Why we don't hate Wal-Mart anymore
The evil empire doesn't look so bad, now that Americans have Wall Street to kick around and a new appreciation for those everyday low prices.
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| Former CEO Lee Scott is feted at Wal-Mart's 2009 shareholder meeting. |
NEW YORK (Fortune) -- It seems like only days ago that Wal-Mart was the most evil company on the planet.
The list of accusations: It locked workers in stores overnight and ignored overtime rules; it didn't give health-care benefits to a lot of workers; and its execs dreaded union organizers so much they actually shut down a store to avoid letting the labor guys in the front door.
Equality for women employees? Forget about it. That was for East Coast, Hillary-loving wimps, or Wegman's, to worry about. And then there was the part about alleged sweatshops in China. (Sam Walton, back in the day, personally hired toddlers. Right?) And let's not forget the decimation of Main Street, USA.
To be honest, even long-time Wal-Mart (WMT, Fortune 500) admirers had to admit that some of this was true. The company was a bit evil.
But that was then. Now the masses don't seem all that concerned about the biggest retailer in America stomping us all like the aliens did in Independence Day.
Let's go to the numbers. If you did a database search, which my colleague Marilyn Adamo kindly conducted for me, there were some 47 stories in 2006 with the words "evil" within ten words of a "Wal-Mart" mention. So far in 2009: only two. Of all stories with at least two mentions of Wal-Mart, there were more than 14,000 in 2006 and just under 5,000 this year.
This ain't a scientific study, by any stretch, but the numbers seem to show that the heat has been turned down. The obvious explanation is that Wall Street, proving they could be much more evil than Wal-Mart could ever be, has provided ground cover for America's second-largest company (after Exxon Mobil).
But as with anything, it's far more complicated than that. Some questions; some answers. Some obvious; some not. All asked and answered by me:
Wal-Mart's revival -- business and image-wise -- is really about the recession. Right?
Bad times are ALWAYS Wal-Mart's friend, except when gas prices are really high and the chain's customers make fewer trips to the store. Can a perfect storm be a positive thing? I don't know. But if it is, it has happened for Wal-Mart. The economy is sluggish, gas prices are low and Wall Street is in the press everyday with fresh scandals. Add all that to the chain's low prices and you have a winner.
So let's see: do I buy the $5 Wal-Mart polo shirt (which I kinda like, actually) or pay $40-plus for one at Nordstrom?
Will this Wall Street thing lose steam? Will Wal-Mart become a punching bag again?
Oh, I wouldn't count on that soon. The bad Wall Street news just keeps on coming. We've recently had what the New York Times described as the biggest insider-trading scam of our generation and, Pay Czar Kenneth Feinberg aside, the big-bank bonus machine just keeps on rolling.
And their explanations don't help much. You know: "Well, if we don't pay big bonuses, our employees will go elsewhere." (Yeah, where? A call center in Logan, Utah?) CNBC guest pundits can live off this stuff for years. They won't be getting around to Wal-Mart again soon. (Unless, of course, Wal-Mart does something REALLY foolish.)
Besides getting tons of help from Wall Street, has Wal-Mart done a better job shaping its own image?
Absolutely. Public relations is no longer viewed as a cost center in Wal-Mart nation. I remember the day when you could just call Wall-Mart executives directly. (Not that they wanted to hear from you; the few P.R. folks they had were probably doubling as grocery baggers.)
But shortly after Sam Walton died, things changed. The company was getting so big it was facing scrutiny on a number of fronts, ranging from its "Made in America" campaign -- some reporters found some of those products weren't Made in America after all (Surprise!) -- to battles over opening stores in communities with vibrant downtown areas.
Then there were awkward moments like the time CEO David Glass walked off the set of a national TV-magazine show because he didn't like the questions. Great theater but bad P.R. for Wal-Mart.
After years of press-bashing, a lot of it justified, Wall-Mart executives finally figured out they needed a strong P.R. presence. They even treated journalists better after years of thinly veiled ... is "disgust" too strong a word?
