Wal-Mart Woes

The article on the front page of the WSJ today ought to provide some clue as to whether Wal-Mart (WMT) is the "knight in shining armour" or the "evil empire." For decades, WMT has been regarded as a friend to the consumer, dramatically increasing the purchasing power for the middle and lower classes. Suddenly, WMT is touted as the "evil empire," mistreating employees, customers and vendors. I have been shocked by comments on WMT by clients and prospective clients. It's like hearing about the local high school athlete and scholar who is now rumoured to be a neighborhood rapist. The business of reputational change is not only fascinating but critical to investing. So, what's going on here?

The article details two organizations: Wake Up WalMart.com and Wal-Mart Watch. The first organization, call it "wake up," is financed by the grocery workers union. The second organization, call it "watch," is financed by the service workers union. Both organizations have alot in common. They both were "born out of the four-month grocery strike against Safeway, Albertsons and Kroger in Southern California two years ago. The big chains argued that they had to cut wages and benefits in order to compete with Wal-Mart, and the workers ultimately made significant givebacks." In addition, they are both top-heavy with former Democratic party campaigners from Howard Dean and John Kerry campaigns. Despite such similarities, it appears that there are some theological differences.

"Wake up" ran recent ads focusing on discouraging Christians from shopping at Wal-Mart because Jesus would not embrace Wal-Mart's values of "greed and profit at any cost." However, "watch" holds that Jesus would say the ad was a mistake. How strange. WMT was a hero to Americans for taking away from the profits of small businesses and redistributing them as lower-priced goods. The name of Jesus was never invoked. Now, WMT, for doing the same job it's always done, except impacting unions rather than small business owners, is suddenly such a villain as to justify the name of Jesus and the wrath of Christians. To me, it just looks our our local athlete/scholar has hurt the wrong girl's feelings.