The Wal-Martization of the World?
As Wal-Mart prepares to roll out the details of its joint venture with Bharti Enterprises later this month, Indian politicians are already preempting any foreign takeover of the local retail economy.
Recently, Sonia Gandhi, president of the Congress Party, sent a letter to Prime Minister Manmohan Singh asking him to reconsider expanding foreign direct investment (FDI) in retail until it is determined what impact this will have on small shopkeepers. This could certainly be chalked up to political strategy as provincial elections in key northern states, with powerful trade lobbies, are not far off.
Nonetheless, Gandhi wields tremendous power and influence and has a past record of advocating for the interests of economically marginalized Indians. In conjunction with the Left parties, who are the most vocal opponents of Wal-Mart’s entry, the burgeoning anti-Wal-Mart movement in India could become a powerful force to reckon with.
For well over a decade, Wal-Mart has become a strong international player and gained significant experience in the global retail market. It has learned from its mistakes in Argentina and South Korea where the retailer went solo and the Wal-Mart brand respectively led to dismal sales or a full retreat from the country.
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Posted by Vasudha Desikan on Wednesday, February 07 | 2 comments | Permalink
A Politically Incorrect Fish Makes A Comeback
From the Wall Street Journal:
One of the most politically incorrect foods is about to get a big boost from the world’s largest retailer.
Wal-Mart Stores Inc., which has been working to burnish its environmental credentials, says it will restore Chilean sea bass to its seafood counters in select markets in coming months. The retailer stopped carrying the fish in 2003 amid concerns that it was being overfished into extinction. Wal-Mart’s turnabout follows a decision by Whole Foods Market Inc. in October to sell Chilean sea bass for the first time since 1999.
It’s the latest twist in the extraordinary history of a fish that went from being an unwanted (and physically ugly) bycatch to a culinary delicacy to massively overfished in a decade. Some environmental activists are already criticizing Wal-Mart’s decision—a potentially difficult situation for the company, which has suffered public-relations missteps and is now engaged in a broad image campaign.
Both Wal-Mart and Whole Foods say they are putting Chilean sea bass back on their shelves because their supply comes from a single fishery near Antarctica that has been certified as sustainable by the London-based Marine Stewardship Council. But the certification is controversial, and critics say they are worried that seeing the fish in giant retailers will send a signal to consumers that the overfishing crisis has abated.
While the one certified fishery is well managed, says Gerry Leape of the National Environmental Trust, it produces only about a tenth of the total legal harvest. Elsewhere, overfishing and poaching remain rampant. “Wal-Mart has 175 million customers every week, so there won’t be enough,” says Mr. Leape. “One of the things we worry about is, what are they going to do when they need more?”
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Posted by Russ Fagaly on Monday, January 29 | 1 comments | Permalink
Senate Sweatshop Bill Gains Bipartisan Support
From McClatchy via the Contra Costa (Calif.) Times:
A bipartisan group of senators introduced legislation Tuesday aimed at preventing American companies from profiting from the use of foreign sweatshops and other unfair labor practices abroad.
Sen. Lindsey Graham, a South Carolina Republican, joined four Democrats and independent Sen. Bernard Sanders of Vermont in sponsoring a bill that would allow U.S. firms to sue competitors that they believe are selling imported products made in overseas sweatshops.
“Believe it or not, ladies and gentlemen, there’s a world out there where people are exploited—sometimes literally to the point of death—just to make a buck,” Graham said at a news conference in the Capitol.
Sen. Byron Dorgan, D-N.D., said free-trade agreements between the United States and other countries have fueled the growth of sweatshop production in recent years.
Dorgan cited China and Jordan as major offenders, saying their factories employ workers as young as 5, often in long shifts, brutal conditions and for little or no pay. In many cases, he said, the foreign countries violate their own poorly enforced labor laws.
“There is no reason for the United States of America to allow the sale of products made in slave-labor-like conditions,” Dorgan said.
About 250 million children worldwide, ages 14 or younger, work in factories, many in deplorable conditions, he said.
If it becomes law, the legislation could have a major impact on large U.S. retailers such as Wal-Mart and Target, which contract with foreign firms to produce many of the products they sell to Americans.
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Posted by Russ Fagaly on Thursday, January 25 | 40 comments | Permalink
Friday Blog Roundup: Fumbles and Floggies
Wal-Mart’s PR Fumbles
- The Checkout: Stealth Doesn’t Pay
Fire No. 2: Sony received a flogging yesterday at the hands of bloggers over, well, some "flogging"—fake blogging. That’s right. Sony pulled a Wal-Mart and was caught creating a phony blog to entice consumers into buying PlayStation game consoles.
- Screenwerk: Off Topic: Spot the ‘Flog’
As user-generated content has gone from scary to essential for marketers in the course of about 12 months, flogs have arisen to try and exploit the trend. I propose a game to foil the cynical agencies who think users can and should be fooled: “Spot the Flog.”
Announcing the Floggies
- Consumerist: Announcing the Floggies
Since nobody should be allowed to move on from their mistakes, we’re holding a knife fight to see who had the "best" flog of 2006. We are pleased to announce… The Floggies. We will mail the winning company a magnificent trophy.
Growth at Wal-Mart
- Beetsolonely: Wal-Mart May Eat Itself
According to this article by James J. Cramer in New York magazine, uppity neighborhood groups like Responsible Growth for Northcross are the least of Wal-Mart’s problems. Between its underperforming stock and flatlining sales growth, the world’s largest retailer is steadily losing ground to more appealing stores like Target and JCPenney. They are beginning to look more like the bloated, pre-bankruptcy K-Mart every day, and we all remember what Rain Man had to say about those guys. Wal-Mart has a huge image problem on its hands.
