Wal-Mart Case Study

Wall Mart Stores Inc:Wall Mart Stores Inc:Case 22Case 22

Presented By:Presented By:

Md. Soheb Ahmed (EMBA 8Md. Soheb Ahmed (EMBA 8thth Batch #04) Batch #04)

IntroductionIntroduction

This case discusses:This case discusses:

Introduction to Wal-MartIntroduction to Wal-Mart

History of Wal-MartHistory of Wal-Mart

Corporate StrategyCorporate Strategy

The Criticism and the ChallengesThe Criticism and the Challenges

Wal-Mart’s PR strategyWal-Mart’s PR strategy

The Road ahead The Road ahead

Wal-Mart – An IntroductionWal-Mart – An Introduction

American public corporation that runs a chain of large, American public corporation that runs a chain of large,

discount department stores discount department stores

World's largest public corporation by revenue World's largest public corporation by revenue

Largest private employer in the world Largest private employer in the world

Fourth largest utility or commercial employerFourth largest utility or commercial employer

Largest grocery retailer in the United States ( 20% )Largest grocery retailer in the United States ( 20% )

Largest toy seller in the United States ( 22% )Largest toy seller in the United States ( 22% )

What is Wal-Mart

• World’s biggest retailer• Sells Grocery & General Merchandise• One Hour Photo Studio• Pharmacy & Optical Centre• Tire & Lube Express• Gasoline station• Fast Food Outlet• Garden Centre • Pet Shop• Also feature hair and nail salons, a video rental store, a

family fun center, a branch of a local bank

Founded Founded - Arkansas, USA(1962) by Sam Walton- Arkansas, USA(1962) by Sam Walton

Headquarters Headquarters - Bentonville, Arkansas, U.S.A.- Bentonville, Arkansas, U.S.A.

Products Products - Discount Stores, Super centers, - Discount Stores, Super centers,

Neighborhood MarketsNeighborhood Markets

Revenue Revenue - US$ 374.5 billion (2007)- US$ 374.5 billion (2007)

Net income Net income - US$ 12.7 billion (2008)- US$ 12.7 billion (2008)

Total assets Total assets - US$ 163.5 billion (2008)- US$ 163.5 billion (2008)

Total equity Total equity - US$ 64.6 billion (2008)- US$ 64.6 billion (2008)

Slogans Slogans - The Lowest Prices. Guaranteed!- The Lowest Prices. Guaranteed!

- Save Money, Live Better- Save Money, Live Better

- WE SELL FOR LESS every day!- WE SELL FOR LESS every day!

Wal-Mart at a GlanceWal-Mart at a Glance

List of Assets (2008)List of Assets (2008)

In U.S.A. -In U.S.A. -

Wal-Mart Discount Stores are 971Wal-Mart Discount Stores are 971

Wal-Mart Super centers are 2,447Wal-Mart Super centers are 2,447

Wal-Mart Neighborhood Markets are 132Wal-Mart Neighborhood Markets are 132

Sam’s Clubs are 591 Sam’s Clubs are 591

Internationally -Internationally -

Stores outside U.S.A are 3121Stores outside U.S.A are 3121

Wal-Mart at a GlanceWal-Mart at a Glance (contd..) (contd..)

History of Wal-MartHistory of Wal-Mart

Sam WaltonSam Walton - - The man behind it allThe man behind it all

Born in a farmer’s family in Kingfisher,Born in a farmer’s family in Kingfisher,

Oklahoma on March 29, 1918Oklahoma on March 29, 1918

Graduated from the University of Missouri Graduated from the University of Missouri

in 1940.in 1940.

First job – at JC Penney at $ 75 a monthFirst job – at JC Penney at $ 75 a month

Gave up job and opened his first store Gave up job and opened his first store

in Arkansas in 1950- Walton’s 5 & dimein Arkansas in 1950- Walton’s 5 & dime

11 stores by 1962. Opened 111 stores by 1962. Opened 1stst Wal-Mart Wal-Mart

At the opening, Walton stated, At the opening, Walton stated,

""Each Wal-Mart store should reflect the values Each Wal-Mart store should reflect the values

of its customers and support the vision they hold for their communityof its customers and support the vision they hold for their community ."."

By 1969, Walton had established 18 Wal-Mart stores, By 1969, Walton had established 18 Wal-Mart stores,

reporting an annual sale of $44 millionreporting an annual sale of $44 million

Focus on overseas expansion in 90’sFocus on overseas expansion in 90’s

In 1998, Walton was included in Time Magazine's list of 100 In 1998, Walton was included in Time Magazine's list of 100

most influential people of the 20th Centurymost influential people of the 20th Century

In 2000, H. Lee Scott became President and CEO, and Wal-In 2000, H. Lee Scott became President and CEO, and Wal-

Mart's sales increased to $165 billionMart's sales increased to $165 billion

Sales increased from US $11.6 million in 1967 to US $315.3 Sales increased from US $11.6 million in 1967 to US $315.3

billion in 2007billion in 2007

History of Wal-MartHistory of Wal-Mart (contd..) (contd..)

