Wal-Mart’s business and reputation are growing. CEO Lee Scott is leaving the company on a deserved high. There’s a twist: it looks like the “bad” old lean Wal-Mart is what’s doing well, not the reborn touchy-feely version.
The Economist describes how boom time was actually his worst time, and how “the credit crunch has been Mr Scott’s friend”.
Instead she comments:
Scott has had to deal with more publicly humiliating challenges than most CEOs – law suits by female employees, discrimination charges, low wages and treatment of employees, bad benefit packages, etc. Then lo and behold, Lee Scott took it all on, listened to his critics, changed direction and succeeded. I could not agree more with The Economist’s point of view.
Up to a point, Lord Copper. She does not seem to get the Economist‘s point of view.
First, let’s get this straight. Wal-Mart’s greening (“Sustainability 360”) and adaption to consumer demand is to be welcomed. If customers want low fat yogurt, longer-lasting light bulbs, more choice of different varieties of produce, including wholemeal, free-range eggs and chickens, environmentally friendly minimalist packaging, good for them. No company can bring such economies of scale to market to satisfy these demands like Wal-Mart can. Big can be both beautiful and low cost. Mass retailers are driven by their very essence to be “a trusted friend and ally to all”.
There’s also no doubt that Wal-Mart has transformed aspects of its culture in line with modern times. The company has even found ways to make energy efficiency pay. It rightly demands that its suppliers obey tough ethical rules on labour, safety and environmental standards. Why would it accept lower standards from them that it sets for its own workforce?
The Economist cites how eco-warriors such as Jeffrey Hollender are now convinced that Wal-Mart is on the right trajectory.
However, and most pointedly, the Economist explains that Lee Scott’s improved fortunes owe more to returning to Sam Walton’s approach than shifting away from it. As the paper explains, in late 2006 (after a spell of softening the firm’s image and being a little more interested in higher-margin upscale consumers) Mr Scott decided to return Wal-Mart to its low-cost roots. As a result, the Economist comments, Wal-Mart was perfectly placed when the economy started to slow, and price moved to the top of the consumer agenda.
The Economist explains how Whole Foods’ share price has plunged by about three-quarters this year and how Wal-Mart has done just enough to satisfy the increasingly cost-conscious middle class demand.
But lawsuits remain. Wal-Mart Watch says that Wal-Mart still faces 80 lawsuits at various stages of the legal process over so-called wages and hours violations alone. Workers remain un-unionised.
Wal-Mart’s core defense is that it does good as a progressive company, employer and neighbour. That case never really changed and was and is robust. More recently, it has been more forcibly communicated.
My point is that I fear that PRs have become too fond of a mantra and a marketing strategy which fits their own liberal view of the world. Too many of my trade are forgetting that they are not campaigners or propagandists for anything except their clients. They fear that unless they promote a business-plus agenda, they will have sold their soul.
There are a couple of things wrong with this. One, PRs are not especially wise about morality and may look for it the wrong places. Second, being dreamy does not give us credibility as professionals. It does nothing to impress the boards and executives responsible for forming real policy. It doesn’t help us when we argue for honest messaging. In other words, because we are always on the side of the angels we happen to approve of but know little about, we lose leverage when we make a professional case on stuff we really ought to know about.
In the case of Wal-Mart’s brand, too many PRs will miss the point.
Oddly, as Wal-Mart thrives in the recession (by making people’s tough pose a bit less tough) we can expect another twist in this story. More websites still target Wal-Mart than any other corporation. Its very success provokes a substantial backlash (remember the struggle to open a Wal-Mart store in Queens, New York) not least among those whose business or lifestyle is threatened. But so what?
Without that tension, Wal-Mart’s brand would be worthless, unidentifiable, stand for nothing and have no core constituency upon which to build its business. Let’s get real, authentic, frank and in line with the facts.