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Posted by Russ Fagaly on Friday, December 22 | 147 comments | Permalink
Wal-Mart Suffers Setback In Canadian Union Fight
From the Canadian Press via Toronto Globe and Mail:
Wal-Mart has lost a battle in the Quebec Court of Appeal to fight the unionization of its store in Gatineau.
The world’s largest retailer wanted the court to order Quebec’s labour relations board to order a secret ballot by store employees. The court refused to hear the appeal.
The board ordered the certification of one United Food and Commercial Workers local after between 35 and 50 per cent of workers signed union cards.
The local withdrew its union request in May of 2005. But another local submitted its request for accreditation the next day. However, the labour board had cancelled a union vote because the original local had withdrawn its request.
Wal-Mart challenged that decision, saying it should have been allowed to present arguments on the legality of the withdrawal. A company lawyer said the union can’t withdraw the vote without the employer’s consent.
Posted by Russ Fagaly on Wednesday, December 06 | 34 comments | Permalink
Wal-Mart Rides Rough Surf
From the Springdale (Ark.) Morning News:
It all started with Cifra.
That’s not a drug, but the Mexican retail chain with which Wal-Mart Stores Inc. first waded into international waters more than 15 years ago. Wal-Mart signed a joint venture agreement with Cifra in 1991 and, six years later, acquired control of the company that today is Wal-Mart de Mexico—or Wal-Mex, as it is commonly known.
During those years, Bentonville-based Wal-Mart also began operations in such places as Puerto Rico, Canada, Argentina and China. Today, Wal-Mart International operates in 13 countries and racked up $62.7 billion in sales in 2005, an 11.4 percent increase over the previous year.
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Posted by Russ Fagaly on Monday, December 04 | 0 comments | Permalink
Wal-Mart’s India Deal
The Wall Street Journal and others roundup the news on Wal-Mart’s deal in India:
After years of looking for a way into India’s fast-growing but highly protected retail market, Wal-Mart Stores Inc. is trying a backdoor approach—teaming up with an Indian phone company to court the country’s burgeoning middle class.
The world’s largest retailer, whose sales growth has slowed at home in the U.S., said it plans a joint venture with Bharti Enterprises Ltd., owner of one of India’s biggest cellphone networks, to open a yet-to-be-named store chain here.
The alliance with Bharti would allow Wal-Mart to skirt Indian regulations that bar most foreign retailers from investing directly in the country’s retail sector.
The deal, structured to capitalize on loopholes in India’s restrictions on foreign direct investment, is said to call for Wal-Mart to provide logistics and sourcing expertise, while Bharti would franchise retail units. The alliance with Bharti means that Wal-Mart would get a head start on rivals such as Carrefour and Tesco in the potentially lucrative market.
The retailer will not be able to own any of the stores bearing its name, but is expected to opt for a franchising arrangement with its local partner, a model it has previously used only in small and unsuccessful ventures in Indonesia and Hong Kong in the 1990s. The US company is expected to supply its own expertise in supply chain and brand management, and will probably plan to increase its stake in the venture as and when FDI restrictions are relaxed.
Perseverance always pays, whether in love or in business. If one tracks Wal-Mart’s final entry into India from the time it started negotiations, its behaviour and body language would resemble the determination and single-minded focus of Arjuna in Mahabharata. And perhaps this is where Tesco lagged behind, when it came to Sunil Mittal’s selection of a partner for his retail foray.
“It is the last and a very big frontier,” Mr. Mittal said in an interview at a conference of the World Economic Forum on Monday in New Delhi. “Brazil is done. China is done. This is the last Shangri-la of retail. Where will Tesco or Wal-Mart get their growth? Here.” Tesco is the No. 1 retailer in England. In an e-mailed statement, Wal-Mart, based in Bentonville, Ark., confirmed that a memorandum of understanding had been signed. Wal-Mart has stumbled recently in some of its overseas markets, in part by misjudging local tastes. This year, for instance, it pulled out of South Korea and Germany.
Posted by Russ Fagaly on Tuesday, November 28 | 5 comments | Permalink
Stockholm, Sweden. Second Scandinavian Pension Fund Drops Wal-Mart Stock
On June 21, 2006, Sprawl-Busters reported that the Norwegian Government Petroleum Fund had voted to drop Wal-Mart stock from its portfolio because the company runs its business in an “ethically unacceptable manner.” Today, two and a half months later, a second Scandinavian pension fund has divested itself of Wal-Mart stock because of the retailer’s policies towards its own employers.
The Swedish Second National Pension Fund, known as AP 2, announced that it has sold its shares in Wal-Mart and Wal-Mart Mexico, worth about $41 million. Wal-Mart of course had no comment to make when an investor drops them cold, but a company spokesman said: “we strive to adhere to the highest standards in the treatment of each and every one of our own associates. These matters are among our highest priorities as a company.”
AP 2 told the media that “since 2003 (it had) written letters, voted at shareholder meetings and taken part in an investor group to influence the company (Wal-Mart), but there has been no change in the company’s view of labor rights.” The divestiture by AP 2 represents its entire holdings in Wal-Mart and Wal-Mart De Mexico. One spokesman for AP 2 told the Dow Jones Newswires that the decision was based on alleged abuses of workers’ rights at Wal-Mart’s various businesses. “Since there are so many accusations from so many parties, in so many countries, it’s impossible to say that there have been no systemic abuses,” the fund spokesman told Dow Jones.
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Posted by Al Norman on Friday, September 08 | 0 comments | Permalink
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