A Dent In Wal-Mart’s Public Image- PR

StrategyPresented By:-

Bhawna Sikka

Nishant Pratap

Arun Yadav

Pooja Jain

Sneha Gera

Sarang Miskin

Nakul Parnami

Presented To:- Prof. Mani Thomas & Class

About Wal-Mart The history of Wal-Mart can be traced back to

the 1940s Sam Walton began his career in retailing at J.C.

Penney 1943: Walton met the Butler Brothers who

owned the retail chain Ben Franklin Stores Ozark Mountain town of 2,900 residents would

become the headquarters for the world's largest retailer

1962: Walton invested 95% of the capital to open the first Wal-Mart store

Introduction To The Case• 2004: Wal-Mart Stores with sales of $256 billion

accounted for 2% of the GDP• Strategy: Everyday low prices and widespread

presence• Emerged as the largest retail store in the world• As it grew in size, it began to draw the attention

of the media and the labor unions• Its non-unionized labor and anticompetitive

practices faced resistance

Contd…• Wal-Mart had been avoiding interaction with the

media and was labeled media-shy • Led to more criticisms against its public relations

policies• Labor lawsuits that alleged low wages, gender

discrimination and illegal immigrant labor further damaged the company’s image

• Consumer advocates publicly claimed that Wal-Mart was bad and cancer on the economy

Contd… Anti-globalization activists blamed the company

for having exploited labor In sweatshops in Bangladesh, China and other

Asian countries to offer low prices to the customers

Campaign Launched• 2005: Launched a major public relations

campaign in 100 newspapers like New York Times, USA Today and Wall Street Journal

• To assure:

1) It was a fair employer

2) It provided most of the health benefits to its employees

• Television advertisements featured Wal-Mart employees especially the women talking about Wal-Mart as a great working place

Contd… For the first time in 43 years, the company had

formally faced media Lee Scott, CEO, Wal-Mart Inc. signed the print

advertisement: “Wal-Mart is working for everyone”

Analysts felt that such a campaign was insufficient to revamp the image, damaged over years

Contd…• This reactive public relations and company’s

defensive stand would further harm the company by attracting more attention

• Other claimed that:

1) By buying media slots in major newspapers, the company was trying to gain favor from media

2) Also, the company was misleading the public with its false claims

For too long, others have had free rein to say things about our company that just aren’t true. We have decided its time to draw our own line in the sand.

-Lee Scott, Chief Executive Officer, Wal-Mart Inc.

I think they are going to have a tough time suddenly overcoming the perceptions of some people. It is going to be a tough sell on their part.

-Larry Bevington, Chairman, Save our Community

Lowest Prices For All- Always World Economies Liberalized, Wal-Mart jumped

to Outsourcing. Continuously focused on its philosophy of

bringing the lowest prices to the customer. It put pressure on its suppliers in US and

Overseas to cut down prices. Wal-Mart became more powerful in its retail

landscape. Wal-Mart demanded the prices of its products to

drop every year which put pressure on its suppliers.

Continued… Merchandise sold in an year was twice more

than all it competitors. Communication strategy revolved around the

lower price strategy that the company believed as its cornerstone.

“Smiley Yellow Face”- promoted its superior image as a discount store that offered quality products at lowest prices.

As Wal-Mart expanded from small towns to large cities, critics questioned its anticompetitive practices.

Continued…. Relied more on central circulars and national

newspapers over local newspapers. In 1994, Fortune magazine named Wal-Mart as

“Most Admired” Company in America. It also faced lawsuits. Critics sent ripples through the public leading to

a large scale opposition against Wal-Mart Local Media were a big criticism to Wal-Mart’s

expansion as it feared increase in failure rate of local stores.

