For years, Wal-Mart has been accused of destroying Main Street, exploiting employees and raping labor markets of the developing world. With the premiere this week of an anti-Wal-Mart documentary film, the company’s PR response includes a “war room,” staffed with political operatives, to get out the good news and counter the bad. New York Times reporter Steven Greenhouse tells Daljit that one goal is to win the hearts and minds of middle-class consumers.
BOB GARFIELD: This is On the Media. I'm Bob Garfield.
DALJIT DHALIWAL: And I'm Daljit Dhaliwal. Being the world's largest retailer and North America's largest private employer has advantages and disadvantages. At Wal-Mart, everyday low prices have also translated into everyday bad publicity. For years it has been accused of destroying Main Street, exploiting employees, and raping the labor markets of the developing world. With the premiere this week of an anti-WalMart documentary film, the company's PR challenges are going to the next level, and so too is the PR response, a war room staffed with political operatives and public relations specialists to get out good news and confront the bad. Apart from the short-term urgency, says Steven Greenhouse, workplace and labor reporter for the New York Times, the goal is to win the hearts and minds of middle-class consumers the company is increasingly anxious to win over. And he joins us now. Steven, welcome to the show.
STEVEN GREENHOUSE: Happy to be here.
DALJIT DHALIWAL: Okay. Well, let's talk about some of these people who are in the political war room. Who are the heavy-hitters behind Wal-Mart's makeover?
STEVEN GREENHOUSE: There are some very heavy hitters, including one of the heaviest of all, Michael Deaver, who was one of Ronald Reagan's key image advisors, and then there's Leslie Dach, who was a media advisor to Bill Clinton, and Jonathan Adashek, who was head of national delegate strategy for the Kerry campaign. They've hired the Edelman public relations firm, one of the most respected public relations firms in the country, and they have many other operatives from Republican campaigns and Democratic campaigns. I think in ways what Wal-Mart's doing is it's often viewed as a red-state company and is hiring some blue-staters to help them especially with the opposition they face in blue states and, you know, some of the bluest of cities, like L.A., Chicago and New York. And they're hoping that some of these Democratic operatives will have ties to Democrats and labor unions.
DALJIT DHALIWAL: So why is Wal-Mart going down this route?
STEVEN GREENHOUSE: For many years Wal-Mart was growing slowly and the cultural lead, the news media did not pay much attention to them. And now Wal-Mart's getting criticized by a movie, by several groups supported by unions that are seeking to pound Wal-Mart very hard to pressure Wal-Mart to improve its wages and benefits. The largest class action employment lawsuit in American history is pending against Wal-Mart, and the lawsuit alleges that Wal-Mart discriminated against women in promotions and pay, more than one and a half million women, and Wal-Mart's very, very worried that the lawsuit could alienate a lot of its customer base and discourage some consumers from shopping at Wal-Mart.
DALJIT DHALIWAL: And you wrote about an internal Wal-Mart memo leaked to the New York Times a few weeks ago detailing the company's plans to aggressively keep down employee health benefits while minimizing damage to the company's reputation. Now, that was a particularly high-profile embarrassment. Given this, do you see their P.R. effort then as a charm offensive or are they really talking about making more substantive changes to their business practices?
STEVEN GREENHOUSE: I would think it's mainly a charm offensive, and this memo makes very clear that they're extremely image-conscious. And I think if you read the memo closely, it appears that they're trying to improve their image on the cheap. They say they're increasing their benefits but they plan to pare their benefits spending by about a billion dollars over the next few years, or they hope to, at least.
DALJIT DHALIWAL: And they're also offering things like journalism scholarships. What's that about?
STEVEN GREENHOUSE: I think that's very smart of them. About a year ago they decided, "we're going to go out into the public forum and we're going to improve our image and we're going to give money to many African-American groups, to Hispanic groups" and, miracle of miracles, they're also sponsoring these journalism fellowships.
DALJIT DHALIWAL: There was a recent article in the New York Times which said that Wal-Mart had taken a page essentially out of the political playbook and that it was chasing the swing voter.
STEVEN GREENHOUSE: Wal-Mart realizes that it has many very loyal consumers. You know, 80, 85 percent of the American people shop at Wal-Mart each year. It also realizes that there are naysayers, liberals, you know, folks who live in New York City or Vermont who just aren't going to shop at Wal-Mart. But Wal-Mart also realizes that there's a group of swing shoppers, or swing voters, who could perhaps be swayed to stop shopping at Wal-Mart if they see these negative movies, read these negative articles. Wal-Mart hired McKinsey and Company, the consulting firm, and McKinsey found that somewhere between two and eight percent of shoppers have decided to stop shopping at the company because they've been affected by negative information about Wal-Mart.
DALJIT DHALIWAL: Well, one place where the company did get a lot of brownie points was the way in which they swung into action with their Katrina relief efforts. It's no secret that Wal-Mart has legions of critics, but are they getting credit where credit is due?
STEVEN GREENHOUSE: I think Wal-Mart did a marvelous job on Katrina. CEO Lee Scott is brilliant at distribution and logistics. Someone wrote an article saying that Lee Scott should have been hired as head of FEMA. Wal-Mart certainly did a better job than FEMA in getting important materials out to its stores when FEMA lagged behind, and Wal-Mart really then tried to milk that to get some good publicity.
DALJIT DHALIWAL: And you've also written that Wal-Mart has these designs on the middle-class urban taste-makers, so to speak, and that is a consumer base that's different from the one that they've built their business around essentially. How has this changed their message then and their ads, and also their image?
STEVEN GREENHOUSE: Wal-Mart traditionally focused on the low-income shopper, especially in the South. And it's seeing that income, wages for the bottom half of American society, is not growing very rapidly. The top half has been doing better in terms of earnings. And Wal-Mart sees Target and Neiman-Marcus and Saks doing better than Wal-Mart in terms of comparable store sales and it says, hey, we want some of that, we want more of that. So it's moving upscale and it's going after a more sophisticated market, people who read papers like the Washington Post and the New York Times and BusinessWeek and see negative stories about Wal-Mart.
DALJIT DHALIWAL: Steven, thanks very much for joining us on the program.
STEVEN GREENHOUSE: Thank you very much. Happy to be here.
DALJIT DHALIWAL: Steven Greenhouse is a labor and workplace reporter for the New York Times. [MUSIC UP AND UNDER]