The Corporate StrategyThe Corporate Strategy

Sam Walton gave 3 policy goals to define Wal-Mart's Sam Walton gave 3 policy goals to define Wal-Mart's

business –business –

# Respect for the individual # Respect for the individual

# Service to customers# Service to customers

# Strive for excellence# Strive for excellence

Walton’s practices-Walton’s practices-

# Consistently stock the shelves with a wide range of goods # Consistently stock the shelves with a wide range of goods

at low pricesat low prices

# Keep the store open later than most other stores, especially # Keep the store open later than most other stores, especially

during the Christmas seasonduring the Christmas season

# # Discount merchandising-Discount merchandising-

- Buy wholesale goods from the lowest priced supplier- Buy wholesale goods from the lowest priced supplier

- Pass on the savings to the customer- Pass on the savings to the customer

Strategic GoalsStrategic Goals

Three successful elements of strategy formulation and a fourth Three successful elements of strategy formulation and a fourth

element, where the strategy is implemented successfullyelement, where the strategy is implemented successfully

1.1. Dominate the Retail Market wherever Wal-Mart has a presence Dominate the Retail Market wherever Wal-Mart has a presence

2.2. Growth by expansion in the US and Internationally Growth by expansion in the US and Internationally

3.3. Create widespread name recognition and customer satisfaction Create widespread name recognition and customer satisfaction

with the Wal-Mart brand, and associate the retailer with the with the Wal-Mart brand, and associate the retailer with the

reputation of offering the best prices reputation of offering the best prices

4.4. Branching out into new sectors of retailing such as pharmacies, Branching out into new sectors of retailing such as pharmacies,

automotive repair, and grocery salesautomotive repair, and grocery sales

The Corporate StrategyThe Corporate Strategy (contd..) (contd..)


Competitive StrategyCompetitive Strategy--

Dominate every sector where it doesDominate every sector where it does

businessbusiness

Measure success in terms of sales and Measure success in terms of sales and

dominance over competitors dominance over competitors

(doesn’t mind putting some of them out of business)(doesn’t mind putting some of them out of business)

Sell goods at low process, outsell competitors, and to expand a Sell goods at low process, outsell competitors, and to expand a

typical Wal-Mart model is to build more stores, make existing stores typical Wal-Mart model is to build more stores, make existing stores

bigger, and to expand into other sectors of retailbigger, and to expand into other sectors of retail

Company Mission-Company Mission- As Wal-Mart continues to grow into new areas and new As Wal-Mart continues to grow into new areas and new

mediums, our success will always be attributed to our culture. Whether you mediums, our success will always be attributed to our culture. Whether you

walk into a Wal-Mart store in your hometown or one across the country walk into a Wal-Mart store in your hometown or one across the country

while you're on vacation, you can always be assured you're getting low while you're on vacation, you can always be assured you're getting low

prices and that genuine customer service you've come to expect from us. prices and that genuine customer service you've come to expect from us.

You'll feel at home in any department of any store...that's our cultureYou'll feel at home in any department of any store...that's our culture

Business Model & strategiesBusiness Model & strategies

Traditional componentsTraditional componentsLow cost-leadership strategy; Driving costs out of its Low cost-leadership strategy; Driving costs out of its supply chain; constantly implementing ways to operate supply chain; constantly implementing ways to operate more cost-efficientlymore cost-efficiently

Offering customers worldwide a broad range of Offering customers worldwide a broad range of merchandise at appealingly low pricemerchandise at appealingly low price

Opening stores in more and more places to serve an Opening stores in more and more places to serve an ever growing customer baseever growing customer base

Newly adopted componentsNewly adopted components

Commitment to protect environment and practice of Commitment to protect environment and practice of green business activitiesgreen business activities

Multiple store formats: Discount stores, Supercentres, Multiple store formats: Discount stores, Supercentres, Sam’s Club, Neighborhood marketsSam’s Club, Neighborhood markets

Wide product selection and a mix of name brand and Wide product selection and a mix of name brand and private -label merchandiseprivate -label merchandise


Practices followedPractices followed--

Aggressive hospitalityAggressive hospitality

# Using door-greeters# Using door-greeters

# Patriotic themes and displays in stores# Patriotic themes and displays in stores

# Compels its staff to engage in morning cheers# Compels its staff to engage in morning cheers

Affiliations with charitiesAffiliations with charities

The United Way and Children's Miracle NetworkThe United Way and Children's Miracle Network

Sundown RuleSundown Rule

All customer and supplier requests or queries must be All customer and supplier requests or queries must be

reasonably answered within reasonably answered within 24 hrs24 hrs by all employees by all employees

