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Wal-Mart Ad Aims to Counter Criticism

An open letter in 15 newspapers begins the retailer's effort to boost its image in California.

September 24, 2004|Debora Vrana | Times Staff Writer

In the first step of a statewide effort to polish its reputation, Wal-Mart Stores Inc. published a newspaper advertisement Thursday promoting its employment practices and promising to continue its expansion in California.

The ad -- published as an open letter to the people of California in 15 newspapers statewide, including The Times -- was designed to counter recent criticism of the company's business practices, Wal-Mart said.

"We're taking a stand in defense of our associates and customers to set the record straight," said Cynthia Lin, a spokeswoman for Bentonville, Ark.-based Wal-Mart.

In its letter, Wal-Mart said, "We've become a target for negative comments from certain elected officials, competitors and powerful special interest groups." The missive said the company pays competitive wages averaging $10.37 an hour in California.

It also reaffirmed the company's plans to build as many as 40 Supercenter stores in the state "over the next few years."

Wal-Mart also said it offered medical coverage to full- and part-time employees and that the stores generate "significant tax revenue for local communities."

Wal-Mart Supercenters -- which combine a full supermarket with its traditional discount store -- will save Southern California consumers at least $3.7 billion, or $589 per household, annually once Wal-Mart reaches 20% market share in the region, the letter said.

In recent years, Wal-Mart has found itself at the center of a nationwide debate over whether its low prices do more good by helping consumers or more harm by leading to lower wages and living standards for workers and suppliers.

Critics claim that Supercenters eventually damage the economies of local communities by eliminating relatively high-paying jobs and wiping out rivals. What's more, Wal-Mart has seen its image tarnished by allegations of discrimination and worker mistreatment.

In Southern California, Wal-Mart has faced strong opposition to its Supercenters, with Inglewood voters rejecting plans last spring for a store and Los Angeles adopting an ordinance last month designed to make it harder for the behemoths to move into the city. This month, though, Rosemead approved the retail giant's plans to build its first Supercenter in Los Angeles County.

The California-centric image blitz comes just weeks after Wal-Mart Chief Executive H. Lee Scott Jr. told Wall Street analysts that the company's efforts to repair its reputation had failed.

It also follows Wal-Mart's June announcement that it had launched initiatives to address concerns over its pay structure and opportunities for women and minorities.

Robert Buchanan, a retail analyst for A.G. Edwards & Sons, said he welcomed news that Wal-Mart was attempting an image makeover in California but questioned how successful the effort would be.

"We need to see more and something with some sophistication," Buchanan said. "Their public relations efforts throughout the years have been abysmal."

The image-repair campaign in California will be ongoing and will include "other venues and other forums," spokeswoman Lin said.

She declined to say whether radio and television advertisements were planned or detail what the other forums would be.

In addition, Lin declined to disclose the statewide campaign's cost or how long it would last.

"We're not surprised by the letter -- it's a one-sided public relations campaign," said Josh Kamensky, communications director for Los Angeles City Councilman Eric Garcetti.

Garcetti commissioned a 72-page report last year that warned that Supercenters could harm the local economy and recommended that the company raise its pay and benefits if it wanted to operate in the city.

Wal-Mart, whose $256 billion in sales last year made it the world's biggest corporation, became a factor in Southern California's recent grocery store strike and lockout.

The major supermarket chains contended that they needed to put the lid on healthcare costs for workers to compete with Wal-Mart's coming Supercenters. The expansion of nonunion Wal-Mart into the grocery business threatens the structure of the state's highly unionized supermarket industry.

Wal-Mart shares rose 87 cents to $52.54 on the New York Stock Exchange.

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