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Wal-Mart Stores whose all-in-one retailing model has forced scores of competitors to close their doors over the last 40 years, is turning to an unusual business plan: helping its rivals.
The giant discount retailer, under increasing assault by critics, announced a wide-ranging effort yesterday to support small businesses near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.
Wal-Mart said it would offer those businesses financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store.
Wal-Mart acknowledged the program was not entirely altruistic. The company is trying to open 50 stores in urban neighborhoods in the next two years, and the aid to small businesses could help build support in cities like Los Angeles and New York where it has met strong resistance.
"We see we can be better for communities than we have been in the past if we are willing to stretch ourselves and our resources," Wal-Mart's chief executive, H. Lee Scott Jr., said in a conference call with reporters yesterday from Chicago, where Wal-Mart plans to open its first urban store.
Criticism of Wal-Mart's wages, health insurance and pricing strategy has crescendoed in the last year, with the release of a feature-length film attacking the company and the passage of a law in Maryland that, unless struck down, would force the retailer to increase spending on health care.
There is also growing evidence that the negative publicity is hurting the company. An internal Wal-Mart report, prepared in 2004, found that 2 percent to 8 percent of consumers surveyed had stopped shopping at the chain because of "negative press they have heard."
On a confidential company Web site, Mr. Scott recently wrote that criticism of the chain had slowed its expansion. Community opposition has foiled efforts to build stores in Chicago, Los Angeles and New York, which are crowded with small businesses.
In response, Wal-Mart has issued a flurry of announcements intended to burnish its image, among them expanding its health insurance to more employees and investing in businesses owned by women.
The Wal-Mart jobs and opportunity zones are to be set up in 10 metropolitan areas where the chain wants to build stores. Wal-Mart said it would choose sites traditionally overlooked by retailers — urban neighborhoods with high unemployment, contaminated land and old shopping centers in need of revitalization. The new stores are expected to create at least 15,000 jobs.
The first zone will be the West Side of Chicago, where Mr. Scott announced the program yesterday. The company would not say what other cities it was considering.
In the zones, the company will identify local businesses to spotlight in newspaper advertisements and to feature on Wal-Mart's in-store radio network, which plays throughout the day. (Mr. Scott said "it would not be healthy" to leave out competitors.)
Wal-Mart will hold seminars to coach the businesses on how to compete with the giant discount stores — by, for example, intensifying customer service, for which Wal-Mart often receives low marks. An annual report on trends in Wal-Mart's business will be distributed exclusively to those companies.
At the same time, Wal-Mart will invest $500,000 in local chambers of commerce, to be used for small-business Web sites and business improvement seminars. "This is a commitment to reach beyond our stores," Mr. Scott said.
He said Wal-Mart would not lose money on the program because urban stores were expected to attract more shoppers — and profits — than suburban and rural outlets.
Critics claimed that the proposed jobs and opportunity zones were an effort to divert attention from the company's negative impact on local economies.
A study conducted by several economists, and presented at a conference held by Wal-Mart last fall, found that after the company's arrival in a county, total earnings for workers, retail and nonretail, fell 2.5 percent to 4.8 percent. One reason for the decline is that Wal-Mart pressures its suppliers to cut their costs and that may lead to lower wages for the workers of suppliers.
A different study, conducted by an economic research firm hired by Wal-Mart, found the retailer's pricing strategy had made industries more productive, creating hundreds of thousands of jobs and increasing net consumer purchasing power by $118 billion last year, or about $401 for every American.
Chris Kofinis, a spokesman for Wake-Up Wal-Mart, a union-backed group prodding the company to improve wages and benefits, said the new program was "bitterly ironic" because it was "asking Wal-Mart to help solve the problems it created."
The program, he said, leaves major issues like Wal-Mart's average wages, which amount to less than $20,000 a year, unaddressed. "What this is," he added, "is another P.R. stunt in a litany of P.R. stunts."
The giant discount retailer, under increasing assault by critics, announced a wide-ranging effort yesterday to support small businesses near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.
