Wal-Mart will offer benefits to same-sex partners of its workers in January 2014.
It was met with praise from progressive groups and disappointment from the religious right. But it also had some scratching their heads.
That's because Wal-Mart (Fortune 500) has long been known for taking a conservative stance: It pulled Maxim magazine from its shelves for its revealing content and canceled its order for Jon Stewart's best-selling "America (The Book)" because it featured a fake photo of naked Supreme Court justices. Wal-Mart CEO Mike Duke even signed a petition in 2009 supporting an Arkansas law prohibiting same-sex couples from adopting. ,
And then, last month, the nation's largest retail store company announced it will offer benefits to same-sex and domestic partners of its workers, at a time when other major companies were doing away with spousal benefits altogether.
Retail experts say the decision to seemingly veer away from its long-standing conservatism is likely driven by pure business impulses during changing times. After all, research shows that gay and lesbian consumers are a powerful draw, and Wal-Mart cannot afford to ignore an attractive shopper group during tough times. At the same time, it could also work as a good ploy to retain employees.
"It does seem to be a shift to ... keep up with competition and try to re-stimulate sales," said Burt Flickinger III, managing director of grocery and retail consultant Strategic. Resources Group, and Wal-Mart shareholder for more than 30 years.
Lately, Wal-Mart has been in a slump. Same-store sales have dropped for two quarters in a row. And last month, the company cut its sales forecast for the remainder of the year.
As Americans are tightening their grip on purse strings, more and more retailers are paying attention to trends that show same-sex couples either out-earn or outspend opposite sex couples. According to a 2012 study from Experian Marketing Services, the typical household income for a married or partnered lesbian woman is $7,200 higher than that of a married or partnered heterosexual woman, and $21,500 more for a gay man.
At the same time, there's probably not much to lose from its broad shopper-base for coming out with this policy, even if it ruffles feathers on conservative groups like the American Family Association, which said it was "disappointed" with the move. Already, more than half of Americans support same-sex marriage, a sentiment that's even higher among the coveted under-30 consumer.
It's also a way for Wal-Mart to show that it's taking care of its employees, Flickinger said, when its workers are staging nation-wide protests for better pay and benefits.
"It seems like Wal-Mart is working hard to improve its consumer image in a time when its sales are suffering," he said.
Despite its overt conservatism, Wal-Mart's internal policies have been in line with most large companies when it comes to protecting and providing resources to its lesbian and gay employees for the last decade, according to Deena Fidas, director of workplace equality programs at the Human Rights Campaign.
Every year, the human rights group rates companies based on policies and practices related to LGBT employees on what it calls the corporate equality index. On the HRC's list of the top 20 Fortune 500 companies, Wal-Mart's rating is fourth to last.
"Their move is a reflection of a business weighing key priorities, keeping pace with competitors and keeping the best employees," she said.
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