ANALYSIS Wal-Mart's Media Summit: Wal-Mart Must Target More Than Press to Repair Image
PR Week - April 18 2005
By John N. Frank

In an attempt to fix its negative profile, Wal-Mart is now courting the media. But will the unions and groups attacking the retailer buy into this strategy?

Wal-Mart's first-ever media summit, held April 5 to 6, was its communications coming-out party. The giant retailer showed itself to the world through the 53 print journalists it gathered near its Bentonville, AR, headquarters.

The question now is whether the world - including community organizations and labor unions that have long opposed Wal-Mart - will accept the company's view of itself. Those who have worked on communications issues for retailers and unions doubt that simply making its case to the media will end Wal-Mart's image problems.

What will be needed is sustained communications with all key stakeholder groups and a willingness to change business practices in order to find some common ground with groups that are key to the company's continued business health.

Wal-Mart already has shown some willingness to reach out. CEO Lee Scott, for example, told reporters at the media days that he's willing to talk to NGOs. And Wal-Mart executives met during the event with a California group concerned about how Wal-Mart will develop a site in its community. But more will be needed.

"Their problems are going to get worse, not better," says Danny Feingold, communications director for the Coalition for a Better Inglewood, the California group that sent a delegation to the media days. "The media is now looking for Wal-Mart stories. Wal-Mart is one of the hottest stories in the country."

And those stories aren't hard to find. The company is in the midst of a major class-action suit alleging discrimination against female employees. And even more embarrassing, The Wall Street Journal reported immediately after the summit's conclusion that a former senior executive previously charged with using company funds for personal purposes might actually have been using them to buy information about anti-Wal-Mart union activities. Thus far, Wal-Mart has denied the accusations.

Unions' offensive

But perhaps what Wal-Mart has most to fear are the negative PR efforts being led by disgruntled unions and advocacy groups across the US.

"We're working essentially to reform the business practices of this company," says Tracy Sefl, communications adviser to the Center for Community and Corporate Ethics. The Washington, DC-based center was established recently with the backing of unions and other groups with the express purpose of getting Wal-Mart to change how it operates, Sefl explains. "We believe by fighting this battle on multiple fronts there's a greater chance of success. We'll be doing this swiftly and aggressively."

The United Food and Commercial Workers union (UFCW) has also announced a new anti-Wal-Mart campaign dubbed "Wake-up Wal-Mart."

"Traditional organizing campaigns are too limited for a greedy, global company that is willing to cut its nose to spite its face rather than do the right thing and stand up for people," said Paul Blank, who is coordinating the UFCW campaign, in announcing the effort.

"Those unions won't go away, no matter how many public statements Wal-Mart makes," says Eric Yaverbaum, president of Jericho Communications in New York. "At day's end, it's not what Wal-Mart says that will matter, it's what it does. You don't say, 'We're good'; you show you're good."

Wal-Mart's image problems won't abate until it can make some peace with unions and demonstrate that it is a good place to work, Yaverbaum says.

But that's what other people think. In two days of speeches and exchanges with reporters, senior management made clear what it thinks about how the press portrays Wal-Mart.

"I think I read a headline [like] 'Wal-Mart Prices Come at Too High a Cost" almost every day," CEO Lee Scott said to the media gathering. "That and 'Is Wal-Mart Good for America?' I'd suggest that a better headline may be 'Wal-Mart is Great for America.'" Wal-Mart helps the country by offering lower prices, he says, saving consumers $100 billion a year. It also pays wages and benefits that are competitive in the retail sector, he adds.

"Some well-meaning critics contend that Wal-Mart should be setting the pace for wages and benefits for the entire economy, just as a unionized General Motors was said to have done in the post-war period," Scott said. "The fact is that retailing doesn't perform that same function in the economy as GM does or did."

But few think that argument will sway unions or community groups. "Invest in communities and employees, not PR," Feingold says in response. "You do not have an image problem, you have a reality problem."

Wal-Mart's response

Scott left no doubt about how Wal-Mart views unions. "Union leadership, which is watching membership and dues shrink in just about every industry, has declared war against Wal-Mart in hopes of either unionizing our associates or making us go away," Scott said. That sort of belligerent attitude toward unions won't help Wal-Mart change its image, say observers.

"Why don't they look at unions from a different angle?" asks Oliver Schmidt, managing partner of C4CS, a crisis communications specialist in Pittsburgh. Wal-Mart has managed to keep unions out even as it's grown to be the world's largest retailer. But that doesn't mean it can continue to ignore unions, particularly as it moves more aggressively into union strongholds in the Midwest and Northeast. Omitting such a major stakeholder group from its communications efforts will only serve to fuel increased union anti-Wal-Mart efforts, Schmidt says.

Edd Snyder, executive director, corporate communications, at GM, has extensive labor relations experience. Commenting on how best to deal with unions in general, Snyder says, "You must find some common ground. The idea is to bridge [differences] and talk and be in constant communication with the other organization. Find common threads."

The US auto industry took decades to achieve a relative state of calm with its unions, but the speed of news and communications in general has changed so much in recent years that "any union and any company can develop a common ground much more quickly now than in the olden days," Snyder contends.

Wal-Mart addressed its labor issues by talking about contented workers. Scott referred in his speech to one unnamed employee who was able to deal with $676,500 in medical expenses by paying only $2,100 in out-of-pocket expenses, thanks to Wal-Mart's health insurance plan.

Mona Williams, VP, communications, says Wal-Mart will seek to "engage" more employees to tell their stories, but wouldn't elaborate on what that will mean. A while ago, it created a website, Walmartfacts.com, on which it is posting employee comments and vignettes.

It's also unclear how Wal-Mart will address the question of its social responsibility in the communities where it operates. The Inglewood, CA, group is asking Wal-Mart to sign a community benefits agreement that will guarantee certain wages, health insurance, and other benefits for workers should it build a store there. It's asked other developers to do the same.

"Communities like Inglewood expect to have a say about what [Wal-Mart does] in our community," says Daniel Tabor, a member of the coalition and a former Inglewood city councilman. Wal-Mart angered Inglewood residents last year by trying to get a new store approved through a voter referendum rather than seeking city approval. Voters rejected the Wal-Mart measure.

Williams says the company will need time before discussing its communications strategy on the social responsibility front.

That's understandable given what a major change of strategy the recent media conference represents for Wal-Mart.

Wal-Mart's success as a retailer demonstrates it should be able to succeed as a communicator, as well, says Fred Marx, a partner with extensive retail experience at Marx Layne, a PR firm in Farmington Hills, MI. "[Wal-Mart has] an uncanny ability to figure out what it's going to take" to be successful, Marx notes.

Others aren't so sure, but media, unions, and community groups are all paying attention now to find out.