Wal-Mart under attack: But should it fight back?

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In the progressive city of Vancouver, stymieing the growth of the world's largest retailer has become a pastime of sorts for the politically active.

Unlike, say Texas or Kansas, where Wal-Mart can choose its next cornfield with impunity, the fight has been ugly. Despite years of opposition, Wal-Mart has yet to give up, going as far as hiring a sustainable development architect to design a "green" Wal-Mart with windmills and underground wells.

Depending on one's particular perch, this site fight-one of many contentious community battles Wal-Mart faces-either illustrates the retailer's softer side and growing willingness to compromise or illustrates the raw greed of a multi-billion dollar corporation eager to expand and grow at any cost.

Indeed, the behemoth's unflinching business model is based on not compromising-not with suppliers hammered for cost-cuts year over year and not with organized labor, where a store will be closed before a deal with a union struck. In its marketing, advertising and public relations, Wal-Mart has historically sought its redemption via America's pocketbook, positioning itself as champion of the cash-crunched shopper.

Wal-Mart believes, unwaveringly, that its low-prices and role as a huge employer make it a positive force. During a gathering earlier this month with reporters at a hotel near its Bentonville, Ark., headquarters, CEO Lee Scott pointed to negative editorial headlines and then offered, without a hint of irony, the alternative headline: "Wal-Mart is Great for America."


This intractable contradiction between the way Wal-Mart views its actions and the way the opposition does has culminated in what might be the most coordinated PR effort ever against a retailer-a coalition of 50 groups planning everything from print ads, videos and books (see sidebar). This increasingly heated battle raises the question: Is it time for Wal-Mart to compromise?

"We are at that turning point right now and clearly, Wal-Mart feels besieged," said James Brock, an economist and business historian at Miami University in Oxford, Ohio, and author of The Bigness Complex, which examines the problems of excessive organizational size and power in America. "There are periods within corporate history when citizens ask, `Is this really good for America?"'

Unique among its peers for the disdain it can engender, every Wal-Mart action seems to elicit a reaction. For every good thing-last week's campaign, for instance, promoting Acres for America to preserve one acre of land for each acre of Wal-Mart's footprint-the opposition has ample ammunition to criticize the retailer's purported good intentions, as the Sierra Club quickly did, labeling it "greenwashing." Sure, Wal-Mart compromised in Vancouver, but what about the Wal-Mart built atop an historic Native American burial ground, the opposition can retort back.

As a backdrop to the ceaseless headlines, there is the constant buzz created by Wal-Mart's well-funded PR department, on overdrive since the January launch of a corporate image campaign, "Wal-Mart is Working for Everyone," a series of TV spots, print and radio ads touting the retailer's work environment, created by agencies GSD&M, Austin, Texas, and Bernstein-Rein, Kansas City, Mo. Hill & Knowlton managed the public relations strategy.

"We are trying to do a better job framing this debate," said Sarah Clark, senior director-corporate communications at Wal-Mart. "We want the company to stand up for itself and defend itself."

In the view of some crisis communications experts, although the campaign might have relieved some frustration in Bentonville, it has stirred up more critics than it has silenced. "When a company, and in this case Wal-Mart, takes a position that says `We are terrific,' it tends to call attention to itself and attract people who want to test the proposition," said Stephen Greyser of the Harvard Business School, an expert on corporation reputations and crisis communications. Mr. Greyser said the campaign inadvertently brings attention to the retailer's recent public relations gaffes: Closing a store in Canada instead of allowing workers to unionize and the high-profile settlement of a discrimination suit raised by former female workers.

Jim Jordan, a Democratic consultant who helped launch the Center for Community and Corporate Ethics that is serving as an organizing hub for groups critical of Wal-Mart, labels Wal-Mart's PR blitz against the opposition a classic case of Catch-22. "It is the cult-like mentality of its executives, and they don't realize it's incredibly unbecoming for them to say something like Wal-Mart is great for America and that this kind of rhetoric just reinforces the growing negative images of the company."

But relentless headline-grabbing by opposition groups demanded a response from Wal-Mart, according to Bill Keegan, exec VP-director of the crisis and issues-management practice of independent PR firm Edelman. "This was a necessity, it was either that or continue to be the punching bag."


Pat Riley, managing director, specializing in crisis communications at Burson-Marsteller, New York, said Wal-Mart has taken solid steps to communicate its position and the view of the opposition needs to be put into context. "You don't see many protesting customers at Wal-Mart. And count how many people went to shop at Wal-Mart today, even if people come out of the woodwork, how many people will Wal-Mart serve today? You have to put things in context."

And in context, we might live in an era where corporate responsibility is closely watched, but we also live in an era of heightened consumer skepticism. Throughout the history of corporate America, ample case studies can be found, from Nike to Chiquita, of a company changing its practices in response to pressures from activists before a brand is tarnished irrevocably.

But unlike Nike or Chiquita, Wal-Mart's brand image begins and ends around its everyday low price positioning. Consumers also harbor a love/hate relationship with the ubiquitous retailer: On one hand, they are troubled by some of its business practices, but ironically, it is these very uncompromising business practices that create a level of trust the retailer is tough enough to get the best price.

"As a consumer, you love Wal-Mart," said James Womack, president of the Lean Enterprise Institute, based in Boston, who is working on a book about Lean Consumption, an adoption of the lean manufacturing philosophy that began at Toyota and is now spreading among retailers. "There's really no resolution to the contradiction that pricing is about you and all these other considerations are about society."

In surveys, consumers always answer yes to questions as to whether companies should be green or socially conscious or focused on serving U.S.-based manufacturers. But, said Mr. Womack: "When you ask where they shop, it's generally at the low-cost retailer."

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