Ten Foot RuleTen Foot Rule

Store employees must greet, smile, and attend to a customer in Store employees must greet, smile, and attend to a customer in

a store when within 10 feet of thema store when within 10 feet of them

Relationship with suppliersRelationship with suppliers

Scale of operation helps to bargain with suppliers to get Scale of operation helps to bargain with suppliers to get the bottom pricesthe bottom pricesProcurement personnel spend a lot of time with the Procurement personnel spend a lot of time with the vendors to understand the their cost structures and to vendors to understand the their cost structures and to get the minimum price in a win-win situationget the minimum price in a win-win situationEncouraged its vendors to contribute ideas about how to Encouraged its vendors to contribute ideas about how to make its store more attractive insofar as their products make its store more attractive insofar as their products were concernedwere concernedVendors were encouraged to voice any problems in their Vendors were encouraged to voice any problems in their relationship with Walmart and to become involved in in relationship with Walmart and to become involved in in Walmart’s future planWalmart’s future plan

Standards for SuppliersStandards for Suppliers

Walmart has certain standard for suppliers in relation to Walmart has certain standard for suppliers in relation to wage and working conditionwage and working condition

Walmart has teams for direct control of factory audits Walmart has teams for direct control of factory audits and for monitoring factory compliancesand for monitoring factory compliances

Conducts training for foreign supplies to ensure Conducts training for foreign supplies to ensure compliance and standardscompliance and standards

Supply chain Management: Use of Supply chain Management: Use of

Cutting edge TechnologyCutting edge Technology Probing, testing and then deploying the newest equipment, retailing Probing, testing and then deploying the newest equipment, retailing techniques, computer software programes etc to increased productivity and techniques, computer software programes etc to increased productivity and drive costs downdrive costs downthe company has sophisticated Information Technology and online the company has sophisticated Information Technology and online capability for real-time access to detailed figures on most operationscapability for real-time access to detailed figures on most operationsThe company can track down the movements of goods through its entire The company can track down the movements of goods through its entire value chainvalue chainWalmart has data sharing systems and Retail Link System with 30,000 Walmart has data sharing systems and Retail Link System with 30,000 suppliers which allow them to avoid both stock outs and carrying access suppliers which allow them to avoid both stock outs and carrying access inventories, identifying slow-selling items to reduce costsinventories, identifying slow-selling items to reduce costsWalmart has introduced Electronic Product Code (EPC) and Radio-Walmart has introduced Electronic Product Code (EPC) and Radio-frequency Identification (RFID) systemsfrequency Identification (RFID) systems. . With the help of EPC and RFID, With the help of EPC and RFID, the company can track movement of any items in real timethe company can track movement of any items in real timeThe company has more than 88,000 associates engaged in logistics and The company has more than 88,000 associates engaged in logistics and information systems activities for effective and cost-supply-chain information systems activities for effective and cost-supply-chain managementmanagement

SWOT AnalysisSWOT AnalysisStrengthStrength

- Efficient supply chain management- Efficient supply chain management

- Targeted marketing- Targeted marketing

- Service innovation and technology- Service innovation and technology

- Growth through adaptability.- Growth through adaptability.

- E-tail’s continued development- E-tail’s continued development

Least cost of packaging Least cost of packaging

- strong penetration strategies- strong penetration strategies

Infrastructure (financial strength)Infrastructure (financial strength)

Weakness - Poor public image

- Late entrant in international market.

- Unable to adapt to different countries

- Ununionised & Strict labor laws

- Were unable to handle media

- High law suits against the company.

- Low penetration in European union

Opportunity- Many countries have Unorganized

retail

- Globalization (diminishing trade

barriers)

- Cold Storage market

- Increase in consumer purchasing

- Power E-business

Threats- Terrorism

- Competitors

- Negative publicity

- International laws against anti dumping

- Campaign against anti competitive practices

Strength in Supply ChainStrength in Supply Chain

Efficient consumer responseEfficient consumer response

Vendor-Managed InventoryVendor-Managed Inventory

Enterprise resource planningEnterprise resource planning

Customer relationship managementCustomer relationship management

Sales force automationSales force automation

The Cookie begins to crumbleThe Cookie begins to crumble

Criticism of Wal-MartCriticism of Wal-Mart

Local communitiesLocal communities

Store openings-Store openings-

→ At sites of archaeological relevance in MexicoAt sites of archaeological relevance in Mexico

→ At American Indian burial grounds and a Civil War battle site in TennesseeAt American Indian burial grounds and a Civil War battle site in Tennessee

Economic Impact-Economic Impact-

→ In a paper published in In a paper published in Farm Farm

FoundationFoundation in 1997, Kenneth Stone, in 1997, Kenneth Stone,

Professor of Economics at Iowa State Professor of Economics at Iowa State

University found that some small University found that some small

towns can lose almost half of their towns can lose almost half of their

retail trade within ten years of a retail trade within ten years of a

Wal-Mart store openingWal-Mart store opening

→ Traditional Traditional Mom’s & Pop’sMom’s & Pop’s

forced out of businessforced out of business

Pricing and Competition IssuesPricing and Competition Issues

→ Sued by many competitors for intentional low pricing Sued by many competitors for intentional low pricing

