Archive for November 16th, 2006

What’s Wal-Mart’s Problem and What Should They Do?

November 16, 2006

I’ve commented about Wal-Mart’s blogging issues related to Edelman and also commented (via Business Week) about their overall crisis situation. Consequently, I’ve gotten some email messages from those involved in criticizing the company–including those hosting online critic sites. So I thought I might add to the Wal-Mart debate my own thoughts about their situation. So here in no particular order are a few things I’d say about it.

– I think Edelman is one of the very best PR agencies out there, a true leader in adapting to the online communication environment. I think the “flog” problem was one of not properly communicating ethical standards throughout the entire organization. I may be wrong, but unlike other critics, I don’t think the senior management made that decision to surreptitiously support the Wal-Mart blog.

– Wal-Mart is in crisis. Deep crisis. Here’s why. In the US the public sentiment is such that communities in various parts of the country have successfully adopted highly specific ordinances aimed at keeping them out–just happened again in my home town. Secondly, the real crisis is that they have become politicized. The public is starting to see those opposed to the company aligned on the Democratic side and those supporting on the Republican side. No company in their right mind wants to be so associated, thereby kissing goodbye approximately half of the market. Especially one who aims to be American’s retailer.

– I am neither for nor against Wal-Mart personally. I go there very infrequently and usually with some sense of guilt–but I don’t refuse to go. I think it is a remarkable success story one that illustrates both the best and worst of the American spirit of free enterprise.

– Their overpowering competitive advantages have hurt countless small business owners, some of whom I know personally. At the same time, their low prices have benefited many more countless families–particularly low income families who have had their meager income stretched by the quite remarkable cost savings offered by Wal-Mart.

– Wal-Mart pays its people way too little. And yet, they employ an awful lot of people who otherwise may not be employable. I am always struck at the Wal-Mart employees who are on the front line of a company that is a world leader in efficient operation because, frankly, many a considerable number of people do not strike me as the most efficient and employable people in the world, let alone our community.

So, what would I do if I was advising Wal-Mart:

1) Take a close look at the harsh criticism and start paying attention to what is real in it. Some examples: Get to be too dominating and mean in your purchasing and you are bound to tick off enough people often enough so that you will be hated. Sure, the suppliers you push around are not the general public. But continue to play a “I win, you lose” game and before long everyone will hate you. No one likes a bully–and Wal-Mart, you are a huge bully. Another: health benefits. You are pushing health care costs onto all the rest of us. The states and hospitals who are forced by regulations to provide charity care for the uninsured are paying for what you refuse to in the name of hyper-efficiency. Well, we are sick of it. Pay your share or face the consequences of our anger.

2) Tell your story better. Once you get past fixing the things you really need to fix, you’ve got a long ways to go to earn our trust and respect. Don’t just tell us your charities. Tell us how what you have learned in becoming a dominant giant can help all of us in business. Tell us the battle you are in with the unions and why it is important that companies have the right to offer employment to non-union employees. Tell us why what you do is good for free enterprise and for protecting the market system. Defend yourself, defend your practices–particularly when they line up with the values we hold precious. You’ve got to engage with your critics, with your supporters and the public. There’s a big conversation going on. We don’t want just the happy face on everything. We’d like to see that you are struggling with these things and dealing with them. We want to know you are listening, and that it matters to you not just that enough people keep buying your deals, but that you respect what is important to us. In other words, engage, listen, respond, change, and convince us that you are good and right for our nation and our communities.

And if you can’t do those things, you run the risk of losing the public franchise, the public license to operate. And you will be in a slow and painful decline that one senses you have already begun.