Declaring War On Wal-Mart

Critics have had a field day with Wal-Mart stores Inc. (WMT ) in recent years, coining the term Wal-Martization to slam it for everything from alleged sex discrimination to poverty-level wages. The world's largest retailer finally got so fed up that it launched a 100-newspaper ad blitz in January to get out the message that "Wal-Mart is working for everyone."

Far from calming the critics, however, Wal-Mart's move has been more like blood in the water -- particularly to organized labor, which is gearing up to launch what's likely to be its most ambitious effort ever against any company. The centerpiece: a massive national campaign to spotlight Wal-Mart's employment practices.

The aim isn't to unionize the retailer's 1.6 million workers, although that's still a long-term goal. Instead, the AFL-CIO intends to exploit Wal-Mart's image problems to drive away some business -- enough, it hopes, to get the Bentonville (Ark.) company to alter its policies. "This will be an effort by the entire labor movement," vows AFL-CIO Secretary-Treasurer Richard L. Trumka. Wal-Mart spokesperson Sarah Clark denies that the company's low prices depend on low wages. "Evidently [labor leaders] feel they gain an advantage by making us look bad with a new publicity campaign," she says.

Labor's plans come as Wal-Mart is vulnerable on several fronts. The company's stock price has remained virtually flat for five years, due in part to Wall Street's disappointment at the retailer's single-digit same-store sales growth. And all the negative publicity has hurt Wal-Mart employees' morale. As a result, some shoppers now find them less friendly and courteous than they were in the late '90s, says Chris Ohlinger, CEO of Service Industry Research Systems Inc., a market research firm that conducted a study on Wal-Mart customer attitudes. Says Wal-Mart Director of Investor Relations Pauline Tureman: "There are probably people who've made the decision not to shop at Wal-Mart because of the public criticism, but we can't quantify it."

Given this backdrop, unions could inflict real pain. The AFL-CIO is planning an effort modeled on its powerful get-out-the-vote political machine. Headed by a veteran labor and Democratic politico, Ellen Moran, it aims to engage hundreds or even thousands of union members to do mailings, phone banks, and work-site visits to convince labor households and, later, the public, that Wal-Mart undercuts living standards. The campaign won't call for a boycott, but labor leaders say focus group studies they've done show that some people may shop elsewhere if told of Wal-Mart's actions.

The campaign will be bolstered by a nonprofit umbrella group, the Center for Community & Corporate Ethics, founded late last year by the Service Employees International Union with $1 million in seed money. Its goal: to coordinate Wal-Mart's disparate critics, from women's groups to environmentalists. "Wal-Mart hurts small merchants, destroys habitats, and increases profits at the expense of local communities," says Sierra Club Executive Director Carl Pope,a center board member.

Wal-Mart's low prices remain irresistible, especially to the working poor who labor aims to help. Even so, if all its critics gang up, the company could have its hands full protecting its image.

By Aaron Bernstein in Washington

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