No Comment, Shouts Wal-Mart! Wal-Marts Public Relation took a new turn by the

1990s In December 1992, , in an interview with

NBC,CEO David Glass was questioned about the non-American labor and the low wages of the workers and child labor in sweatshops in Bangladesh

For the charges, Glass affirmed that it was equally depend on American factories for its merchandize and that the Buy American campaign

Not satisfied with Glass reply- NBC in another episode showed Made in USA

labels being hung over the merchandise bought from overseas in most of the Wal-Mart stores

Glass defended that it was mistake at store level and for the child labor he said, we don’t buy from any vendor that uses child labor

Few weeks later, company arranged for another media interaction with channel- Glass remarked that he was not prepared with

facts in previous interview This time, he said, he had evidence to prove that

there is no child labor at the factories in Bangladesh

When reporter insisted showing the videos taken at plants, Glass claimed the videotapes had been doctored and abruptly walked out of the interview.

In another interview with 60 minutes in 1994- When Wal-Mart was charged of impairing growth

of small stores in the country, the company did not react and avoided any interaction with media.

In 1995, during a press meeting at Canada, the company officials seemed so unsure and dubious

However, the growth continued. By 2002, it had 4800 stores and more than $8

billion in revenues.

No Comments, Shouts Wal-Mart..! Wal – Marts was against unionizing labor. Employees were not allowed to interact with

UFCW workers. California and New York oppose Wal-Mart. Discrimination against women. UFCW claimed Wal-Mart workers were paid

30% less than industry norms.

No Comments, Shouts Wal-Mart..! Law suit filed by 1.6 million women workers. Share value drop by 84 cents on NYSE on a

single day. Protests from National Organization for Women. Websites posting criticism about the company.

PR Path: The Defensive Way!

Steps taken to improve its image in the society …

To face communication crisis a PR Team was put in place

Under CEO, Lee Scott PR Campaign in over 100 newspapers were launched

It included the major 1ce like New York Times, Wall Street Journal & others..

Jay Allen, senior VP stated that :-

“Campaign was not response to any recent affairs but was addressed towards long term solution for the image drained over the years”

The CEO confirmed that the campaign wanted to get rid of the MYTHS among the customers, union workers & the public about the company

The CEO also issued an Open Letter in the ads stating that the company provides good jobs with excellent advancement opportunities

PR Team was sent to major metro areas to attend media calls

Employees themselves took initiative to send mails to editors refuting the criticisms

In the Print Advertisements the company held some special interest groups & critics responsible for spreading misinformation

Wal-Mart’s benefits manager sent a letter to New York Times stating that the company provides health benefits to their employees

The district manager wrote a similar letter to The Salt Lake Tribune

The CEO became the 1st person to address the National Retailer Federation Trade Group

In which he openly condemned the medias wide coverage on its imports from china & employees labor policies

The executives declared that IF the policies would have been so bad then the chain would not have grown to the size it did

It changed its low prices proposition which had been guiding its advertising strategy

The commercials the released were not meant to sell any product but focused on creating overall goodwill about the company

“Meanwhile, as the company was working towards restoring good employers image, Federal raids in the store in the country bought to light 200 workers with illegal immigration licenses”

However it reported that the Federal Government had betrayed them…as it stated that “it had already agreed with Federal Government to corporate with the immigration officers in exchange of which it was to be left untouched”

An internal lawyer was appointed to regularly investigate the hiring practices of the company

The company also began to actively corporate to smoothen the investigation process

A professor specializing in Labor Issues stated that “I think we have reached a critical mass of bad publicity for Wal-Mart. Settlements, as expensive as they are, stop the bleeding.”

The company accelerated its image makeover efforts by :- Launching testimonial advertisements 1st time increasing its political donations to

$1 million Other advertisements shoed hoe Wal-Mart

contributed to other local communities In an alliance with NPR (National Public Radio) ,

Wal-Mart announced in radio about it being a good employer

It further began to offer scholarship for journalist studies in about 10 universities nationwide

Some observers claimed that the company was seeing corporate benefits

A Behemoth called Wal-Mart.. Revenue- US$ 421.849 billion. Nearly 2 % contribution to the GDP. Wal-Mart employs 2.1 million associates

worldwide in more than 6,700 stores in the US and more than 1,500 throughout the rest of the world.

