fact, regulators presiding over the hearings asked Wal-Mart's opponents how the retailer's plan could be altered to address their concerns, which ranged widely from the company's ability to drive community banks out of business to its impact on the financial system.

The FDIC has also requested leases signed by banks that operate in Wal-Mart's stores to weigh the company's commitment to not swap those institutions with banks of its own, sources close to the situation told Reuters yesterday.

While Wal-Mart officials previously professed the benefits of getting into retail banking, the company says it abandoned that strategy in 2003 and instead opted to dramatically boost the number of independent banks in its stores. Now, the company says it just wants a bank to transmit electronic payments.

But many groups opposing Wal-Mart's plan, including banks and some members of Congress, say they don't believe the retailer has given up its hope of offering everything from checking accounts to home mortgages.

''It was very clear from their testimony yesterday that they make up their minds based upon what the current market conditions are," said Wayne Abernathy, executive director for the American Bankers Association's financial institutions policy and regulatory affairs.

Wal-Mart's bank would transmit payment requests from shoppers to credit card issuers and then transfer payments back to Wal-Mart. It would be a conduit for payments, which would not be deposited into Wal-Mart bank.

Wal-Mart, in testimony to the FDIC, said its intention to keep community banks in its stores is best illustrated by the long-term contracts it has signed with 1,400 banks and credit unions. It said some of those leases extend out to 2024 and can be terminated only by the bank tenant.

Critics, however, say this testimony is inaccurate. ''Our information from community banks contradicts Wal-Mart's testimony," said former US Representative Tom Bliley, who appeared at the public hearings representing the Sound Banking Coalition. ''Wal-Mart has the ability to break its leases with banks in its stores simply by paying a small fee and those leases get renewed beyond the initial five-year term if both parties -- not just the banker -- consent to it," he said.

The FDIC faces no deadline for its decision on the application, first filed in July 2005. The agency will hold another public hearing later this month in Kansas.

© Copyright 2005 The New York Times Company

[back to top] 

Wal-Mart pledges not to open bank branches

Business Respect, Issue Number 93,
dated 11 Apr 2006                                        [back to top] 

Wal-Mart has promised the first public hearing held by the Federal Deposit Insurance Corporation that it will never open bank branches, following controversy over the firms suspected intentions.

The testimony came about following Wal-Mart's application to open a bank in order to process credit card transactions without the cost of a third party - which the company declared to be the only intention behind its move.

Some banks fear that the company eventually intends to move into consumer banking services, something which they believe could pose a serious threat to their businesses.

The focus of the hearing turned into a long assault on the company's integrity, with various opponents stating that the company's word could not be trusted.

[back to top] 

Banking at Wal-Mart

By Matthew Mogul
April 11, 2006              [back to top] 

The "Bank of Wal-Mart" will win approval from federal regulators, perhaps as early as this summer. But don't expect to get a loan or make a deposit at your local Wal-Mart. The bank will be housed in an office building in Utah and won't have any branches.

Wal-Mart's bank will have limited powers, able only to process check, debit and credit card transactions. That will save the retail giant millions of dollars a year in fees it would otherwise have to pay others—savings that Wal-Mart says it can pass on to consumers. Other businesses, including Toyota and Target, have similar operations, but Wal-Mart is far bigger than each of those firms.

Look for Congress to slap limits on what such company banks can do. Lawmakers are likely to pass a law containing specific prohibitions on any foray into retail banking, establishing perimeters not only for Wal-Mart, but also for any other company seeking a foothold in financial services. So-called industrial loan corporations, or ILCs, will be barred from interstate branching and face limits on commercial loan levels. To win federal approval and counter critics who fear its size and influence would threaten the viability of community banks and change the U.S. banking system forever, Wal-Mart has repeatedly said it has no plans to go into retail banking. It has also pleased regulators by agreeing to set aside more reserve capital and hire a chief risk officer. In addition, it withdrew a request to be exempt from federal banking laws requiring lenders to cater to the credit needs of low-income neighborhoods.

Wal-Mart's concessions won't silence opposition from many lawmakers and other banks, which say the megachain's history proves its promises can't be trusted. They note that Wal-Mart is already well on its way in the financial service industry. The massive retailer has teamed up with about 300 community banks, which have branch offices in a third of Wal-Mart stores nationwide. The retailer itself also offers money orders, wire transfers and check cashing, all at competitive rates, and has rolled out a no-fee 1% cash back Discover Card to its well-off customers.

What do you think of Wal-Mart's venture into banking? Take our poll.

[back to top] 

Bush, Justice Dept. Among Muzzle Winners

By Zinie Chen Sampson
The Kindred Times (UT)
April 11, 2006                          [back to top] 

RICHMOND, Va. - President Bush and the Justice Department are among the winners of the 2006 Jefferson Muzzle awards, given by a free-speech group to those it considers the most egregious First Amendment violators in the past year. The Justice Department earned a Muzzle for demanding that Google turn over thousands of Internet records, prompting concerns that more invasive requests could follow if the government prevails.

