business news in context, analysis with attitude

1. The New York Times reports that all of Walmart’s recent efforts at polishing its reputation and nurturing better relations with the communities in which it does business - or, more importantly, wants to do business - may be for naught, as the reverberations from the Mexico bribery scandal may be catching up with it.

According to the story, “In Los Angeles, a Wal-Mart building permit is getting a once over. In New York, the City Council is investigating a possible land deal with the retailer’s developer in Brooklyn. A state senator in California is pushing for a formal audit of a proposed Wal-Mart in San Diego. And in Boston and its suburbs, residents are pressuring politicians to disclose whether they have received contributions from the company.

“All of it in the past week.”

And while Walmart has pledged to continue its expansion efforts regardless of the Mexico controversy, the story notes that “the scandal in Mexico has provided opponents with new ammunition,” and it may be hard - at least for the moment - for Walmart to fight back effectively.

Last weekend, the Times provided an inside look at Walmart’s Mexico division, suggesting that its fast growth over the past decade was fueled by bribes, and that top management was more concerned with details not being revealed and investigations not being allowed to move forward than it was with stopping the systematic corruption and adhering to US law that forbids American companies from bribing foreign officials.

2. Reuters reports that Walmart is getting a little pressure from within the organization for a change in top management as a result of the bribery scandal that came to light a little more than a week ago.

According to the story, Venanzi Luna, a deli manager at a Walmart store in Pico Rivera, California, has launched an online petition calling for the resignations of company chairman S. Robson Walton and CEO Mike Duke, as well as for “"a thorough and independent investigation by a highly-respected external organization."

Luna, a seven-year Walmart employee who comes from Mexico, tells Reuters, "Nobody should get away with bribery, and they should be held accountable for that.”

Luna’s goal is to get 10,000 signatures on the petition; as of this writing, she has more than 5,400.

3. In an analysis of Walmart’s new “Buy Online, Pay In Cash” initiative, Forbes suggests that the concept isn’t just good for the 1-24 percent of the US population that does not have a relationship with a bank, but also for teenagers who want to make purchases from digital devices but do not qualify for credit cards: “Paying in cash is their only option and Walmart’s solution is perfect for this demographic.”

Add these two groups together, the piece suggests, and Walmart is positioning itself as a relevant mobile solution for an audience that Amazon to this point has been ignoring.

“Paying for something in cash goes hand in hand with this hand to mouth population,” Forbes writes.

In case you missed the story last Friday, here’s how the new Walmart initiative works:

“Customers go to from any Internet-connected device to select an item and place an order. During checkout, the customer selects the ‘cash’ option and their shipping preference. Customer immediately receives an order number on the order confirmation page and an email receipt with their order number. The item is reserved in the system. The customer has 48-hours to take the printed order form to any cash register of any Walmart store or Neighborhood Market. Once cash payment is completed in the store and received, shipping then occurs via Site to Store or to their preferred address.”
KC's View:
Let’s see....I’ll take these in reverse order.

3. I’m not entirely convinced about the Walmart pay-by-cash concept. Sure, it appeals to the unbanked, but the process isn’t exactly convenient. Still, I think it is a smart idea to test it and see if it can attack Amazon on the flank that the e-tailing pioneer has not been protecting. (If it works, expect to see a lot of other retailers looking to develop their own versions...)

2. What’s the over/under on how long Venanzi Luna’s Walmart career lasts?

That said, her petition throws a spotlight on a cultural problem that the bribery scandal may be creating for Walmart ... a sense that this American behemoth comes into countries and just throws money around to get what it wants. Not great for Walmart, and not all that hot for America, either.

1. As for the bribery scandal creating a domino effect that could plague Walmart both in the US and around the world, this could be the sad legacy of the Lee Scott - Mike Duke - Eduardo Castro-Wright era, depending on how it all plays out. It may be that their emphasis on short-term goals could create a long-term set of problems with which their successors will have to grapple.