In a page one story yesterday, the New York Times reported that while Wal-Mart often is perceived as a dominant threat to almost every other business on the planet, “there is one company that even Wal-Mart eyes warily these days: Google, a seven-year-old business in a seemingly distant industry.”
The NYT writes that when it looks at the Google’s search engine and its potential, “Wal-Mart sees both a technology pioneer and the seed of a threat” and that “the worry is that by making information available everywhere, Google might soon be able to tell Wal-Mart shoppers if better bargains are available nearby.”
Jim Breyer, a member of Wal-Mart’s board of directors as well as a partner in a Silicon Valley venture capital firm, tell the Times, "We watch Google very closely at Wal-Mart.”
Small wonder. As the NYT writes, Google “could extend its economic reach in the next few years as more people get high-speed Internet service and cell phones become full-fledged search tools, according to analysts. And ever-smarter software, they say, will cull and organize larger and larger digital storehouses of news, images, real estate listings and traffic reports, delivering results that are more like the advice of a trusted human expert.” (And, it must be noted, that it isn’t just Google – companies like Yahoo! and Microsoft also are in the search business, and are looking for ways to eclipse Google’s growth)
It is probably no coincidence that this story ran on the same weekend as a plethora of stories in numerous newspapers about the economic summit that Wal-Mart convened in Washington, DC, last Friday.
The Financial Times reports that among the presentations made at the conference, Global Insights released a study – based on what it said was unprecedented access to the company’s people and operations - supporting “Wal-Mart's repeated assertion that it has delivered net benefits for the average American, concluding that the retailer had saved each US household an average of $2,329 in 2004 both as a direct result of its low prices and as an indirect result of its impact on suppliers and other retailers.
“On the more controversial issues of the impact on jobs and wages, the research concluded that the retailer had created an additional net 210,000 jobs in 2004 – 10 per cent of the total jobs created nationwide that year.
“But it also found that Wal-Mart had created a 2.2 per cent fall in wages across the whole economy – a central assertion of its labor union critics. However, it said there was no evidence of Wal-Mart paying below market wages, and asserted that this fall in nominal wages was offset by retailer's impact on consumer prices, resulting in a 0.9 per cent net increase in real disposable income in 2004.”
The Washington Post reported: “Among the findings in other presentations: that the average state spends about $898 per Wal-Mart worker in Medicaid expenditures; that items typically sold in drugstores, such as aspirin and shampoo, decline in price when Wal-Mart enters a market; and that Wal-Mart stores had an adverse effect on retail employment, total employment and total payroll per person in the South, where Wal-Mart stores are numerous and where they have been open the longest.”
MarketWatch writes that “Wal-Mart's growth over the 1985 to 2004 period was related to a cumulative decline of 9.1% in food prices, a 4.2% drop in prices of commodities and a 3.1% decrease in overall consumer prices as measured by the consumer price index.” However, MarketWatch also reports that “a study done through the University of California and Rutgers University found that there= was an $11.46 an hour gap in wages and benefits between union grocery workers and Wal-Mart food workers.”
The Washington Post tried to put the issues into context in a week-in-review piece yesterday: “It was probably inevitable that Wal-Mart would come to be viewed not just as an incredibly successful company but as a metaphor for everything that is right and wrong about American capitalism. No company had ever gotten so big so fast, had more customers or employed more people…Its impact has been so profound that economists can now quantify its effect on what things cost, what people make, what fringe benefits they get, and how fast jobs and wealth have been created. And that's true not just in the United States, but in countless countries around the world.”
The Post notes that “for all this public scrutiny, Wal-Mart is an intensely private company, with an insular culture, that is only just now learning to use tools long since taken for granted by other large businesses.” That means hiring management “gurus” (McKinsey & Co.), public relations firms (Edelman) and other consultants (Global Insights) to help it understand how to better position itself in the minds of consumers and thought-leaders.
It isn’t just perception that Wal-Mart is concerned about; there also are some cold economic realities, and with “its same-store sales rising only 3 percent, its stock price languishing and even once-loyal customers beginning to turn away because of all the bad publicity, Wal-Mart probably has no choice but to deal with it.”