Other winners of the 15th annual awards include the Department of Homeland Security for barring an air marshal from expressing concerns about public safety; the Yelm, Wash., City Council for banning the words "Wal-Mart" and "big-box stores" at public hearings; and students at the University of Connecticut who heckled conservative columnist Ann Coulter.

As in the past, this year‘s winners reflect concern about "the overextension of government authority into areas that clearly affect our lives and chill and inhibit our ability to express views," center director Robert M. O‘Neil told The Associated Press.

Since The New York Times disclosed the surveillance program‘s existence in December, it has become the target of harsh criticism, several lawsuits and a congressional investigation. John W. Dean, who was Richard Nixon ‘s White House counsel, remarked that the domestic spying exceeds the wrongdoing that toppled his former boss.

"Google appears to be the only one that drew a line in the sand," O‘Neil said. "We commend their insistence that aggregate data could end up identifying a particular subscriber."

In Yelm, Wash., the city council banned discussion of a plan by Wal-Mart to build a super center after many opponents sought to express their views. When that didn‘t squelch opposition, the council voted in June to prohibit citizens from using the terms "Wal-Mart" or "big-box stores" at public meetings.

[back to top] 

Strange bedfellows balk at Wal-Mart's bank bid

By MARCY GORDON
The Associated Press
Tuesday, April 11, 2006                         [back to top] 

WASHINGTON — Allies for once, a stream of officials from the banking industry, unions and consumer groups urged federal regulators Monday to reject a bid by Wal-Mart Stores to expand its empire into the banking business.

A company official, meanwhile, assured the Federal Deposit Insurance Corp. (FDIC) that Wal-Mart had no plans to compete with community banks, including bank branches in its megastores.

The first day of the first-ever FDIC public hearings on a bank application drew a wave of opposition to the plans of the world's largest retailer.

Among the protesters: officials of trade groups representing banks of every type and size; unions; lawmakers; consumer and community organizations; and associations of convenience stores, grocers, retailers, real-estate agents and farmers.

Wal-Mart's bid for federal deposit insurance for a state-chartered bank in Utah — which would handle the 140 million credit, debit-card and electronic-check payments the company processes each year — is just the camel's nose under the tent, the critics said.

It would be counter to Wal-Mart's nature to refrain from expanding into full-scale banking with retail branches that would destroy local banks, they said.

The lone Wal-Mart executive who testified — Jane Thompson, president of Wal-Mart Financial Services — insisted the $250 billion-a-year retailer is a good corporate citizen, pays its employees fair wages and complies strictly with laws and regulations.

The company insists consumers and banks have nothing to fear and is pledging to stay out of branch banking and consumer lending.

Some 300 institutions operate branches in 1,150 Wal-Mart stores, and the company says it doesn't want to compete with them.

"Wal-Mart is absolutely and unequivocally committed not to engage in branch banking," Thompson told FDIC Chief Operating Officer John Bovenzi and two other agency officials, seated at a dais in an auditorium before some 70 people.

Wal-Mart already is too big, opponents say, with 3,900 stores nearly saturating the U.S. market and unrivaled dominance, accounting for an estimated 10 percent of the U.S. retail economy. That means a Wal-Mart bank could pose a risk to the country's financial system, and potentially to taxpayers, they say.

"Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system," said U.S. Rep. Stephanie Tubbs Jones, D-Ohio, who heads a group of lawmakers opposed to the company's application.

"The potential losses to the FDIC are staggering. Our country is extremely fortunate that Enron and WorldCom did not own banks."

A few witnesses backed Wal-Mart: officials of the American Financial Services Association, which represents credit-card issuers and other consumer lenders, and the Salvation Army and the National Center for Missing and Exploited Children.

Backers say a move by Wal-Mart into banking would benefit consumers by lowering fees and prices in an industry needing more competition.

Nearly 70 witnesses are testifying, both for and against Wal-Mart's application, in FDIC hearings on Monday and today in Arlington, Va., and on April 25 in Overland Park, Kan. The agency has not set a deadline for a decision.

 [back to top] 

Wal-Mart bank blasted

By AP
April 11, 2006                   [back to top] 

WASHINGTON -- Allies for once, a stream of officials from the banking industry, unions and consumer groups urged U.S. regulators yesterday to reject a bid by Wal-Mart Stores Inc. to expand its empire into the banking business.

A company official, meanwhile, assured the Federal Deposit Insurance Corp. that Wal-Mart had no plans to compete with community banks, including bank branches located within its megastores.

The first day of the hearings drew a wave of opposition to the plans of the world's largest retailer.

Wal-Mart is seeking federal deposit insurance for a state-chartered bank in Utah.