Wal-Mart said it would offer those businesses financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store.
Wal-Mart acknowledged the program was not entirely altruistic. The company is trying to open 50 stores in urban neighborhoods in the next two years, and the aid to small businesses could help build support in cities like Los Angeles and New York where it has met strong resistance.
"We see we can be better for communities than we have been in the past if we are willing to stretch ourselves and our resources," Wal-Mart's chief executive, H. Lee Scott Jr., said in a conference call with reporters yesterday from Chicago, where Wal-Mart plans to open its first urban store.
Criticism of Wal-Mart's wages, health insurance and pricing strategy has crescendoed in the last year, with the release of a feature-length film attacking the company and the passage of a law in Maryland that, unless struck down, would force the retailer to increase spending on health care.
There is also growing evidence that the negative publicity is hurting the company. An internal Wal-Mart report, prepared in 2004, found that 2 percent to 8 percent of consumers surveyed had stopped shopping at the chain because of "negative press they have heard."
On a confidential company Web site, Mr. Scott recently wrote that criticism of the chain had slowed its expansion. Community opposition has foiled efforts to build stores in Chicago, Los Angeles and New York, which are crowded with small businesses.
In response, Wal-Mart has issued a flurry of announcements intended to burnish its image, among them expanding its health insurance to more employees and investing in businesses owned by women.
The Wal-Mart jobs and opportunity zones are to be set up in 10 metropolitan areas where the chain wants to build stores. Wal-Mart said it would choose sites traditionally overlooked by retailers — urban neighborhoods with high unemployment, contaminated land and old shopping centers in need of revitalization. The new stores are expected to create at least 15,000 jobs.
The first zone will be the West Side of Chicago, where Mr. Scott announced the program yesterday. The company would not say what other cities it was considering.
In the zones, the company will identify local businesses to spotlight in newspaper advertisements and to feature on Wal-Mart's in-store radio network, which plays throughout the day. (Mr. Scott said "it would not be healthy" to leave out competitors.)
Wal-Mart will hold seminars to coach the businesses on how to compete with the giant discount stores — by, for example, intensifying customer service, for which Wal-Mart often receives low marks. An annual report on trends in Wal-Mart's business will be distributed exclusively to those companies.
At the same time, Wal-Mart will invest $500,000 in local chambers of commerce, to be used for small-business Web sites and business improvement seminars. "This is a commitment to reach beyond our stores," Mr. Scott said.
He said Wal-Mart would not lose money on the program because urban stores were expected to attract more shoppers — and profits — than suburban and rural outlets.
Critics claimed that the proposed jobs and opportunity zones were an effort to divert attention from the company's negative impact on local economies.
A study conducted by several economists, and presented at a conference held by Wal-Mart last fall, found that after the company's arrival in a county, total earnings for workers, retail and nonretail, fell 2.5 percent to 4.8 percent. One reason for the decline is that Wal-Mart pressures its suppliers to cut their costs and that may lead to lower wages for the workers of suppliers.
A different study, conducted by an economic research firm hired by Wal-Mart, found the retailer's pricing strategy had made industries more productive, creating hundreds of thousands of jobs and increasing net consumer purchasing power by $118 billion last year, or about $401 for every American.
Chris Kofinis, a spokesman for Wake-Up Wal-Mart, a union-backed group prodding the company to improve wages and benefits, said the new program was "bitterly ironic" because it was "asking Wal-Mart to help solve the problems it created."
The program, he said, leaves major issues like Wal-Mart's average wages, which amount to less than $20,000 a year, unaddressed. "What this is," he added, "is another P.R. stunt in a litany of P.R. stunts."
So what if they aren't doing it for the purest of reasons, as long as someone benifits from it. I'm sure though that the haters won't be able to find anything postitive in this. I'm not a big fan of walmart(after working for them for 4 years) but if they help people in the process of making a few billion, so what. Sure beats the other business that fled the urban areas.
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