Another thing that Wal-Mart is dealing with is continued attack by people and organizations that believe it is the devil incarnate. There is a documentary produced by Robert Greenwald, “Wal-Mart: The High Cost Of Low Prices,” which accuses the company of exploiting its employees and ruining local economies.
Wal-Mart is hardly turning the other cheek to the Greenwald film. The company released a statement saying that “no matter how much Robert Greenwald talks to the special interests, he just won't change the personal experiences that our customers, our associates, and the American people have with our company…Mr. Greenwald has done a disservice to his audience. With his refusal to correct previous errors and by perpetuating even more, he has managed to fully discredit his video. After spending $2 million of his own money and the money of his still-undisclosed donors, it appears Mr. Greenwald is left with an error-ridden propaganda video that just doesn't appeal beyond the special interests he represents.”
So there.
At the same time, Wake Up Wal-Mart, an activist organization that is supporting the release of the Greenwald film, announced that it is creating a national organization that will advise Wal-Mart employees of their rights and support their efforts to be heard and treated better. While this new association is not a union – an assertion made early and often by Wake Up Wal-Mart – it certainly can be seen as an end-run around Wal-Mart’s anti-union strategies.
At the end of Friday’s conference, Ray Bracy, Wal-Mart’s vice president of corporate affairs, said that the company is working to provide greater visibility into its practices, to charge the things that need to be changed, and offer a reasoned defense of its strategies. “We’re trying to be more transparent,” Bracy said.
The NYT writes that when it looks at the Google’s search engine and its potential, “Wal-Mart sees both a technology pioneer and the seed of a threat” and that “the worry is that by making information available everywhere, Google might soon be able to tell Wal-Mart shoppers if better bargains are available nearby.”
Jim Breyer, a member of Wal-Mart’s board of directors as well as a partner in a Silicon Valley venture capital firm, tell the Times, "We watch Google very closely at Wal-Mart.”
Small wonder. As the NYT writes, Google “could extend its economic reach in the next few years as more people get high-speed Internet service and cell phones become full-fledged search tools, according to analysts. And ever-smarter software, they say, will cull and organize larger and larger digital storehouses of news, images, real estate listings and traffic reports, delivering results that are more like the advice of a trusted human expert.” (And, it must be noted, that it isn’t just Google – companies like Yahoo! and Microsoft also are in the search business, and are looking for ways to eclipse Google’s growth)
It is probably no coincidence that this story ran on the same weekend as a plethora of stories in numerous newspapers about the economic summit that Wal-Mart convened in Washington, DC, last Friday.
The Financial Times reports that among the presentations made at the conference, Global Insights released a study – based on what it said was unprecedented access to the company’s people and operations - supporting “Wal-Mart's repeated assertion that it has delivered net benefits for the average American, concluding that the retailer had saved each US household an average of $2,329 in 2004 both as a direct result of its low prices and as an indirect result of its impact on suppliers and other retailers.
“On the more controversial issues of the impact on jobs and wages, the research concluded that the retailer had created an additional net 210,000 jobs in 2004 – 10 per cent of the total jobs created nationwide that year.
“But it also found that Wal-Mart had created a 2.2 per cent fall in wages across the whole economy – a central assertion of its labor union critics. However, it said there was no evidence of Wal-Mart paying below market wages, and asserted that this fall in nominal wages was offset by retailer's impact on consumer prices, resulting in a 0.9 per cent net increase in real disposable income in 2004.”
The Washington Post reported: “Among the findings in other presentations: that the average state spends about $898 per Wal-Mart worker in Medicaid expenditures; that items typically sold in drugstores, such as aspirin and shampoo, decline in price when Wal-Mart enters a market; and that Wal-Mart stores had an adverse effect on retail employment, total employment and total payroll per person in the South, where Wal-Mart stores are numerous and where they have been open the longest.”