 [back to top] 

Wal-Mart Opens Books on Labor Diversity

Wal-Mart Stores Opens Its Books to Show How Many Women, Minorities in U.S. Work for Retailer

By MARCUS KABEL
The Associated Press                 [back to top] 

Wal-Mart Stores Inc. has opened its books to show exactly how many women and minorities in the United States work for the world's largest employer, the first time it has released the data it files each year with the Equal Employment Opportunity Commission.

Wal-Mart's move comes amid calls from religious investors and workers rights groups for the Bentonville, Ark.-based company to prove it is meeting verbal commitments to increase diversity and prevent discrimination. Wal-Mart also faces a class-action discrimination lawsuit on behalf of all current and former U.S. female employees.

"It's extremely important," said Sister Barbara Aires of Sisters of Charity of St. Elizabeth, N.J., a member of a coalition of faith-based investors called the Interfaith Center on Corporate Responsibility.

The ICCR holds about 2 million shares of Wal-Mart stock and has lobbied Wal-Mart for several years to publish the confidential diversity data that companies with more than 100 workers must file by law with the Equal Employment Opportunity Commission.

"We have assurances that they will continue to provide that information each year so that we can begin to compare and look from year to year and note their progress, which is what we want them to do," she told The Associated Press.

The report for 2005 showed that 32 percent of the 1.34 million Wal-Mart employees in the United States were minorities. That level varied by occupational group, including 21 percent of top officers and managers, 20 percent of professionals and 33 percent of sales workers.

Women accounted for 60 percent of the overall work force, 39 percent of officers and managers and 75 percent of sales workers.

The report did not provide comparative data for previous years.

Wal-Mart did compare its 2005 numbers with the retail industry and large employers overall, although those numbers were based on 2003 findings, the latest comprehensive tallies published by the Equal Employment Opportunity Commission.

Wal-Mart said its minority employment of 32 percent compared to 31 percent for the retail sector and 30 percent for all large U.S. employers. Total female employment of 60 percent compared to 63 percent in retail and 48 percent nationwide.

Other Wal-Mart critics said the report did not go far enough, including not listing any data on pay levels or promotions among minorities and women.

"If Wal-Mart was serious about diversity, it would hire independent auditors, stop refusing to disclose its diversity goals, and finally release the hard data about what Wal-Mart pays its women and minority workers," said Chris Kofinis, spokesman for the union-funded campaign group, WakeUpWalMart.com.

In the report, Chief Executive Lee Scott said that Wal-Mart last year expanded diversity targets for managers from a group of 3,500 officers and senior managers to include more than 51,000 store-level managers. Scott said the goals were all met.

The publication of the 2005 employment data comes a year after Wal-Mart first provided a summary of some of those numbers, but not the full report, a Wal-Mart spokeswoman said.

"This year is another step toward being a more transparent corporation in all aspects of our business, including diversity," spokeswoman Sarah Clark said.

Clark said Wal-Mart wants to continue to increase the number of women and minorities at all levels.

That includes promoting diversity among Wal-Mart's huge pool of suppliers. Wal-Mart said it does business with more than 3,100 minority and women-owned businesses, totaling more than $4 billion in 2005 compared with $2 million in 1994.

Wal-Mart is also working with its largest suppliers to make sure they deal with more minority and women-owned businesses and in late 2005 began collecting data to monitor that business, the company said.

 [back to top] 

Regulators hear Wal-Mart critics

All Reuters News                   [back to top] 

WASHINGTON (Reuters) - U.S. regulators on Tuesday wrapped up the first set of unprecedented public hearings on Wal-Mart's plan to open a bank, but gave scant indication of how they might come down on the retail giant's application.

Based on questions posed by the Federal Deposit Insurance Corp. to witnesses over the past two days, some lobbyists and analysts said if the agency approves Wal-Mart's plan it will not be without strict limits on the bank activities allowed.

In fact, regulators presiding over the hearings asked Wal-Mart's opponents how the retailer's plan could be altered to address their concerns, which ranged widely from the company's ability to drive community banks out of business to its impact on the financial system.

The FDIC has also requested leases signed by banks that operate in Wal-Mart's stores to weigh the company's commitment to not swap those institutions with banks of its own, sources close to the situation told Reuters on Tuesday.

While Wal-Mart officials previously professed the benefits of getting into retail banking, the company says it abandoned that strategy in 2003 and instead opted to dramatically boost the number of independent banks in its stores. Now, the company says it just wants a bank to transmit electronic payments.

But many groups opposing Wal-Mart's plan, including banks and some members of Congress, say they don't believe the world's largest retailer has given up its hope of offering everything from checking accounts to home mortgages.

"It was very clear from their testimony yesterday that they make up their minds based upon what the current market conditions are," said Wayne Abernathy, executive director for the American Bankers Association's financial institutions policy and regulatory affairs.

"And market's change all the time. And the fact that they have no intentions to do it now is absolutely no indicator of what they plan to do in the future," he told Reuters.

LEASES GET ATTENTION

Wal-Mart has applied to open a bank known as an industrial loan company, or ILC, in Utah to process credit card and debit transactions from its stores.