(intentionally selling a product at low cost in order to drive (intentionally selling a product at low cost in order to drive

competitors out of the market)competitors out of the market)

→ Investigated by the Federal Competition Commission for Investigated by the Federal Competition Commission for

““monopolistic practicesmonopolistic practices””

→ Retailer pressured suppliers to sell goods below cost or at Retailer pressured suppliers to sell goods below cost or at

prices significantly less than those available to other storesprices significantly less than those available to other stores

→ in 2003, the German High Court ruled that Wal-Mart's low cost in 2003, the German High Court ruled that Wal-Mart's low cost

pricing strategy "undermined competition" and ordered Wal-pricing strategy "undermined competition" and ordered Wal-

Mart to raise it’s pricesMart to raise it’s prices

→ Wal-Mart sells all its stores in GermanyWal-Mart sells all its stores in Germany


Employee and labor relations:Employee and labor relations:

→ Wal-Mart Associates don't earn enough to support a family Wal-Mart Associates don't earn enough to support a family

Sam Walton - Sam Walton - "I pay low wages. I can take advantage of that. We're going "I pay low wages. I can take advantage of that. We're going

to be successful, but the basis is a very low-wage, low-benefit model of to be successful, but the basis is a very low-wage, low-benefit model of

employment.“employment.“

→ Wal-Mart managers are judged, in part, based on their Wal-Mart managers are judged, in part, based on their

ability to control payroll costsability to control payroll costs

→ Wal-Mart's 2006 Annual Report reported that the company Wal-Mart's 2006 Annual Report reported that the company

faced 57 wage and hour lawsuitsfaced 57 wage and hour lawsuits

→ 1.6 million women workers filed a lawsuit of gender 1.6 million women workers filed a lawsuit of gender

discrimination in 2004 - the largest nationwide civil lawsuit discrimination in 2004 - the largest nationwide civil lawsuit

against a private company ever.against a private company ever.


Working conditions:Working conditions:

→ In 2000, Wal-Mart paid $50 million to settle a class-action suit In 2000, Wal-Mart paid $50 million to settle a class-action suit

that asserted that 69,000 current and former Wal-Mart that asserted that 69,000 current and former Wal-Mart

employees in Colorado had been forced to work off-the-clockemployees in Colorado had been forced to work off-the-clock

→ In December 2005, a California court ordered Wal-Mart to pay In December 2005, a California court ordered Wal-Mart to pay

$172 million in damages for failing to provide meal breaks to $172 million in damages for failing to provide meal breaks to

nearly 116,000 hourly workersnearly 116,000 hourly workers

→ On October 16, 2006, 200 workers at Wal-Mart Super Center, On October 16, 2006, 200 workers at Wal-Mart Super Center,

Florida, walked out in protest against new store policies and Florida, walked out in protest against new store policies and

rallied outside the store, shouting rallied outside the store, shouting "We want justice“"We want justice“..

→ A report by Congressman Miller alleged that in ten percent of A report by Congressman Miller alleged that in ten percent of

Wal-Mart's stores, night-time employees were locked inside, Wal-Mart's stores, night-time employees were locked inside,

holding them prisoner.holding them prisoner.



Child labor violations and Illegal workers:Child labor violations and Illegal workers:

→ Internal Wal-Mart audit conducted in July 2000-Internal Wal-Mart audit conducted in July 2000-

# 1,371 instances of minors working too late, during school hours, or for too # 1,371 instances of minors working too late, during school hours, or for too

many hours in a daymany hours in a day

→ Wal-Mart agreed to pay $135,540 to settle child labor violation charges in Wal-Mart agreed to pay $135,540 to settle child labor violation charges in

January 2005January 2005

→ Wal-Mart has also been fined $205,650 for 1,436 violations of child labor Wal-Mart has also been fined $205,650 for 1,436 violations of child labor

laws in Maine for the period 1995 to 1998laws in Maine for the period 1995 to 1998

Health Insurance: Health Insurance:

→ Wal-Mart reported in January 2006 that its health insurance only covers Wal-Mart reported in January 2006 that its health insurance only covers

43% of their employees. Wal-Mart had approximately 1.39 million US 43% of their employees. Wal-Mart had approximately 1.39 million US

employees that timeemployees that time

→ President and CEO Lee Scott in 2005- "President and CEO Lee Scott in 2005- "In some of our states, the public In some of our states, the public

program may actually be a better value - with relatively high income limits to program may actually be a better value - with relatively high income limits to

qualify, and low premiums."qualify, and low premiums."


Labor Union OppositionLabor Union Opposition

→ Efforts of UFCW (United Food and Efforts of UFCW (United Food and

Commercial Workers Union) to interact Commercial Workers Union) to interact

with workers, foiled each timewith workers, foiled each time

→ In 2000, a small meat cutting In 2000, a small meat cutting

department successfully department successfully

organized a union at a organized a union at a

Wal-Mart store in Texas. Wal-Mart Wal-Mart store in Texas. Wal-Mart

responded a week later by announcing the phase-out of its in-store responded a week later by announcing the phase-out of its in-store

meat cutting company-wide.meat cutting company-wide.

