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Just call it 'Teflon' Target
With Wal-Mart constantly in the line of fire, some say it's given Target a lucky break with critics.
April 20, 2005: 4:13 PM EDT
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - With a red bull's eye as its logo, it may be surprising that Wal-Mart's main rival isn't an easy Target for naysayers.

Somehow, Target, the Minneapolis-based retailer, has managed to fly under the radar of labor unions and community activists even though it shares some of the same attributes that irk opponents of its much larger rival.

Wal-Mart (Research) is a non-union company, for one thing. But so is Target (Research).

Community activists call Wal-Mart's big-box, over 100,000 square feet "Supercenter" formats, an "eye sore." Well, Target, the No. 2 discounter after Wal-Mart, has its own fleet of "Super Targets."

Wal-Mart's expanding into more urban neighborhoods. So is Target.

Finally, Wal-Mart's critics lambaste the retailer's pay and health benefits policies, alleging that the retailer doesn't adequately pay or provide medical coverage for its non-managerial employees.

Oddly, these same critics confess that they can't prove Target's wage and benefits are significantly better. And Wal-Mart maintains that its wage and benefits are comparable to Target.

"We think that Target and Wal-Mart are both guilty of wage suppression," said Bernie Hess, the union organizer with the United Food and Commercial Workers (UFCW) Local 789 chapter in St. Paul, Minn.

Hess has been spearheading efforts to unionize a Target store in the West St. Paul area. Union members have been distributing leaflets to residents and local business that claim Target shortchanges employees.

The St. Paul union office estimates that Target's hourly employees typically make around $6.75 to $7.25 and that less than half the company's workers are covered by its health insurance plan.

Said Hess, "Two years ago Target started to feel the increasing cost of healthcare coverage. So it raised the threshold for minimum number of hours that have to be worked to between 24 to 28 from 20 hours a week in order to qualify for healthcare coverage."

When asked for a comment, Target e-mailed the following response to CNN/Money:

"Misinformation has been circulating recently regarding our wages and benefits," Target's spokeswoman Carolyn Brookter said in a statement. "We regularly complete wage surveys in all of our markets to ensure that we pay competitive wages."

"Target has one of the best health care and benefits packages in the industry," Brookter said. "We are an industry leader in providing a wide array of excellent benefits that allow us to attract and retain the best team members."

However, Brookter declined to offer details of Target's compensation or benefit information, citing competitive reasons.

Is it sometimes better to be No. 2?

The one point that academics, labor policy experts, retail industry watchers and union representatives all agree on is that Wal-Mart attracts more scrutiny than Target because it's the industry leader.

"In some ways Target's been given a free pass because of the perception that since Wal-Mart is the largest player, it can dictate the market in terms of prices, pay and benefits while others simply are forced to go along," said Ken Jacobs, deputy chair at the UC Berkeley's Center for Labor Research and Education.

"It's natural that the focus will be on Wal-Mart," said Madeleine Janis-Aparico, executive director of the Los Angeles Alliance for a New Economy (LAANE). "Wal-Mart's size gives its enormous leveraging power. So if we can get Wal-Mart to change its policies, then we can get others to follow suit."

The activist group has opposed Wal-Mart's entry into some California neighborhoods, including Inglewood where Wal-Mart lost a self-sponsored referendum in 2004 that sought the support of residents to build a supercenter store. Aparico argued that Wal-Mart's entry would hurt small business in the area.

However, Inglewood already hosts other big-box merchants, including Target, Costco (Research) and Home Depot (Research).

Maybe it's an image thing

Some observers say that Wal-Mart shot itself in the foot with its closed door, media-shy image, a mistake that the company is now trying to rectify. This policy has also hurt it in light of the panoply of lawsuits against it.

Target, on the other hand, is extremely media savvy and therefore has done a much better job connecting with the consumer with colorful and spunky ads.

"No retailer can afford to underestimate the importance of good marketing and public relations," said George Whalin, an independent retail consultant. "Target also comes across as a better corporate citizen than Wal-Mart because it makes it a point to inform people about its efforts to give back to communities."

Janet Wagner, associate chair of marketing with the Robert H. Smith School of Business at the University of Maryland, says that because of Wal-Mart's small town southern roots, the company does have to try harder to win people over, especially as it looks to expand in markets in the northeast.

"In Vermont, lots of people don't want to be associated with the Wal-Mart image," Wagner said. "The perception, perhaps fair or unfair, is that Wal-Mart's appeal is mostly to blue collar customers while it's the yuppies that shop at Target."

Target's not off the hook

It may be smooth sailing for Target for now but that could change.

"The bigger Target becomes the more likely it will be that unions and other activists will find it in their favor to go after it a little harder than they have," said Sourushe Zandvakili, a labor economist with the Department of Economics at the University of Cincinnati.

Target is already feeling the heat for its involvement in a process called "eminent domain" in a few east coast markets, said Whalin. Eminent domain is a process that allows state or federal agencies to acquire private property and develop it for public use, such as a school or a shopping center.

Target did not respond this reporter's request for comment on the issue.

Said Jacobs of UC Berkeley's Center for Labor Research and Education, "In some respects, Wal-Mart's been a convenient excuse for Target and other retailers who've said that it's the competitive pressures brought about by Wal-Mart that's dictated their labor policies. Do critics really think Target is so benign? I don't think so, and Target shouldn't either."  Top of page

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