Opposition Costs Wal-Mart, Analyst Says
Posted on March 9, 2007 by webteam
From Bloomberg News:
Union opposition to Wal-Mart Stores Inc., the world’s largest retailer, is hurting its sales and efforts to open new stores in a “meaningful” way, while helping its rivals such as Target Corp., a Bank of America analyst says.
“The union fixation has made zoning victories tough’’ in localities for building new stores, and it is “distracting management from focusing on its retail strategy,” analyst David Strasser wrote in a report yesterday.
Wal-Mart has come under attack from labor groups that say the company needs to boost wages and health coverage for its workers. Politicians, including two Democratic presidential candidates, Senator Barack Obama and former Senator John Edwards, have also criticized the company’s labor practices.
Strasser estimated that total funding of union campaigns, which include the Washington-based groups Wal-Mart Watch and Wake-Up Wal-Mart, could be more than $20 million. He said the funding has grown “substantially” since the groups formed two years ago. The groups have also become more sophisticated, he wrote.
“We believe the campaign is hurting Wal-Mart, while benefiting the supermarkets as well as Target,’’ wrote Strasser, who rates Wal-Mart shares “buy.” Sales at stores open at least a year rose 2.1 percent last year at Wal-Mart and 4.8 percent at Target, the second-largest discount chain.
Wal-Mart this year began two nationwide television commercials touting the benefits it provides families and communities. It is spending about $10 million on salaries for public relations staff internally and at Edelman Public Relations, an outside firm, Strasser estimates.
“This report is independent verification that our campaign is having a real and meaningful impact,” said Nu Wexler, a spokesman for Wal-Mart Watch, a coalition of labor, environmental, religious and community groups.
Wal-Mart last year hired former Democratic adviser Leslie Dach as head of lobbying and public relations and named Harriet Hentges, a former nun who helped mediate conflicts in Iraq, to the new post of senior director of stakeholder engagement.
“We play offense every day,” Dach told attendees at the company’s analyst conference in October. “We want our opponents to react to what we’re doing.”