→ Wal-Mart has issued "Wal-Mart has issued "A Manager's Toolbox to Remaining A Manager's Toolbox to Remaining

Union FreeUnion Free““


TaxesTaxes

→ The estimated total amount of federal assistance for which The estimated total amount of federal assistance for which

Wal-Mart employees were eligible in 2004 was $2.5 billionWal-Mart employees were eligible in 2004 was $2.5 billion

→ One 200-employee Wal-Mart store may cost federal taxpayers One 200-employee Wal-Mart store may cost federal taxpayers

$420,750 per year. This cost comes from the following, on $420,750 per year. This cost comes from the following, on

average:average:


Sam Walton launched the “Sam Walton launched the “Buy AmericanBuy American” campaign in the ” campaign in the 1980s.Agreed to pay 5% more for products made in US.1980s.Agreed to pay 5% more for products made in US.

In December 1992, in an interview with NBC program In December 1992, in an interview with NBC program DatelineDateline, CEO David Glass on non-American labor and low , CEO David Glass on non-American labor and low wages and child labor-wages and child labor-”We are equally dependent on American ”We are equally dependent on American factories and ‘Buy American’ is still active”factories and ‘Buy American’ is still active”

Not satisfied, NBC showed “Not satisfied, NBC showed “Made in USAMade in USA” labels being hung ” labels being hung over merchandize bought from overseas in most of the Wal-over merchandize bought from overseas in most of the Wal-Mart stores.Mart stores.

Glass said-Glass said- “Its some sort of a mistake at store level, and we don’t “Its some sort of a mistake at store level, and we don’t buy from any vendor that uses child labor.”buy from any vendor that uses child labor.”

During the interview, Glass is shown videos of child labor During the interview, Glass is shown videos of child labor working in plants. What does Glass say??working in plants. What does Glass say??

“ “We take care that we rely least on child laborWe take care that we rely least on child labor””

The Wal-Mart ReactionThe Wal-Mart Reaction

“ “No CommentsNo Comments”, says Wal-Mart”, says Wal-MartFew weeks later, Glass returned for another interview, saying Few weeks later, Glass returned for another interview, saying he wasn’t prepared with the facts the last time.he wasn’t prepared with the facts the last time.

Fair enough, NBC says. Glass maintains there's no child labor Fair enough, NBC says. Glass maintains there's no child labor in Bangladesh stores.in Bangladesh stores.

NBC shows videos. Glass fumes, saying videos were NBC shows videos. Glass fumes, saying videos were doctored, and walks out.doctored, and walks out.

No more details revealed to the media.No more details revealed to the media.

Another interview….same storyAnother interview….same story

Interview with “Interview with “60 minutes60 minutes” (the most reputed news show in ” (the most reputed news show in the USA) in 1994. Wal-Mart charged with impairing growth of the USA) in 1994. Wal-Mart charged with impairing growth of small stores. Wal-Mart held its silence.small stores. Wal-Mart held its silence.

On launch of Supercenters in mid-1990s, local officials On launch of Supercenters in mid-1990s, local officials responded vaguely to media queries and directed them to responded vaguely to media queries and directed them to their annual reports.their annual reports.


Even in the situations when PR could’ve helped the company, Even in the situations when PR could’ve helped the company, the executives faltered.the executives faltered.

When Wal-Mart entered Canada in 1995, company officials When Wal-Mart entered Canada in 1995, company officials seemed very unsure and dubious during a press meeting.seemed very unsure and dubious during a press meeting.

Result - Newspapers carry out articles ridiculing the Result - Newspapers carry out articles ridiculing the company’s poor public relations-”company’s poor public relations-”Short of substanceShort of substance”, ”, ““CircumspectCircumspect”, ””, ”Executives skirt major questionsExecutives skirt major questions”.”.

The National Organization for Women demonstrated in front The National Organization for Women demonstrated in front of Wal-Mart stores, calling it “of Wal-Mart stores, calling it “Merchant of ShameMerchant of Shame”, distributed ”, distributed cards reading – cards reading – “Wal-Mart: Always Low Prices, But Who “Wal-Mart: Always Low Prices, But Who Pays?”Pays?”

Protests begin to mushroom from every corner. Wal-Mart still Protests begin to mushroom from every corner. Wal-Mart still holds its silence. holds its silence.

Not for long thoughNot for long though



For most of its 43 years, Wal-Mart has been notoriously tight-lipped.

A 2004 report prepared by McKinsey & Company for Wal-Mart found that 2% – 8% of Wal-Mart consumers surveyed have ceased shopping at the chain because of "negative press they have heard.“

“The sleeping giant has to be awakened and has to emerge with a defensive posture and a take-no-prisoners attitude.”

-Gail. F. baker, PR Expert, University of Florida

“I think they are going to have a tough time suddenly overcoming the perceptions of some people. It is going to be a tough sell on their part.” - Larry Bevington, Chairman, Save our Community

Wal-Mart does wake up…But is it too late??Wal-Mart does wake up…But is it too late??