Wal-Mart now has smart publicists who will tell you, in so many words, that you're an irresponsible troll of a journalist without you actually feeling like you're an irresponsible troll of a journalist. And then they'll work with you again.
Wal-Mart somehow managed to throw enough positive things out there to turn the tide. The company also admitted its mistakes. Now, there are still some what-were-you-thinking moments, like when Wal-Mart tried to recover insurance-settlement money last year from a worker who had suffered brain damage in a car accident.
But with more than 2 million employees, there's going to be more than a couple who make poor decisions. Try and control the conduct of all the employees in a company with roughly the population of the city of Houston. Try it.
What about Wal-Mart's CEOs? Can they ever measure up to the founder? If not, won't that hurt them in the long run?
I haven't counted all the "What Would Sam Do?" stories over the past years; there have been a lot of them. But David Glass, Sam's heir, actually made the company greater. (P.R. lapses aside.) And I can tell you no one would have done better than Lee Scott, Glass' heir, who stepped aside as CEO earlier this year. In fact, though not a lot of people agree with me, Scott may go down as one of the best chief executives of his generation. Let me tell you why.
First of all, he was left with a giant company that had a pretty good run. He was also dealing with warring camps internally. It was loaded with a lot of old-school Wal-Mart execs who were partly to blame for the chain's image problem in the first place, but who blamed the press for all their woes and treated Washington politicians like the Taliban. They thought the unions were powerless and mere annoyances (until they tried opening a lot of stores in California and going up against the powerful grocery unions, which ended up as a Napoleon-in-Russia kind of thing).
Nothing was their fault, so they circled the wagons, and it was a disaster. Scott had to change the culture, a nearly impossible job in a company of Wal-Mart's size. He also, with a big push from the board, as Fortune's Suzanne Kapner reported earlier this year, dealt with the company's image problems head on.
He came up with more health-care coverage for his workers, emerged as a spokesman of sorts for covering the uninsured and became an evangelist for the green movement. You think it's easy trying to persuade people that a company that cuts down trees to build stores, covers the earth with asphalt parking lots and offers such low prices on paper towels is green? Pretty good trick, eh? (I admit I do love those small, environmentally friendly bottles of All detergent.)
Does it help that people are just plain tired of bashing Wal-Mart and reading stories bashing Wal-Mart?
Yeah, I call it Wal-Mart fatigue. Our babysitter, who wouldn't even apply for a job at Wal-Mart because she thought they would water-board her if she folded the shirts the wrong way, has given up hating them. (There are other things she can complain about -- like my kids.)
And I think people are weary of the "Wal-Mart vs. Mom and Pop" story line. Wal-Mart may have contributed to the decline of Main Street shopping, but the ugly truth is some of these merchants had it coming -- they didn't serve their customers very well.
My late in-laws lived in Shallotte, N.C., when a new Wal-Mart opened. After years of suffering with mediocre, poorly stocked stores and high prices, the big discounter got a pretty nice reception. Kind of like what Dick Cheney was hoping for when American troops invaded Iraq. If Wal-Mart is indeed killing off small-town America, they have a lot of company.
Finally, has the lack of real competition helped?
My theory: It helps that Eddie Lampert is running Sears (SHLD, Fortune 500) and Kmart like Al Davis runs the Oakland Raiders -- and that Target no longer seems to be at the top of the hipness scale, though I can't really prove it. I know all these folks in Westchester County, N.Y., where I live, who loved going to Target (TGT, Fortune 500), and actually talked about it, because it SEEMED different than Wal-Mart.
Was it? Is it? Let's see: Non-union employees? Check. A lot of overseas-made products? Check. Sells basically the same stuff as Wal-Mart? Check. (But Target's dog mascot, Bullseye, is so much cuter than Wal-Mart's dog mascot, Ol' Roy!) People are just looking for good deals now, no matter where they find them and don't feel compelled to talk about it at their kids' soccer games. Maybe Wal-Mart is now the new Target -- who knows? 
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