Industrial banks are state-chartered and state-regulated. Commercial companies may own them because they are not considered banks under federal laws that bar nonfinancial companies from engaging in banking.

Wal-Mart's bank would transmit payment requests from shoppers to credit card issuers and then transfer payments back to Wal-Mart. It would be a conduit for payments, which would not be deposited into Wal-Mart Bank.

Bringing this function in-house is expected to generate $10 million in revenue by the third year of operation -- a fraction of Wal-Mart's total revenue. But it also reduces what Wal-Mart says is the inefficiency of paying a third party simply to pass information between its stores and customers' banks.

This is Wal-Mart's fourth attempt to open an ILC.

Wal-Mart, in testimony to the FDIC, said its intention to keep community banks in its stores is best illustrated by the long-term contracts it has signed with 1,400 banks and credit unions.

According to the retailer, some of those leases extend out to 2024 and can be terminated only by the bank tenant.

Critics, however, say this testimony is inaccurate.

"Our information from community banks contradicts Wal-Mart's testimony," said former U.S. Rep. Tom Bliley, who appeared at the public hearings representing the Sound Banking Coalition, which opposes Wal-Mart's application.

"Wal-Mart has the ability to break its leases with banks in its stores simply by paying a small fee and those leases get renewed beyond the initial five-year term if both parties -- not just the banker -- consent to it," he said.

The FDIC is reviewing some of those leases, according to sources close to the situation.

TIMETABLE FOR REVIEW

The FDIC faces no deadline for its decision on the application, first filed in July 2005. The regulatory agency will hold another public hearing later this month in Kansas.

Other things, however, could get in the way of a prompt conclusion after that, some lobbyists said, noting the White House may name a new chairman for the FDIC board and Congress could consider ILC-related measures.

Copyright 2006 Reuters

[back to top] 

US regulators review Wal-Mart bank leases

Reuters
Tue Apr 11, 2006            [back to top] 

WASHINGTON, April 11 (Reuters) - U.S. regulators considering Wal-Mart's application to open a limited-purpose bank have asked for leases signed with the banks in its stores to assess what the retailer calls its strategy to support independent community banks, sources close to the application said on Tuesday.

Wal-Mart <WMT.N>, whose bid to start restricted banking operations has generated an unprecedented level of opposition to a bank application, has repeatedly said it has no plans to open branches in its stores.

Wal-Mart's bank, an industrial loan company (ILC), in Utah would be used to process electronic payments from its stores, according to a three-year business plan submitted to the FDIC.

Groups opposing Wal-Mart's application, including community banks and some members of Congress, have said they do not believe the world's largest retailer has abandoned previously voiced hopes of offering bank services to the general public.

In testimony to a public hearing held by the Federal Deposit Insurance Corp. -- the agency considering the application -- Wal-Mart said its strategy of keeping independent banks in its stores is best illustrated by the long-term contracts it has signed with those banks.

According to the retailer, some of those leases extend out to 2024 and can only be terminated by the bank tenant.

The FDIC has requested and is reviewing some of those leases, according to sources close to the situation.

Industrial banks are state-chartered and state-regulated, and fall under the FDIC's supervision. Commercial companies may own them because federal laws that bar nonfinancial companies from engaging in banking do not classify industrial banks as banks.

Groups opposed to the bank bid are scheduled to testify on Tuesday, the second day of public hearings on the company's application.

© Reuters 2006. All rights reserved.

 [back to top] 

Wal-Mart bank plan attacked at FDIC hearing

The Chicago Tribune
Tuesday, April 11, 2006                   [back to top] 

Wal-Mart Stores Inc. found itself on the defensive April 10 at a federal hearing on whether it should receive a limited bank charter, reported The Chicago Tribune.

The world's biggest retailer tried to make a case to U.S. regulators that it should receive federal deposit insurance for an in-house bank that it wants to open to more cheaply process its own credit, debit and check transactions, the Tribune reported April 11.

Calling itself "one of the most supportive institutions for independent banks anywhere," with branches in 1,200 of its stores, Wal-Mart insisted at the Federal Deposit Insurance Corp. hearing that it has no plans to start company-branded financial locations.

"You will not see a Wal-Mart branch in a Wal-Mart store," said Jane Thompson, president of Wal-Mart Financial Services.

But small bankers, labor and environmental groups and other foes regard Wal-Mart's application as the financial equivalent of a Trojan horse, arguing that once the door cracks open for Wal-Mart to receive deposit insurance for even a limited-purpose bank, it eventually will want to expand with branches and offer traditional banking products, the Tribune reported.

Critics raised myriad concerns, according to the Tribune, ranging from the dangers of mixing banking and commerce to Wal-Mart’s track record as a corporate citizen to the impact that a Wal-Mart bank would have on small financial institutions if it were to open branches.

"Being one of the largest employers in the United States, millions of employees would no longer need their existing accounts currently held at local community banks," said Rose Oswald Poels, vice president of the Wisconsin Bankers Association.

