Wal-Mart makes some gains by polishing image

The Baltimore Sun

Two years ago, Wal-Mart began a counterassault on its critics, launching a re-imaging campaign to thwart those who had successfully painted an unsavory picture of the company as an employer who didn't treat or pay its workers well, among other things.

The world's largest retailer embarked on a public relations blitz, introducing initiatives to portray it as more environmentally friendly, more in tune with the communities where it was building and as a better employer to its workers.

The strategy has succeeded in some areas, but the company remains a target of criticism on other fronts. And as Wal-Mart still struggles to prove to others that it has implemented changes that really matter, efforts to improve its image have taken on added significance during recent months as the company loses market share to competitors.

Wal-Mart reported its weakest sales growth in almost 30 years for 2006, something that analysts and consultants said is at least partly attributed to the drumbeat of criticism about its corporate image. "For too long a period they didn't do a great deal with image competition, and as a result they have had some serious imaging problems," said Eugene Fram, a professor at the University of Rochester. "They've had to take a different tactic than they did five or 10 years ago. They have to prove to their critics that they are working at it and that they are changing."

The company's imaging efforts have worked in some areas. Even Wal-Mart's harshest critics say the company has made strides on the environmental side with initiatives that include reducing waste and making its stores more energy-efficient. And it has worked more closely to get community input when opening new stores, including one of its newest in Landover Hills in Prince George's County.

But labor groups - especially those that have formed for the sole purpose of criticizing the company - argue that it has done little to improve working conditions for its employees.

That's despite a plan to increase the frequency of bonuses to Wal-Mart workers and opening up its health care system to more employees.

There was a time when Wal-Mart didn't care what its opponents thought. For years it practiced a strategy of ignoring its critics and not speaking to the press.

But then the company's predicament began to change.

Labor unions organized a savvy campaign to point out the company's flaws, accusing it of paying its workers low salaries and benefits while bullying its way into communities and putting mom-and-pop stores out of business.

"We now take every opportunity to counter our union-funded critics and their campaign of misfortune," said Steven Restivo, a Wal-Mart spokesman who adds that the criticism has not affected the company's reputation and that consumers still shop at its stores for its low pricing. "Put simply, we're starting to educate the general public about all the good things we do in the community every day."

Wal-Mart Chief Executive Officer H. Lee Scott Jr. wrote a letter Friday to shareholders denying that the company had authorized surveillance on some investors, disputing allegations in the Wall Street Journal by an ex-employee. The worker, who said he snooped on shareholders and others, recanted portions of those statements in sworn testimony, Wal-Mart said.

Analysts point out that Wal-Mart's focus on image has also come at a time when its sales haven't been as strong. It was easier for the retailer to ignore criticism when it wasn't having an impact on business, they said.

The company ended 2006 with a sales gain of 2.1 percent, the lowest since 1980, the year it began reporting same-store sales increases.

Wal-Mart built its business in rural communities desperate for better shopping choices. As it moved into more competitive urban areas, it started facing more opposition. Many people didn't want the retailer in their neighborhoods.

To help quell that criticism, Wal-Mart executives are working more closely with communities before breaking ground on new stores. They worked with community groups in Landover Hills after residents there expressed concern about how a new store would affect the area.

The store opened last month with a facade different from its typical format. The store doesn't sell alcohol or guns, and it has a large ethnic food section to serve the area's demographics, including a growing Latino population. And unlike some other stores, this Wal-Mart is not open 24 hours.

Restivo said Wal-Mart would include similar elements that reflect the community when it expands its "supercenter" concept to stores in Hunt Valley, Arbutus and Glen Burnie later this year. Those retail centers include traditional Wal-Mart offerings as well as full supermarkets, which are typically are two to three times the size of normal groceries.

But some community leaders in Landover Hills remain concerned about the wages the company pays. There were even protests in front of the new store.

The Rev. Terence D. Collins, executive director of the Community Ministry of Prince George's County, said that he likes many of the concessions Wal-Mart made to the community but that he, too, would like the company to consider its labor practices.

"I don't want to seem as if they didn't do anything, but there is more they could have done," he said.

Perhaps Wal-Mart has made its biggest strides in plans to make the company more environmentally friendly. Its goal is to have zero waste at its stores by 2025 and to reduce the greenhouse gas emissions it produces by 20 percent in the next eight years. The retailer has also pledged to design a store that will use 30 percent less energy and produce 30 percent fewer greenhouse gas emissions than current stores.

"The fact that Wal-Mart is now addressing these issues is significant because of their reach," said Suzanne Apple, vice president for business and industry at the World Wildlife Fund, which has worked with the retailer regarding sustainable fishing practices for its products. "It moves other companies along to address these issues."

Wal-Mart has also announced initiatives in other areas of the business. Last month, it said it would give out bonuses to employees quarterly rather than yearly. The company doled out more than a half-billion dollars in bonuses to Wal-Mart and Sam's Club hourly workers at the time of the announcement.

And last month, the company said it was expanding an initiative across the country to help its employees become healthier by offering wellness and other seminars. The move is meant to help workers to save money by recycling and to lower health care costs by quitting smoking, among other things.

Labor groups still accuse the retailer of making money at the expense of its employees, focusing on low wages and poor health benefits.

"Their employee health care plans still stinks," said Nu Wexler, a spokesman for Wal-Mart Watch, a labor group critical of the retailer. "They have been tinkering at the margins making some changes, but they're still far behind other retailers, at least in the name of labor practices."

Several retail analysts and academics argue that Wal-Mart will always have critics.

"I think it takes time to change corporate images," said Ken Bernhardt, professor of marketing at Georgia State University. "And if they sincerely do invest in their communities, they will in fact over time get the recognition they deserve for doing that. But it won't happen overnight."

andrea.walker@baltsun.com

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