In the past year Wal-Mart has been banged around by activists pushing the company to improve wages and benefits and to assist the communities in which it does business. Finally, the company has been forced to alter its practices because of bad PR. The word to emphasize here is forced.
State legislatures forced Wal-Mart to offer increased benefits to workers by passing laws requiring them to do so. A widely publicized Wal-Mart bashing movie hit the theatres, forcing Wal-Mart to answer critics in the media. All this negative attention prompted Edelman set up a “war room” in Bentonville, Arkansas to aggressively combat negative Wal-Mart news. The NY Times reported that Edelman fed bloggers pre-packaged positive comments that some dutifully disseminated in their blogs.
All this activity was in the wrapping of a battle. Wal-Mart was beleaguered, on war footing. The CEO, the General of the largest retailer in the world, recently decided that he can’t deal with it and he is taking May off for vacation – see Associated Press story. Why is that so shocking? Because Wal-Mart is the largest private employer in the U.S., Canada and Mexico, with 6,500 stores in 16 countries and nearly $316 billion in annual sales. How many of Wal-Mart’s 1.3 million employees gets to take a month off?
Now it seems like Wal-Mart is using its brain as well as its brawn. The company realized it needed to make deep, systemic changes in how it operates in order to effect a more positive image. That in itself should not require a constant public battering followed by a revelation but apparently it does.
The 4/5/06 NYT headline was brilliant: Wal-Mart Announces Plan to Help Its Rivals The story: Wal-Mart, under increasing assault by critics, announced a wide-ranging effort to support small businesses near its new urban stores, including the smaller retailers with which it competes. Wal-Mart said it would offer those businesses financial grants, training on how to survive with the retailer … (Also see Wal-Mart Works to Polish Image – But Detractors Gear Up Too, 4/19/06 story in the Los Angeles Times ).
The real battle of Wal-Mart is fought in thousands of local communities where the retailer comes in and permanently and inextricably alters the economic as well as sociological landscape. It is a polarizing stance – you are either for or against Wal-Mart. Now, Wal-Mart is shifting from corporate warrior to mediator, from polarizer to good neighbor, respectful of the traditions and history of the communities where it does business. This is a good example of (negative) PR forcing a company to change its behavior. Follow this story. The result should be a better image of Wal-Mart as a respectful neighbor. The big question, of course, is how will this shift in behavior and better treatment of workers effect the bottomline, and in turn Wal-Mart’s share price?