Never has the FDIC received such overwhelming opposition to a filing. Wal-Mart's request for federal deposit insurance drew a record 2,900 letters. About 100 people, far fewer than expected, showed up on the first of 2 1/2 days of planned hearing

 [back to top] 

Wal-Mart puts the squeeze on vendors

P&G, Clorox and other big consumer products firms take a hit as the world's largest retailer cuts back inventories.

By Parija Bhatnagar
CNNMoney.com
April 10, 2006                    [back to top] 

NEW YORK (CNNMoney.com) - When Wal-Mart sneezes, everybody catches a cold, and now some of America's biggest consumer products companies are at risk of getting sick as the world's largest retailer moves to cut back inventories this year.

The discount retailer is already credited with having one of the best inventory management systems in the business as it tries to keep goods flowing to its 3,800 Wal-Mart stores in the United States.

But Wal-Mart (down $0.44 to $45.58, Research) is hoping that by becoming even leaner and ordering "just in time" to meet its merchandise needs,it can further trim costs associated with carrying excess or unsold inventory and invest the funds in bolstering its marketing and merchandising efforts.

Wal-Mart investors, no doubt, would cheer any efforts to improve the company's slowing sales and profit growth and kick start its stagnant stock price.

But investors in the discounter's suppliers may not be quite so happy. Among the consumer products giants that are taking a hit are Procter & Gamble (Research), Clorox (Research), Playtex (Research) and Spectrum Brands (Research).

That's because some of these vendors have significant sales exposure to Wal-Mart.

A recent note from Goldman Sachs identified not only P&G, Clorox and Playtex, but Kellogg's (Research), Prestige Brands, a maker of health care products, and beverage supplier Cott Corp. as suppliers that face a greater risk from the inventory reductions at Wal-Mart.

Wal-Mart was Procter & Gamble's largest customer in 2005, accounting for 16 percent of its total sales. But some other consumer goods firms count on Wal-Mart for an even larger chunk of their sales, like Chattem, a maker of hot and cold packs for pain relief that gets more than a third of its sales from the discounter (See chart).

The casualties are already emerging from this group.

In its mid-quarter update to investors earlier last month, Procter & Gamble lowered the high-end of its third-quarter sales growth forecast to an increase of 5 to 6 percent from an earlier 5 to 7 percent range. The company cited "recent customer inventory reductions" as one of the factors dampening its forecast.

Shares of Spectrum Brands tumbled on Friday after the maker of batteries, shaving and personal care productsslashed its second-quarter earnings forecast. The company attributed the shortfall to ongoing challenges in its consumer battery business.

Additionally, the company said that during the second quarter, several of its "largest retail customers implemented or accelerated inventory adjustment initiatives designed to reduce their retail inventory levels, which further impacted sales."

Industry experts say that while Wal-Mart's biggest vendors are likely to experience some short-term pain,vendors and customers could very well benefit in the long term.

"Wal-Mart's strategy all along has been to work closely with its vendors," said Craig Johnson, president of retail consulting group Customer Growth Partners.

"There will be some short-term problems to suppliers as the system adjusts itself but longer-term this will force vendors to become even more efficient in terms of their own manufacturing and shipping processes, and become preferred suppliers not just to Wal-Mart but to other retailers as well."

There could be a big benefit to consumers, too.

"The more costs Wal-Mart can take out of the system, the more it's able to pass a portion of the cost saved on to the customer in the form of lower prices," Johnson said.

Love Goel, CEO of Growth Ventures, an investment firm focused on retailers, agreed.

"The only sustainable competitive advantage for retailers over the next few decades is to build strong customer relationships based on trust and some other value proposition. For Wal-Mart it's price. That's their contract with the customer," Goel said.

He said Wal-Mart may be doing its suppliers a favor by pushing them to become more competitive globally.

"By challenging its suppliers to source and manufacture products more efficiently and improve their own inventory and replenishing systems, Wal-Mart is also helping these companies to eventually compete more effectively with other global suppliers who's prices are even lower than theirs," he said.

 [back to top] 

Wal-Mart's Plan for Bank May Curb Lending, Bankers Group Says

Lauren Coleman-Lochner
Bloomberg
April 10                                            [back to top] 

Wal-Mart Stores Inc., the world's largest retailer, will siphon business from local banks and hurt lending in communities if it's allowed to open a bank, consumer groups and bankers will say today at a regulatory hearing.

The American Bankers Association, the Independent Community Bankers of America and more than two dozen other groups plan to tell the Federal Deposit Insurance Corp. that Wal-Mart's planned industrial bank will allow the company to gain a foothold and open branches. They'll be joined by Rep. Stephanie Tubbs Jones, Democrat of Ohio.

Opponents are organizing to thwart Wal-Mart's third attempt to get into banking as the Bentonville, Arkansas-based retailer is struggling to boost sales and counter criticisms of its pay, health benefits and environmental record. Bankers say the company's reputation for wiping out small businesses should convince the FDIC to turn down the application.