“ “For too long others have had free rein to say things about For too long others have had free rein to say things about our company that just aren’t true. We’ve decided it’s time to our company that just aren’t true. We’ve decided it’s time to draw our own line in the sand.”draw our own line in the sand.”

- Lee Scott, CEO, Wal-Mart Inc.- Lee Scott, CEO, Wal-Mart Inc.

A “A “DO or DIEDO or DIE” situation for the giant retail chain” situation for the giant retail chainTo face the communication crisis, a PR team is put in placeTo face the communication crisis, a PR team is put in placeA PR campaign is launched in over A PR campaign is launched in over 100100 newspapers under CEO newspapers under CEO Lee Scott on January 13, 2004Lee Scott on January 13, 2004Jay Allen, Senior VP, Corporate Affairs, said campaigns aimed at Jay Allen, Senior VP, Corporate Affairs, said campaigns aimed at long term solution to improve the tarnished image. NOT a long term solution to improve the tarnished image. NOT a response to “response to “any specific chargesany specific charges” raised recently. ” raised recently. With newspapers including With newspapers including New York TimesNew York Times and and Wall Street Wall Street JournalJournal among others, criticism on money “wasted” among others, criticism on money “wasted”CEO issued an open letter in the ads stating that the company CEO issued an open letter in the ads stating that the company provides provides “good jobs with excellent advancement opportunities.”“good jobs with excellent advancement opportunities.”


Wal-Mart’s Benefits Manager sent a letter to Wal-Mart’s Benefits Manager sent a letter to New York TimesNew York Times, , ascertaining that the company provided health benefits to its ascertaining that the company provided health benefits to its employees.employees.

District Manager wrote a similar letter to District Manager wrote a similar letter to The Salt LakeThe Salt Lake Tribune.Tribune.

CEO, Lee Scott, became the first Wal-Mart person to address CEO, Lee Scott, became the first Wal-Mart person to address the the National Retailer Federation Trade GroupNational Retailer Federation Trade Group, condemning , condemning the media’s wide coverage on lawsuits against the company.the media’s wide coverage on lawsuits against the company.

““If our policies had been so bad, then the chain wouldn’t have grown If our policies had been so bad, then the chain wouldn’t have grown to this size, attracting such a large customer base.”to this size, attracting such a large customer base.”

Moving away from the low prices, company focussed on Moving away from the low prices, company focussed on creating goodwill to restore its image.creating goodwill to restore its image.

TV commercials showed employees giving testimonials about TV commercials showed employees giving testimonials about the benefits they get at the companythe benefits they get at the company


Accelerating the image makeover, Wal-Mart increased its Accelerating the image makeover, Wal-Mart increased its political donations to $1 millionpolitical donations to $1 million

In an alliance with NPR (National Public Radio), Wal-Mart In an alliance with NPR (National Public Radio), Wal-Mart announced in radio shows about being a good employer and announced in radio shows about being a good employer and bringing job opportunities and quality goods and services to bringing job opportunities and quality goods and services to local communitieslocal communities

Began offering scholarships for journalistic studies in about 10 Began offering scholarships for journalistic studies in about 10 universities all across the USAuniversities all across the USA

But despite all this, the problems didn’t die. Lawsuits kept on But despite all this, the problems didn’t die. Lawsuits kept on increasing by the day, anti-Wal-Mart communities began to increasing by the day, anti-Wal-Mart communities began to grow.grow.

Was Wal-Mart’s sheer size the main problem??Was Wal-Mart’s sheer size the main problem??

“ “Wal-Mart’s very success may be working against it. Big empires are Wal-Mart’s very success may be working against it. Big empires are hard to manage, and the public tends to mistrust institutions that get hard to manage, and the public tends to mistrust institutions that get too mightytoo mighty” – A brand analyst” – A brand analyst


Wal-Mart recruited former presidential advisers, including Wal-Mart recruited former presidential advisers, including Michael K. Deaver (Ronald Reagan's image-maker), and Michael K. Deaver (Ronald Reagan's image-maker), and Leslie Dach (Bill Clinton's media consultant) to set up a rapid-Leslie Dach (Bill Clinton's media consultant) to set up a rapid-response PR team in Arkansas.response PR team in Arkansas.Result- On January 13, 2005, millions of Americans opened Result- On January 13, 2005, millions of Americans opened their morning papers to find a full-page ad declaring, "their morning papers to find a full-page ad declaring, "Wal-Mart Wal-Mart is working for everyoneis working for everyone," and signed by Lee Scott.," and signed by Lee Scott.Same morning, Lee Scott appeared on Good Morning Same morning, Lee Scott appeared on Good Morning America, Fox News, and CNBC America, Fox News, and CNBC Scott called the company's carefully orchestrated PR Scott called the company's carefully orchestrated PR campaign campaign "an outreach.“"an outreach.“BUT, Scott didn't pull it off. On-screen he was reserved and BUT, Scott didn't pull it off. On-screen he was reserved and careful. His gaze was flat, his smile thin and forced. His low-careful. His gaze was flat, his smile thin and forced. His low-key manner in the face of critical allegations came off as key manner in the face of critical allegations came off as dispassionate.dispassionate.


