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Wal-Mart fires back at opponents
CEO says sometimes critics are right, but highlights all the good the retailer does for communities.
April 5, 2005: 7:37 PM EDT
By Parija Bhatnagar, staff writer

ROGERS, Ark. (CNN/Money) - Wal-Mart CEO Lee Scott admitted to a gathering of journalists Tuesday that the retailer's "critics are sometimes right" and he'll try to fix the problem and move on. But when they're not, he's going to jump in and set the record straight.

"I have to do this for our associates," Scott told reporters Tuesday as the company kicked off its first-ever media conference in Rogers, Ark.

"Our associates were frustrated that I haven't been responding to all the criticism directed against Wal-Mart, even when a lot of it is unfair and inaccurate," Scott said. "I think we did a disservice to our associates and to our shareholders by not answering our critics."

The two-day event, a rarity for the world's largest retailer, is seen as an attempt to foster better relations with the media after a number of public setbacks for the retailer.

Among them, the company has been hit with dozens of lawsuits alleging sexual discrimination and practices which shortchange employees out of pay. It has also recently settled charges it contracted illegal alien workers.

Additionally, the company also continues to face opposition from community groups when it tries to enter some cities and towns.

Addressing Wal-Mart opponents, Scott was blunt. "If they don't want Wal-Mart in their community, then just say it. Don't hide behind all this malarkey."

"What we've seen over and over again is that over a relatively short time, people come to appreciate what we offer. they appreciate that they can save money right in the neighborhood, or not far from it," he said. "They appreciate it that we hire from the neighborhood. They appreciate that our store managers and associates are involved in the community and that 90 percent of our charitable giving is targeted locally... The critics are the ones who simply want to maintain the status quo because change isn't necessarily fun. Innovation and competition changes the status quo."

Earlier in the day, some community groups made an appearance at the conference to pressure Wal-Mart on its business practices.

Speaking at the same hotel where the media event is being held -- and echoing criticism voiced by labor groups Monday -- the activists said they hoped the nation's biggest company will listen to their demands and become what they call more responsible.

Wal-Mart (Research) is the nation's largest non-union private sector employer, with 1.5 million employees.

Scott rejected calls to unionize Wal-Mart. "We don't think we need middlemen when our associates can come directly to management with their issues."

He also defended the company's wage, healthcare and retirement benefits programs. Said Scott," Few people realize that 74 percent of Wal-Mart associates work full-time, compared to 20 to 40 percent at comparable retailers .This means that Wal-Mart spends more broadly on health benefits than do most big retailers."

In an interview Tuesday, representatives of the Coalition for a Better Inglewood said the two-day media event was just "wax and polish on an already rusty machine."

The nine-member Inglewood, Calif., delegation is in Rogers to deliver a proposal to Scott to prove that Wal-Mart is serious in its efforts to become a community leader and not just a corporate powerhouse.

One year ago, Inglewood voters rejected a ballot initiative sponsored by Wal-Mart that would have allowed the discounter to build a close to 200,000 square-foot store in the California neighborhood of 140,000 residents.

Since then, the Coalition said that Wal-Mart had purchased the 60 acre land where it had planned to set up the store and could soon announce new plans for an Inglewood store.

According to Coalition member Rev. Altagracia Perez, the group wants Wal-Mart to agree to a community development agreement that would ensure that the retailer provides protection for small businesses, pension benefits and "real" healthcare for workers before it sets up shop in their community.

"It's something Wal-Mart has never done before but by agreeing to our proposal, Wal-Mart could convince us and others to take it seriously that the company is trying to change its image," she said.

Scott took responsibility for Wal-Mart's failure in Inglewood. "We believed we wouldn't be treated fairly by the city council so we went to the people directly, We should've gone to the city council first," he said.

Other senior Wal-Mart executives focused on communicating the retailer's strong business fundamentals.

"Wal-Mart's sales have doubled and earnings have more than doubled over the past five years but we haven't done a good job in communicating that," said Tom Schoewe, Wal-Mart's chief financial officer.

However, Schoewe did point to higher gas prices as a continuing concern for the company. "With a truck fleet as large, higher fuel prices increase our transportation costs," he said. "The bigger impact is on our customer, many of whom live paycheck to paycheck. So higher gas prices means less disposable income for Wal-Mart shoppers."

Others also defended Wal-Mart, including well-followed retail industry observer Britt Beemer of America's Research Group.

"It's hard to escape a week without some negative story about Wal-Mart,"Beemer said in a statement emailed to CNN/Money. "Let's look at the facts. Wal-Mart is clearly the number one retailer in America. Average consumers have to buy the products that Wal-Mart sells and they do this each and every week. The consumer isn't interested in the origin of the products purchased as long as merchandise meets their expectations."

"Wal-Mart deserves their high admiration level because they do what they say," Beemer added. "They give America a place to buy at low prices in stores where employees seem happy to be there and willing to assist customers when questions are asked."

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