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Wal-Mart's Success Also Brings it Business Woes

Shoppers love Wal-Mart stores. The giant retailer is also considered a model of business success. It is the world's largest retailer, and the nation's largest employer. Its policy of "everyday low prices'' saves consumers billions of dollars every year.

But despite those accomplishments the retail giant has come under a barrage of attacks from a variety of groups lately. Nahedah Zayed reports on the controversies facing Wal-Mart, and what the giant retailer is doing to fight back.

A Wal-Mart commercial on the air:
"We want everybody in town to succeed, and that's just the culture of Wal-Mart."

Wal-Mart has launched a media campaign including national commercials, and full-page ads in major newspapers, touting the company as a member of the community and a place of opportunity.

Wal-Mart, known for its friendly employees and cheaper prices, is already a household name in the U.S. It has 3,700 stores in America, and plans to build more. Mia Masten, who works for Wal-mart's corporate affairs division, says, "About 300 new stores; this year alone, we'll create about 100,000 jobs."

But the bigger and more successful the company gets, the more public opposition it seems to attract.

Protestors: "Hey, hey, ho, ho, poverty wages have got to go."

Members of organized labor don't like Wal-Mart's non-union stand, and its employment practices. Small manufacturers say its low prices and enormous buying power squeeze their profits.

Dozens of citizen groups, like the one headed by Robin Gottlieb, oppose Wal-Mart because they say it wipes out small mom-and-pop shops, and changes the character of their towns. She says, "They are not wanted."

Those complaints, plus a number of well-publicized lawsuits accusing Wal-Mart of sex discrimination and hiring illegal aliens, have created an image problem for the company. Officials deny any wrongdoing and hope their media campaign will set the record straight.

Ms. Masten defends the company. "We are drawing a line in the sand, we are a good company, and a good member of communities in which we serve."

Critics, like Alan Tonelson of the U.S. Business and Industry Council, an organization that represents small and medium sized manufacturers, have a harsher view. He says, "This is a rogue company. They discriminate against women, they hire illegal aliens to clean up their stores. They are doing everything they can to drive American living standards down."

In a recently settled lawsuit, Wal-mart agreed to pay $11 million in fines for hiring illegal workers to clean some of its stores during overnight shifts. Wal-Mart officials insist they were not aware that the contractors they used were hiring undocumented workers.

Wal-Mart is also vigorously contesting a major lawsuit accusing it of systematically denying women equal wages and opportunities. Company officials say Wal-Mart is an equal opportunity employer where women represent 60 percent of the workforce, and hold 40 percent of management positions.

Ms. Masten says the company is supportive of diversity. "I've known about this company all my life. It provides wonderful opportunity for women, for any individual who wants to move up. It's committed to diversity, it's committed to integrity."

Union leaders disagree. They have filed dozens of federal complaints accusing Wal-Mart of not paying employees for overtime, and not offering adequate health benefits, a charge Wal-Mart denies. The giant chain has resisted unionizing its stores.

Mr. Tonelson explains, "They don't want unions because unions could in theory enable workers to organize, to mount collective action and to press successfully for higher wages and much better benefits packages."

Ms. Masten, speaks of the benefits that are in place. "Actually we provide a comprehensive benefit package, which includes health care, bonuses, and 401k's [retirement plans]. It provides a lot of opportunities in a full benefit package, and we provide competitive wages."

Wal-Mart's hourly employees make an average of $10 an hour. That's three dollars less than the workers at union grocery chains. And its health care packages are generally lower too.

That may be one reason why Wal-Mart is able to offer prices 20 to 30 percent below those of its competitors. It also keeps production costs at a minimum by using its massive buying power, as the largest retailer, to get the best price out of suppliers.

Tim Kane, a conservative economist with the Heritage Foundation, says Wal-Mart's methods make good business sense. "It's very unfortunate to analyze the company looking at one side of things, how the workers fare or how the supply chain fares. You have to look at the consumers. How do they fare, because there are a lot more consumers than Wal-Mart workers."

Two hundred million consumers shopped at Wal-Mart stores last year, and customers we talked to didn't seem bothered by the negative publicity.

Wal-Mart customer Stacy Gehrt says she'll keep shopping, "Don't even pay any attention to that. I'm still going to keep coming back. I come back all the time; I just spent $100. But that's okay. If I would've gone to the grocery store and bought half of what I bought here, it would have been a whole lot more."

Wal-Mart officials are aware they have a real image problem on their hands and are working hard to change it. In the end they are confident they will beat their adversaries with one important ally, the millions of customers who keep coming back for those "everyday low prices."