Scott kept promising to tell the real story and provide the real Scott kept promising to tell the real story and provide the real facts. But from one interview to the next, it became clear that facts. But from one interview to the next, it became clear that the retailer only wanted to tell part of the story and share the retailer only wanted to tell part of the story and share “certain”“certain” facts factsWhen asked on Good Morning America how much Wal-Mart When asked on Good Morning America how much Wal-Mart imports from China, Scott said he didn't know. imports from China, Scott said he didn't know.

ABSURD??...Coming from a company known for tracking ABSURD??...Coming from a company known for tracking practically everything, pretty much yes.practically everything, pretty much yes.Wal-Mart believed the cause of the bad image to be the lack Wal-Mart believed the cause of the bad image to be the lack of awareness among the public.of awareness among the public.So, it thought the image would automatically be restored if the So, it thought the image would automatically be restored if the facts were made available to the people.facts were made available to the people.This resulted in the launch of a website, walmartfacts.com.This resulted in the launch of a website, walmartfacts.com.Had links to all the labor policies, lawsuits, benefits to the Had links to all the labor policies, lawsuits, benefits to the employees and philanthropic activities undertaken by the employees and philanthropic activities undertaken by the company.company.


Wal-Mart also bought paid search ads from Yahoo! and Wal-Mart also bought paid search ads from Yahoo! and othersothers

A basic search on Yahoo! resulted in a sponsored link to the A basic search on Yahoo! resulted in a sponsored link to the site walmartfacts.com saying, “site walmartfacts.com saying, “Who drives Wal-Mart? Want to Who drives Wal-Mart? Want to know the facts? Go to walmartfacts.comknow the facts? Go to walmartfacts.com””

Wal-Mart planned to create 100,000 new jobs in the United Wal-Mart planned to create 100,000 new jobs in the United States in 2005States in 2005

Promoted more than 9,000 people from hourly jobs to salaried Promoted more than 9,000 people from hourly jobs to salaried management jobs and made sure that this deed was made management jobs and made sure that this deed was made known to the entire nation through advertisements in both TV known to the entire nation through advertisements in both TV and print media.and print media.

But was the extensive PR campaign serving its purpose or But was the extensive PR campaign serving its purpose or was it adding on to the never ending woes of Wal-Mart??was it adding on to the never ending woes of Wal-Mart??


Over the years, several groups had come up, to bring to light the Over the years, several groups had come up, to bring to light the facts the public didn’t know about Wal-Martfacts the public didn’t know about Wal-MartWake Up Wal-MartWake Up Wal-Mart - a union-backed campaign group affiliated - a union-backed campaign group affiliated with the UFCW, founded in April, 2005with the UFCW, founded in April, 2005The centerpiece of the The centerpiece of the organization is its website -organization is its website -WakeupWalMart.comWakeupWalMart.comExposes all the facts and Exposes all the facts and problems which the problems which the website walmartfacts.com website walmartfacts.com doesn’t. doesn’t.

Wal-Mart WatchWal-Mart Watch, formed in the spring of 2005, is a joint project , formed in the spring of 2005, is a joint project of The Center for Community and Corporate Ethics, a non-profit of The Center for Community and Corporate Ethics, a non-profit organization studying the impact of large corporations on societyorganization studying the impact of large corporations on society

Anti-Wal-Mart groupsAnti-Wal-Mart groups

Wal-Mart: The High Cost of Low Price, Wal-Mart: The High Cost of Low Price, a documentary film a documentary film released in 2005, presents an unfavorable picture of Wal-released in 2005, presents an unfavorable picture of Wal-Mart's business practices through interviews with former Mart's business practices through interviews with former employees, small business owners, and Wal-Mart executives.employees, small business owners, and Wal-Mart executives.

The movie has been seen by millions and has been highly The movie has been seen by millions and has been highly acclaimed critically as well.acclaimed critically as well.

New York Times had this to say - “BREATHTAKING”New York Times had this to say - “BREATHTAKING”

Wal-Mart came up with its own DVD film, defending its Wal-Mart came up with its own DVD film, defending its practices entitled practices entitled Why Wal-Mart Works, and Why That Drives Why Wal-Mart Works, and Why That Drives Some People C-R-A-Z-YSome People C-R-A-Z-Y. .

But couldn’t undo the magnitude of damage already done.But couldn’t undo the magnitude of damage already done.

Anti-Wal-Mart groupsAnti-Wal-Mart groups

1.1. Stop defending and start examining:Stop defending and start examining: “ “You can't address what you don't acknowledge”. You can't address what you don't acknowledge”.

