Wal-Mart Seeks to Counter Negative Publicity
Retail Giant, Seeking to Counter Negative Publicity, Lets Journalists Check It Out
Pittsburgh Post-Gazette - April 06, 2005
By Teresa F. Lindeman

Wal-Mart Stores Inc. may be the nation's largest company, but it cannot be expected to play the role that General Motors did in creating a post-World War II American middle class.

That's the message that Lee Scott, president and chief executive officer of the retailer from Bentonville, Ark., sought to drive home yesterday to a media horde invited to spend a few days with executives and the company in the retailer's home environs.

While GM's profit margins and heavy automation allowed it to pay high wages and good benefits to even low-skilled workers, Wal-Mart can't work that way, Scott told about 50 journalists gathered at an Embassy Suites hotel near Bentonville in this booming sliver of northwest Arkansas.

Wal-Mart's business equation only works if it pays wages competitive with other retailers, offers competitive prices and drives inefficiency out of its operations, Scott said. With a tight 3.4 percent profit margin, there is not a lot of wiggle room to do much better than that, he said.

Scott went on to defend the wages and benefits his company pays its 1 million-plus employees, and noted that the $288 billion retailer only makes a profit of $6,500 per employee, as compared with Microsoft's $143,000 per employee.

Even as he spoke, a community group from Inglewood, Calif., that last year successfully fought the building of a Wal-Mart store in its town was at the hotel, deriding the retailer's public-relations efforts. "No amount of wax and polish is going to make an old, beat-up car look better," said coalition member Daniel Taber, a former Inglewood city councilman. Representatives from unions also were on hand to talk about employment issues.

The two-day media event, a Wal-Mart first, was organized in part because executives are concerned a steady drumbeat of negative publicity in recent years may be playing a role in decisions by communities such as Inglewood where the retailer wants to open stores.

It also hopes to put some pop back into it once high-flying stock, which has trended down for the better part of a year, and to buck up associates tired of seeing the company criticized for everything from development practices to employee pay to imports of merchandise.

Wal-Mart's CEO did not meet with the Inglewood group and the other various party crashers. But Scott addressed the many issues being parried in many of the nation's communities with a vigor that made it clear he is paying attention to his critics.

On the accusation that Wal-Mart is a low-wage employer that dumps some of the responsibility for employee benefits onto taxpayers, Scott said some government assistance programs are so lucrative that it is hard to compete.

He specifically cited Georgia, where a state legislator on Monday said more than 10,000 children of Wal-Mart employees were enrolled in that state's health-care program for low-income families. "We don't encourage the use of public assistance," Scott said, pulling out a slide offering numbers to back his contention that Wal-Mart has helped take 160,000 people off the rolls of the uninsured.

Scott declined to take the blame for eliminating small mom-and-pop stores, a decline he said started back when regional malls began to pull retailers out of downtown shopping districts, or for hurting higher-cost retailers that he said want consumers to pay for their inefficiencies.

"If it wasn't Wal-Mart (luring customers away from higher-priced stores), it would be someone else," Scott said, adding that people migrate to value whether it is offered by Wal-Mart or other discounters such as Aldi or Dollar General or Target.

Whether Wal-Mart can change any minds with its increasingly active public relations effort remains to be seen. This week's gathering follows a slew of national advertisements and television appearances by executives earlier this year trumpeting Wal-Mart as a good place to work and a benefactor to local economies where it has stores.

As the largest player in the world in an industry expected to continue producing jobs, many are looking to the company Sam Walton founded to set a higher standard for others to follow. As Scott said when the company was trying to organize the media event, only to trigger reactions from its opponents, "There's nothing we do anymore that's done in a small way. Everything gets somewhat complicated."