CorpComms Magazine

Big is not always beautiful, as Wal-Mart has been finding out. America's largest private sector employee, with more than 1.3 mn workers nationally, has been under attack for its employment policies, its impact on smaller rivals and its cut-throat tactics to squeeze the best price from its suppliers.

Wal-Mart always seemed to ignore negative press, however - until earlier this year when the world's largest retailer found it had become an issue in city elections and the US presidential race.

It took Wal-Mart four years to get its first store in Chicago, and the non-union company has made no secret of its desire to open at least eight more. But in April more than two dozen candidates, backed by the unions, were elected to the city's council in order to bring in new legislation that will compel major retailers to increase wages and health benefits. The election was a clear blow to Mayor Richard Daley, who has held office for 18 years, and who opposed the legislation. A fund organised by his supporters received $100,000 from Wal-Mart.

City elections in Los Angeles have similarly turned on whether candidates support or oppose Wal-Mart, while the question of whether the retailer was good or bad for America was even posed at a televised debate among Democratic presidential candidates. Hillary Clinton, who served as a director for Wal-Mart for six years before turning critic, hedged her bets and called it a 'mixed blessing'.

Fighting back

Wal-Mart CEO Lee Scott decided the retailer should emerge from behind the barricades to repair its battered reputation. As such, it begun a massive bid to schmooze the press, inviting selected reporters to its home office in Bentonville, Arkansas for tours and lessons on the Wal-Mart way. It also renewed efforts to influence the elite thinkers who shape how Wal-Mart is perceived in Washington and other corridors of power.

Wal-Mart hired Washington PR experts Edelman, which specialises in advising companies on reputation management, to assist the efforts of its 40-person in-house team. Edelman doesn't come cheap - the reputed cost to Wal-Mart is around $10 mn a year - but the retailer sees it as money well spent if its reputation is renovated. The publicity machine has certainly gone into overdrive. In May alone, Wal-Mart announced a host of initiatives running the gamut of social issues: it said US schools were $1 mn better off as a result of Wal-Mart's education programmes; it followed that with news its delicatessens were phasing out unhealthy trans-fats, and boasts it had been named one of the top 50 firms for diversity.

On the environment, it said it had struck a deal to supply 22 of its stores with solar power, while on the health front it proudly announced that more corporations had joined its coalition pressing for healthcare reform.

Despite these initiatives, however, Wal-Mart can't shake off the critics; every positive headline is matched with a corresponding attack. Regulators slammed Wal-Mart for improperly labelling food as organic. Human Rights Watch, an organisation better known for tackling third-world dictators, attacked Wal-Mart's aggressive stance on unionisation. At the same time, campaigns such as Wal-Mart Watch and WakeUpWalMart continued their high-profile battles against the retailer's labour practices, environmental policies and social policies.

An ill wind

Admittedly, two years ago Wal-Mart achieved a major PR coup. Its response to Hurricane Katrina, when 126 of its stores were forced to close, was widely regarded as a model corporate reaction to a local tragedy, and one of which the federal government could only dream.

Within days of the disaster, Wal-Mart had provided an unrivalled $20 mn in cash donations, as well as 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced employees. The retailer also made no attempt to prevent the looting of its abandoned stores.

'Wal-Mart has raised the ante for every firm in the country,' declared Adam Hanft, chief executive of New York-based branding and marketing agency Hanft Unlimited. 'This is going to change the face of corporate giving.'

Sadly, the impact of that coup quickly diminished as Wal-Mart underwent a series of PR disasters. First there was the press officer who quit after comparing town planners to Nazis when they tried to bar the superstore from opening in their neighbourhood. Later it emerged that a couple who wrote a supposedly independent blog, 'Wal-Marting Across America', were being paid by the company.

Then there was Andrew Young, a former civil rights leader, Democratic politician and UN ambassador, who was forced to quit as head of Working Families for Wal-Mart after alleging in an interview that Jewish, Korean and Arab shop-owners routinely overcharge customers.

Most recently, though, the company had to deal with the fallout from the Bruce Gabbard incident. Gabbard worked for Wal-Mart's little-known Threat Research and Assessment Group, which the US public has come to view as a secretive department set up by the retailer to track potential problems caused by political agitators and rebellious shareholders.

Gabbard was fired when it emerged he had been monitoring the telephone calls of investors and journalists, including New York Times repor ter Michael Barbaro. But Gabbard then went public with an explanation of his role that painted Wal-Mart as an ultra-paranoid organisation with piles of dirty linen the company would rather keep hidden. The revelation prompted New York City comptroller William Thompson to demand that the SEC and the Justice Department investigate Wal- Mart's surveillance practices.

Playing politics

Part of Wal-Mart's problem has been its political leaning. Over the past 15 years, more than 75 percent of its political donations have gone to the Republicans. With one of the most unpopular Republican presidents currently residing in the White House, that perceived Right-leaning is no longer going down too well.

A major part of Edelman's job has been to soften Wal-Mart's perceived conservatism. Edelman specialises in helping industries with reputational problems; another important client is the American Petroleum Institute, a Washington lobbying group that seeks to convince Americans oil firms both care about the environment and generate reasonable profits.

There are around 20 in Edelman's Wal-Mart team working to help the company scrub its muddied image. A major part of that push has been the company's new-found zeal for organic produce and its drive toward environmental protection.

Putting new items on the shelves - from organic cotton baby clothes to ocean fish caught in ways that don't harm the environment - is part of a broader green policy launched last year to meet consumer demand, cut energy and packaging costs, and burnish a battered reputation.

Alice Peterson, president of the Chicago-based consultancy Syrus Global, says the shift was part of a realisation customers are interested in more than just low prices. 'Like many big companies, Wal-Mart has figured out it is just good marketing and good reputation-building to be in favour of the issues Americans are increasingly interested in,' she explains.

Changing tack

Some Wal-Mart critics call the effort a PR job, although even they accept it is one that has worked - at least in part. 'For too long it didn't do a great deal with image competition, so it has had some serious imaging problems,' says Eugene Fram, a professor at the University of Rochester. 'It has to take a different tactic from five or 10 years ago and prove to critics that it is changing.'

Wal-Mart spokesperson Steven Restivo claims the criticism has not affected the retailer's reputation and says consumers still shop at its stores for its low prices, although he acknowledges the retailer has to work harder. 'We now take every opportunity to counter our union-funded critics and their campaign of misfortune,' he notes. 'Put simply, we're starting to educate the general public about all the good things we do in the community every day.'

Nevertheless, Wal-Mart recently reported its worst monthly performance since it started gathering such data almost 30 years ago. Surveys suggest the number of die-hard Wal-Mart loyalists is dwindling, while the number of refuseniks is growing.

'I think it takes time to change corporate images,' suggests Ken Bernhardt, professor of marketing at Georgia State University. 'And if Wal-Mart sincerely invests in its communities, it will over time get the recognition it deserves for doing that. But it won't happen overnight.'

share me: del.icio.us | digg | reddit | Tweet