Be prepared to accept responsibility, acknowledge difficult Be prepared to accept responsibility, acknowledge difficult truths, and construct a plan for productive change. truths, and construct a plan for productive change. Begin a truly transparent process Begin a truly transparent process

2.2. Fire your consultants:Fire your consultants: For years, Wal-Mart stayed clear of any form of PR, For years, Wal-Mart stayed clear of any form of PR,

following Sam Walton’s policy that it’s a waste of money.following Sam Walton’s policy that it’s a waste of money. But when it did, it hired a rogue's gallery of spinmeisters But when it did, it hired a rogue's gallery of spinmeisters

who've worked for Reagan, Clinton, Kerry, and Bush.who've worked for Reagan, Clinton, Kerry, and Bush. All they did was reinforce Wal-Mart’s defensive posture, All they did was reinforce Wal-Mart’s defensive posture,

collected fat checks, and tried to win debating points in the collected fat checks, and tried to win debating points in the consumer culture consumer culture

Remember, consumers Remember, consumers don'tdon't pay attention to all those pay attention to all those fancy words. They go for fairness.fancy words. They go for fairness.

Ten Steps to Turn Around Wal-MartTen Steps to Turn Around Wal-Mart

3.3. Leverage your size to help your 1.6 million employees in Leverage your size to help your 1.6 million employees in unexpected ways :unexpected ways :

Make Wal-Mart an employer of choice instead of the Make Wal-Mart an employer of choice instead of the exhaust system of the American economy.exhaust system of the American economy.

Support the communities you do business in by using your Support the communities you do business in by using your infrastructure and helping local school districts pool their infrastructure and helping local school districts pool their buying and save on textbooks and other merchandise.buying and save on textbooks and other merchandise.

4.4. Talk to the unions :Talk to the unions :

You've spent years fighting and villainizing them.You've spent years fighting and villainizing them.

It’s time to think about the impossible: a solution that would It’s time to think about the impossible: a solution that would let the unions in. let the unions in.

Consumers wouldn’t mind spending an extra penny, Consumers wouldn’t mind spending an extra penny, knowing its providing for health care for families.knowing its providing for health care for families.


5.5. Support mom and pops :Support mom and pops :

Start helping mom and pops in some imaginative ways. Start helping mom and pops in some imaginative ways. For eg., start a referral networkFor eg., start a referral network

Let the customers know where they can find the stuff you Let the customers know where they can find the stuff you are never going to store. You end up making two friends – are never going to store. You end up making two friends – the local store and the customers.the local store and the customers.

6.6. Expand your vendor base :Expand your vendor base :

Actively seek out small, innovative companies with exciting Actively seek out small, innovative companies with exciting new products, and help them grow.new products, and help them grow.

Help the new entrepreneurs get stronger. Customers get Help the new entrepreneurs get stronger. Customers get bored by the same products on the shelf and they want to bored by the same products on the shelf and they want to see you reach out to everyone.see you reach out to everyone.


7.7. Stop treating your employees like commodities :Stop treating your employees like commodities :

Demonstrate your commitment to getting people out of the Demonstrate your commitment to getting people out of the minimum wage sinkhole as quickly as possible.minimum wage sinkhole as quickly as possible.

Encourage your employees in entrepreneurship. Take pride in Encourage your employees in entrepreneurship. Take pride in how many employees start a new company each year.how many employees start a new company each year.

You lose employees but it’s great PR to lose good people for You lose employees but it’s great PR to lose good people for the right reasonthe right reason

8.8. Open up your business :Open up your business :

Become less impenetrable. Act like you have nothing to hide. Become less impenetrable. Act like you have nothing to hide. Install “factory-cams” at your captive manufacturing plants Install “factory-cams” at your captive manufacturing plants around the world, so anyone can check out the conditions around the world, so anyone can check out the conditions 24/7 on your website24/7 on your website

Let management and store personnel blogLet management and store personnel blog

Talk to the reporters Talk to the reporters


9.9. Use your extended warranty marketing as a model for other Use your extended warranty marketing as a model for other new services :new services :

Don’t give a chance to consumer advocates to raise a finger on Don’t give a chance to consumer advocates to raise a finger on the credibility of these policies.the credibility of these policies.

Offer discounts on future purchases, upon a single purchase Offer discounts on future purchases, upon a single purchase above a certain amount.above a certain amount.

10.10. Kill the big holiday TV campaigns :Kill the big holiday TV campaigns : You can’t afford health care benefits but you can afford to pay You can’t afford health care benefits but you can afford to pay

over-priced celebrities to dance around the TV screen??over-priced celebrities to dance around the TV screen?? No one would believe that these celebrities shop at Wal-Mart. No one would believe that these celebrities shop at Wal-Mart.

Instead, run advertising that shows how Wal-Mart democratizes Instead, run advertising that shows how Wal-Mart democratizes the holiday for real people.the holiday for real people.

Make Wal-Mart an Make Wal-Mart an admiredadmired company, instead of a company, instead of a fearedfeared one. one.


Thank YouThank You

Documents

Wal-Mart Case Study