Wal-Mart’s Reputation Problems Continue

Wal-Mart has spent the last year desperately trying to improve its reputation. The company has bombarded consumers with new marketing, including a new logo, a new company tag line, and a new, friendly name - “Walmart.” The retailer also hired a new ad agency and launched a massive environmental marketing initiative, all aimed at eradicating criticisms of the company’s business practices.

Two new polls show these efforts are failing. The two surveys - from Harris Interactive (PDF) and the Reputation Institute (PDF) - indicate shoppers still don’t trust Wal-Mart, in spite of the retailer’s massive marketing overhaul.  The poll results support Wal-Mart Watch’s fall 2007 public opinion poll findings, which showed shoppers increasingly cite Wal-Mart’s poor business practices as a reason not to shop at the retailer’s stores.

Wal-Mart’s reputation remains the biggest obstacle to the company’s long-term growth potential, as its reputation affects both its ability to reach new shoppers and to build new stores. Both of these strategies are crucial to the company’s long term success, but are hampered by Wal-Mart’s recurring reputation problems.

Wal-Mart Watch Executive Director David Nassar said in a release, “There’s no doubt that Wal-Mart is profiting from the economic downturn and cash-strapped consumers. But, recent public opinion surveys indicate that although people are shopping there, they aren’t happy about it because they are still concerned about Wal-Mart’s poor business practices.”

The Harris Interactive survey found that shoppers consider a company’s labor practices above all other social responsibility issues. Considering that Wal-Mart has done little to improve working conditions in its U.S. stores, refuses to raise wages and continues to provide a substandard health care plan for its employees, it is not surprising the retailer ranked so low on Harris’ list.

Meanwhile, the Reputation Institute ranked the 150 largest U.S. companies based on “the overall trust, esteem, admiration and good feelings consumers have toward them.” Wal-Mart, long known for damaging communities, sourcing from sweatshops and discriminating against female employees, came in at number 136 out of 150 companies, dropping 76 places from number 57 in 2007. Wal-Mart was joined in the bottom 15 by several oil companies and defense contractors, including Halliburton.

High profile cases also continue to draw negative attention and damage the company’s reputation. In March, for example, Wal-Mart’s unconscionable treatment of former employee Debbie Shank sparked national outrage and earned the company Keith Olbermann’s “Worst Person in the World” designation for three nights in a row on MSNBC’s Countdown. Just two weeks ago, Wal-Mart made headlines again for violating labor laws two million times in Minnesota, and faces up to $2 billion in damages.

These and other offenses helped land Wal-Mart in Corporate Accountability’s Corporate Hall of Shame for the second year in a row, and boosted the retailer to the semifinals in Consumerist’s Worst Company in America contest. Online polls such as these are perhaps even more telling of popular sentiments on the retailer.

“So despite the millions of dollars Wal-Mart spends to improve its image, these negative public opinion surveys and headlines combined with opposition to new Wal-Mart stores in communities across the country clearly show that Wal-Mart’s reputation problems are not resolved,” said Nassar.  “If Wal-Mart wants to retain shoppers after the economy improves, it will need more than a new logo or advertising campaign.  The company needs to change its business practices; it can start by treating its employees fairly, paying higher wages and providing adequate health care plans.”

Posted by Alex Goldschmidt on Monday, July 21, 2008

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