``I think that the community would lose their local banks,'' Terry Jorde, chairwoman of the Washington-based Independent Community Bankers of America, said in an interview last week. ``They can afford to undercut us until we're gone, and then what?''

The FDIC hearings are being held today and tomorrow in Arlington, Virginia, and are the first the agency has ever held on an application. The agency will also hear testimony in Overland Park, Kansas, on April 25.

Wal-Mart in July applied in Utah for an industrial-bank charter to handle payment processing. Industrial banks, also known as industrial loan corporations, were created at the turn of the last century to provide credit to low-income workers. They can offer loans and other banking services to their parent company's customers, as well as handle payment processing.

Target, Toyota

Target Corp., Toyota Motor Corp. and General Electric Co. are among non-financial companies that operate industrial banks.

``We have now said we will not branch in as many ways as we can possibly say it,'' Wal-Mart spokesman Marty Heires said. ``If this bank is approved, you will not see any Wal-Mart branches in any of our stores.''

Heires said the company shifted its strategy in 2003 to expand the number of community banks that lease space for branches in its stores. It has more than doubled the number of branches since then, he said.

``These are long-term leases and these banks can stay in our stores for 15 years and in some cases even more,'' Heires said. ``We're committed to community bankers and we're committed to what they bring to our stores and their customers. We're their allies.''

Loose Regulation

Shares of Wal-Mart fell 54 cents, or 1.2 percent, to $46.02 on April 7 in New York Stock Exchange composite trading.

Wal-Mart will benefit if it wins approval because industrial banks aren't as closely regulated as commercial ones, said Jorde, who's president and chief executive officer of CountryBank USA, a bank with $40 million in assets based in Cando, North Dakota.

Jorde plans to testify that Wal-Mart could engage in predatory pricing, siphon business from local banks and make credit decisions that favor its own interests.

``A Wal-Mart bank would have an incentive to favor Wal- Mart's suppliers and disfavor their competitors,'' according to her prepared testimony.

Wal-Mart plans to use the bank to process the more than 2 billion debit, credit and electronic-check transactions it handles each year rather than pay third parties for that service.

Regulated by States

Unlike commercial banks, industrial banks aren't regulated by the Federal Reserve. ILC's are supervised by the states that charter them and the FDIC, which insures their deposits.

The FDIC can't impose capital requirements or sanctions on industrial banks, said Travis Plunkett, legislative director of the Consumer Federation of America, in his prepared testimony.

Given Wal-Mart's unsuccessful attempts to enter banking in the past, including efforts to buy a California bank in 2002 and an Oklahoma thrift in 1999, critics are skeptical about its claims it doesn't plan to expand beyond payment processing.

``Wal-Mart has both a demonstrated appetite to engage in full-service banking and a recent and ongoing track record of expanding the retail banking services it can offer under current law,'' according to the prepared testimony of Arthur Johnson, chairman of the Washington-based ABA's government relations council. ``It is disconcerting to realize that once a Wal-Mart bank obtains deposit insurance, there would seem to be little or no opportunity for the public to comment on the bank's expansion into other products, services or geographies.''

Speaking for Wal-Mart

Speakers in favor of the Wal-Mart application will include representatives from the American Financial Services Association, the trade association that represents companies that own industrial banks; the American Enterprise Institute, and Working Families for Wal-Mart, a group formed in December to counter criticism of the retailer that receives Wal-Mart funding.

Peter Wallison, a resident fellow at the American Enterprise Institute in Washington, has argued that the issue of the separation of commerce and banking was resolved by the 1999 Graham-Leach-Bliley Act, which allowed securities firms and insurance companies to enter banking.

Industrial banks grew to more than $140 billion in assets in 2004 from $3.8 billion in 1987, according to a September 2005 report by the U.S. Government Accountability Office.

 [back to top] 

Wal-Mart poised for bank filing

Retailer says it would only process checks, payments by credit cards

By MARCUS KABEL
HoustonChronicle.com
Associated Press
April 8, 2006                   [back to top] 

BENTONVILLE, ARK. - Wal-Mart Stores, ever looking for ways to expand its already huge empire, is asking the government for permission to move into an entirely different industry: running its own in-house bank.

The world's largest retailer will ask the Federal Deposit Insurance Corp. Monday for permission to open a bank that can process millions of checks and credit card payments each month. The company says it's not interested in running a consumer bank as well, but some of its opponents still fear such a step could hurt local banks much like the mom and pop stores were during Wal-Mart's rapid expansion.

This is Wal-Mart's fourth bid at running a bank — and its request unleashed an unprecedented flood of comments to the FDIC. In response, the FDIC scheduled its first public hearings ever on a bank application.

"It's a landmark battle in both U.S. business and financial services history," said Jerry Comizio, a financial services lawyer for Thacher Proffitt & Wood in Washington and a former senior attorney with the Securities and Exchange Commission and Deputy General Counsel of the U.S. Department of the Treasury's Office of Thrift Supervision.