Serves more than 138 million customers per week.

“Wal-Mart’s very success may be working against it. Big empires are hard to manage, the public tends

to mistrust institutions that get too mighty.“

– David Berkowitz (Brand Consultant)

Wal-Mart- Accused of doing PR the wrong way. What went wrong ?

Media stone-walling. ‘No Comment’ strategy. Company’s hesitant attitude.

Remedial Measures undertaken : Paid search Ads from Yahoo and others. Launched walmartfacts.com

walmartfacts.com Press Releases. Community Fact Sheet Corporate & Financial Fact Sheet Health & Wellness Fact Sheet Opportunity Fact Sheet Sustainability Fact Sheet How many jobs we provide Average wages Supplier jobs we support How we give back in your community

The Bigger The Worse (Contd.) Negative publicity – bloated in size – affect the growth

prospects of a company as large as Wal-Mart.

UFCW skeptical about the facts revealed – believed that the company was trying to solve the problem temporarily – in reality was misleading the media and the public.

The Democratic Socialists of America challenged Wal-Mart to prove the facts – opportunity to debate its critics.

One PR campaign would not negate the long list of PR blunders of the earlier years.

The Bigger The Worse (Contd.) Not going to make Wal-Mart look like a great place for

low wage workers – downsides too well known.

Must be followed by changes at the factory level – comparing it with the pro smoking ads of the 1930s and 1940s – smoke-and-mirrors diversion tactic.

Image of the company hanging on the prevailing lawsuits regarding gender discrimination and the immigrant labor.

No lawsuits If the labor policies were flawless.

The Bigger The Worse (Contd.) Humility and acknowledging mistakes – willing to

make good.

Spend money on wages and solving problems instead of unrealistic and glossy advertisements.

Wal-Mart’s Financial ResultsYear Revenue($Mi

l.)Net Income Net Profit

MarginEmployees

Jan 04 256,329.0 9,054.0 3.5% 1,500,000

Jan 03 244,524.0 8,039.0 3.3% 1,400,000

Jan 02 217,799.0 6,671.0 3.1% 1,383,000

Jan 01 191,329.0 6,295.0 3.3% 1,244,000

Jan 00 165,013.0 5,377.0 3.3% 1,140,000

Jan 99 137,634.0 4,430.0 3.2% 910,000

Jan 98 117,958.0 3,526.0 3.0% 825,000

Jan 97 104,859.0 3,056.0 2.9% 728,000

Jan 96 93,627.0 2,740.0 2.9% 675,000

Jan 95 82,494.0 2,681.0 3.2% 622,000

Stock ValueYear Stock Price ($) P/E Per Share ($)

FYHigh

FYLow

FYClose

High Low Earns Div. Book Value

Jan 04 60.75 46.01 53.85 29 22 2.07 .36 10.12

Jan 03 63.94 41.50 47.80 35 23 1.81 .30 8.95

Jan 02 59.98 41.50 59.98 40 28 1.49 .28 7.88

Jan 01 64.94 41.44 56.80 46 30 1.40 .24 7.01

Jan 00 70.25 38.88 54.75 56 31 1.21 .20 5.80

Jan 99 43.22 20.09 43.00 44 20 .99 .16 4.75

Jan 98 20.97 11.50 19.91 27 15 .78 .14 4.13

Jan 97 14.13 10.06 11.88 21 15 .67 .11 3.75

Jan 96 13.81 9.55 10.19 23 16 .60 .10 3.22

Jan 95 14.63 10.31 11.44 25 17 .59 .09 2.77

Conclusion

Wal-Mart has been growing at an impressive rate. But, there is no smoke without fire. Present hard facts and figures to the media. Adopt media friendly strategy with backup. Solve problems from within.