MarketWatch writes that “Wal-Mart's growth over the 1985 to 2004 period was related to a cumulative decline of 9.1% in food prices, a 4.2% drop in prices of commodities and a 3.1% decrease in overall consumer prices as measured by the consumer price index.” However, MarketWatch also reports that “a study done through the University of California and Rutgers University found that there= was an $11.46 an hour gap in wages and benefits between union grocery workers and Wal-Mart food workers.”
The Washington Post tried to put the issues into context in a week-in-review piece yesterday: “It was probably inevitable that Wal-Mart would come to be viewed not just as an incredibly successful company but as a metaphor for everything that is right and wrong about American capitalism. No company had ever gotten so big so fast, had more customers or employed more people…Its impact has been so profound that economists can now quantify its effect on what things cost, what people make, what fringe benefits they get, and how fast jobs and wealth have been created. And that's true not just in the United States, but in countless countries around the world.”
The Post notes that “for all this public scrutiny, Wal-Mart is an intensely private company, with an insular culture, that is only just now learning to use tools long since taken for granted by other large businesses.” That means hiring management “gurus” (McKinsey & Co.), public relations firms (Edelman) and other consultants (Global Insights) to help it understand how to better position itself in the minds of consumers and thought-leaders.
It isn’t just perception that Wal-Mart is concerned about; there also are some cold economic realities, and with “its same-store sales rising only 3 percent, its stock price languishing and even once-loyal customers beginning to turn away because of all the bad publicity, Wal-Mart probably has no choice but to deal with it.”
Another thing that Wal-Mart is dealing with is continued attack by people and organizations that believe it is the devil incarnate. There is a documentary produced by Robert Greenwald, “Wal-Mart: The High Cost Of Low Prices,” which accuses the company of exploiting its employees and ruining local economies.
Wal-Mart is hardly turning the other cheek to the Greenwald film. The company released a statement saying that “no matter how much Robert Greenwald talks to the special interests, he just won't change the personal experiences that our customers, our associates, and the American people have with our company…Mr. Greenwald has done a disservice to his audience. With his refusal to correct previous errors and by perpetuating even more, he has managed to fully discredit his video. After spending $2 million of his own money and the money of his still-undisclosed donors, it appears Mr. Greenwald is left with an error-ridden propaganda video that just doesn't appeal beyond the special interests he represents.”
So there.
At the same time, Wake Up Wal-Mart, an activist organization that is supporting the release of the Greenwald film, announced that it is creating a national organization that will advise Wal-Mart employees of their rights and support their efforts to be heard and treated better. While this new association is not a union – an assertion made early and often by Wake Up Wal-Mart – it certainly can be seen as an end-run around Wal-Mart’s anti-union strategies.
At the end of Friday’s conference, Ray Bracy, Wal-Mart’s vice president of corporate affairs, said that the company is working to provide greater visibility into its practices, to charge the things that need to be changed, and offer a reasoned defense of its strategies. “We’re trying to be more transparent,” Bracy said.
- KC's View:
-
Wal-Mart is trying to be more transparent.
Not that it has any choice.
This final comment by Bracy brings us back to the beginning of our story, and the concerns that Wal-Mart has about Google’s ability to provide consumers with real time information about its prices and strategies.
Read this sentence from the Times piece again:
“The worry is that by making information available everywhere, Google might soon be able to tell Wal-Mart shoppers if better bargains are available nearby.”
That kind of transparency can be both a weapon and a curse, because it creates a completely empowered consumer class – one that could, at the end of the day, make decisions not just based on price, but on value defined in myriad ways, or on how employees are compensated at a particular store, or how the health department has rated a specific location, or how other consumers have rated the store.
This kind of transparency doesn’t just affect Wal-Mart. It can impact retailers and manufacturers of every stripe, becoming for them both weapon and/or curse.
There probably are a lot of companies out there taking comfort in the fact that Wal-Mart is undergoing an extended corporate proctology exam. They should not.
Wal-Mart is going through it first because it is big, it is ubiquitous, and because it had made both real and perceived missteps over the years that continue to haunt it. Wal-Mart is a unique American success story, and this makes it role model, metaphor and target.
But every company can and likely will face this sort of examination. Transparency is a distinctive fact of modern life with which we all must cope. It can be an advantage or a drawback.