Reassurances from retailer Wal-Mart says consumers and retail banks have nothing to fear. It pledges to stay out of branch banking and says it will not provide consumer lending. About 300 institutions operate branches in 1,150 Wal-Mart stores, and the company says it doesn't want to compete with them.

For opponents, those assurances ring hollow.

"There is reason to believe that these plans could be expansive. Wal-Mart has attempted on several occasions to enter the full-service banking business," said Art Johnson, head of government relations for the American Bankers Association, in testimony prepared for Monday's hearing. "The ABA believes that banking is too important to the nation to try such a risky experiment."

Wal-Mart says it can save money if allowed to operate an in-house bank to handle the 140 million credit, debit card and electronic check payments it handles each year. At present, it pays outside companies to handle those transactions.

Previous attempts failed In the past five years, Wal-Mart has tried without success to buy financial institutions in California and Oklahoma and partner with a bank in Canada. The California legislature, Congress and regulators blocked those deals over worries about big retailers getting into banking without full bank supervision.

This time, Wal-Mart is applying for a state charter to open a special type of bank called an industrial loan corporation in Utah, where other companies, including rival Target Corp., already have one.

Target uses its Utah industrial bank to issue credit cards for corporate customers and says it has no plans to expand that business.

The charter needs approval from the FDIC, which would supervise and insure its deposits.

 [back to top] 

Land buy revives Wal-Mart's Meridian store

by Bill Wilson
Wichita Business Journal
April 7, 2006                                  [back to top] 

The Wichita-Sedgwick County Metropolitan Area Planning Department has agreed to review next month "substantial changes" in Wal-Mart's plan for a 53rd and Meridian supercenter, company officials in Bentonville, Ark., say, reviving plans for a store there.

The Arkansas-based retailer has added unspecified adjacent land to its original 27-acre rezoning request for the property, creating a "buffer" between the store on the northwest corner of the intersection and residents who live across Meridian to the east, says John Schlegel, director of planning for the department.

In addition, the store may drop plans for a lube and oil center to alleviate noise concerns voiced last fall by neighbors, says Wichita City Council member Sharon Fearey, who represents the area.

After the May planning commission meeting, the issue appears headed for a District Advisory Council meeting, a neighborhood meeting and another hearing this summer before the Wichita City Council, which unanimously turned down the first rezoning request in December.

Schlegel and Fearey say Wal-Mart officials have agreed to take the supercenter proposal to their neighbors in a public meeting separate from the planning commission's own public hearing. No date has been set.

Failed rezoning requests require a year before a second hearing, Schlegel says, unless the property owner makes significant changes to the original request and planners approve a quicker rehearing.

Wal-Mart spokeswoman Angie Stoner in Bentonville says the company remains optimistic about the proposed project and awaits its opportunity to state its case again to the planning commission, neighbors and the city council.

Fearey says her mind remains open to the supercenter. However, she says the buffer may not alleviate traffic concerns voiced last fall by area residents.

"You can make people drive further inside to get to Wal-Mart, but you can't get that traffic off the arterials," she says.

Business, residential impact The project's revival is interesting news in nearby Valley Center, says city clerk Kristine Polian.

"I think that business-wise, any business is good," she says. "But in terms of our long-time small businesses like Leeker's (grocery) and Bartel's Ace Hardware, I'm absolutely sure it would have an impact."

Both stores, Polian says, have a strong and loyal local following. But with soaring energy prices, "that loyalty is going to be tested for certain," she says. "Wal-Mart can provide economies of scale that Leeker's and Bartel's can't."

The council voted unanimously against the proposed project Dec. 14, saying it would harm the nearby residential area.

Fearey said then that the Wal-Mart would have disrupted the area with traffic, both passenger cars and semi-trailers.

But in February, she softened her stance, saying she'd take any new planning commission recommendation back to the area residents in a public meeting.

 [back to top] 

Wal-Mart Delivers Mixed Message to Newspapers

Sandra O'Loughlin
April 07, 2006                     [back to top] 

NEW YORK -- Wal-Mart, always with its eye on the bottom line, told the National Newspaper Association this week that it won’t be doing any more run-of-press ads in local newspapers.

But Wal-Mart CEO and president Lee Scott also told the Newspaper Association of America that local newspaper ads will be part of the “Wal-Mart Jobs and Opportunity Zones” initiative, which entails working with store managers to identify up to five local businesses per quarter that will be featured as “Small Business Spotlights” in community newspaper ads. A second part of that program involves holding seminars to help small businesses learn how to thrive with Wal-Mart in the neighborhood.

“Wal-Mart does pre-prints in some newspapers, typically daily newspapers and some weeklies depending on the market, but this was an ROP test,” said Mike Buffington, past president of the NNA and co-publisher of MainStreet Newspapers, Jefferson, Ga., who represented the association in talks with Wal-Mart. “The ROP advertising is what we were having a discussion about.”

In early December, Wal-Mart conducted a test ROP ad in several hundred small Midwestern newspapers for its electronics department.

“Wal-Mart told us they did see a pretty good bump in sales on the items and in the department,” Buffington said, “but they bought very expensive full-page process color ads for thin margin electronic items... [so] I’m not sure that that’s a true analysis. But we’ll stay in touch with them as far as the National Newspaper Association. The day will come when they want to take another look at what community newspapers have to offer.”

Wal-Mart confirmed that the test does not change existing programs to advertise in local papers. “We advertise in weekly circulars and around new store openings,” said Wal-Mart rep Kevin Thornton. “This entailed an ad campaign around holiday time over high-end electronics. We’re not going to continue that kind of advertising.”

 [back to top] 

Wal-Mart bank showdown looms

No. 1 retailer set to face critics of its bank proposal during public hearings

Reuters
Monday. April 7, 2006               [back to top] 

WASHINGTON (Reuters) - Wal-Mart will defend its bid Monday to open a bank amid unprecedented opposition to allowing the world's biggest retailer to start even limited financial operations.

At the first of four days of public hearings on Wal-Mart's bank application, the company is expected to outline the functions its bank would perform and try to clear up what it says are misconceptions about the bank's purpose.

But the hearings will give a platform to Wal-Mart's (Research) vocal opposition as well -- groups whose aggressive lobbying helped lead the U.S. agency considering Wal-Mart's bid to call the first ever formal public hearings on a bank application.

Already, members of Congress, banks and the National Association of Realtors have laid out a long list of complaints about Wal-Mart's application, ranging from worries about the company's ability to drive community banks out of business to the risk the bank could pose to the broad financial system.

The criticism has been months in the making, and Wal-Mart has largely remained silent, working behind the scenes with regulators and making changes to its application to win approval and perhaps ease opposition, at least in Congress.

The company has repeatedly said it looked forward to the hearings as a chance to discuss its bank's proposed functions, and to reiterate that the operation would only be used to process electronic payments for Wal-Mart's stores.

It will not, Wal-Mart says, offer any services to the general public, open bank branches or offer payment processing services to other retailers.

But that has done nothing to quiet critics who say they simply don't believe Wal-Mart's assurances.

"Wal-Mart does nothing on a small scale," Terry Jorde, chairman of the Independent Community Bankers of America, will tell regulators at the hearing Monday, according to her prepared testimony. "We respectfully suggest that Wal-Mart's recent history belies the assertions made in its narrow application, justifying our skepticism that Wal-Mart will honor the business plan as filed for very long."

What's more, given Wal-Mart's size, a financial problem at the retailer could bleed into its bank and disrupt the U.S. payments system, many opponents argue.

Still, some analysts and lobbyists say if the Federal Deposit Insurance Corp., the agency considering the application, follows statute and precedent, there is little reason Wal-Mart's bid should be denied when rival Target Corp. (Research) and other corporate heavyweights such as General Electric (Research) have succeeded.

"The FDIC, if it looks at this on its face value, for what it's being asked for, then there's nothing special, nothing unique about this," said Jim Reichbach, national managing principal for Deloitte & Touche USA LLP's banking and finance practice.

Wal-Mart's application is getting undue attention, he said, because the retailer is a "lightning rod" for other issues.

Wal-Mart or something broader? Wal-Mart, in fact, is far from alone among corporations seeking industrial banks, called industrial loan companies (ILCs).

Industrial banks are state-chartered and state-regulated, and fall under the supervision of the FDIC. Commercial companies may own them because federal laws that bar nonfinancial companies from engaging in banking activities do not classify industrial banks as banks.

Wal-Mart's application has energized not only its regular critics, such as labor and environmental groups, but also those who want Congress to clamp down on ILCs overall because they benefit from a "loophole" in federal law that allows commercial companies to buy banks but escape full supervision by bank regulators.

Even Federal Reserve officials have urged Congress to review the ILC statute.

Such broader worries are, in fact, part of Wal-Mart's problem, according to analysts and lobbyists who say the ongoing and intensifying debate about what Congress might do to boost industrial bank oversight could lead to further delays in Wal-Mart's application.

"That's a strategy option, for sure," one source said.

  [back to top] 

Wal-Mart executive won't hire unhealthy employees

Bloomberg
April 7, 2006                 [back to top] 

A Wal-Mart Stores executive who suggested last year that the world's largest retailer should avoid hiring unhealthy workers has been promoted to head its human resources division.

Susan Chambers was named executive vice-president of the unit that oversees human resources and diversity, Wal-Mart said yesterday.

In October, advocacy group Wal-Mart Watch leaked a company memo from Chambers that said Wal-Mart's healthcare costs were rising faster than sales because its workers had been "sicker than the national population".

Labour unions, US legislators and community organisations have criticised the company for its inadequate pay and benefits.