Wal-Mart's Stinker
10-27-2005, 04:59 AM
#1
Thread Starter
Wal-Mart's Stinker
Wal-Mart Memo Sparks Criticism
By Julie Appleby, USA TODAY
(Oct. 27) - Wal-Mart's effort this week to improve its public relations by offering new health insurance options for its workers took a hit Wednesday with the release of an internal memo recommending the company consider changes that would "dissuade unhealthy people from coming to work at Wal-Mart."
The memo, written by the vice president of benefits, Susan Chambers, for the board of directors, outlined ways the company could help trim its health care and other benefit costs.
Some of the proposals are already standard at other large firms, such as charging workers more for covering spouses.
But the memo drew sharp criticism for proposals to redesign job descriptions and benefits to attract healthy workers.
"The arrogance of this really troubles me," said former California congressman Tony Coelho, who was primary author of the Americans with Disabilities Act.
"No company should be able to discriminate against an employee on the basis of age, level of fitness, disability or potential cost to the company," Coelho said.
The 27-page memo's release to The New York Times by a labor union-backed group came two days after CEO Lee Scott announced new, lower-premium health plans to make insurance more affordable to employees.
The memo said many Wal-Mart workers pay a substantial portion of their incomes for health benefits: "On average, associates spend 8% of their income on health care for themselves and their families, nearly twice the national average." Five percent are on government programs such as Medicaid, compared with 4% at other national employers, it said.
Wal-Mart, like most employers, is wrestling with rising health and benefit costs.
Total benefits, including health care, could consume 12% of total profits by 2011, the memo says, unless action is taken.
"Every business in America is facing the harsh reality of skyrocketing health care costs," the company said in a statement Wednesday. "They're having conversations in their board rooms just like we're having in ours."
Princeton economist Uwe Reinhardt says many employers are looking at ways to cut health care costs - and some are trying to push out older workers in favor of younger, less costly employees.
The memo outlined nine low-risk and fairly non-controversial steps the company could take, including allowing part-time workers to qualify sooner for health benefits and expanding the number of health clinics in its stores to discourage employees from using hospital emergency rooms.
But it also includes five "bold steps," including: moving all employees into a new type of health insurance that comes with high annual deductibles; designing all job descriptions to include physical activity; and offering benefits, such as education credits, that "appeal to healthy associates."
"It will be far easier to attract and retain a healthier workforce than it will be to change behavior in an existing one," the Chambers memo says.
By Julie Appleby, USA TODAY
(Oct. 27) - Wal-Mart's effort this week to improve its public relations by offering new health insurance options for its workers took a hit Wednesday with the release of an internal memo recommending the company consider changes that would "dissuade unhealthy people from coming to work at Wal-Mart."
The memo, written by the vice president of benefits, Susan Chambers, for the board of directors, outlined ways the company could help trim its health care and other benefit costs.
Some of the proposals are already standard at other large firms, such as charging workers more for covering spouses.
But the memo drew sharp criticism for proposals to redesign job descriptions and benefits to attract healthy workers.
"The arrogance of this really troubles me," said former California congressman Tony Coelho, who was primary author of the Americans with Disabilities Act.
"No company should be able to discriminate against an employee on the basis of age, level of fitness, disability or potential cost to the company," Coelho said.
The 27-page memo's release to The New York Times by a labor union-backed group came two days after CEO Lee Scott announced new, lower-premium health plans to make insurance more affordable to employees.
The memo said many Wal-Mart workers pay a substantial portion of their incomes for health benefits: "On average, associates spend 8% of their income on health care for themselves and their families, nearly twice the national average." Five percent are on government programs such as Medicaid, compared with 4% at other national employers, it said.
Wal-Mart, like most employers, is wrestling with rising health and benefit costs.
Total benefits, including health care, could consume 12% of total profits by 2011, the memo says, unless action is taken.
"Every business in America is facing the harsh reality of skyrocketing health care costs," the company said in a statement Wednesday. "They're having conversations in their board rooms just like we're having in ours."
Princeton economist Uwe Reinhardt says many employers are looking at ways to cut health care costs - and some are trying to push out older workers in favor of younger, less costly employees.
The memo outlined nine low-risk and fairly non-controversial steps the company could take, including allowing part-time workers to qualify sooner for health benefits and expanding the number of health clinics in its stores to discourage employees from using hospital emergency rooms.
But it also includes five "bold steps," including: moving all employees into a new type of health insurance that comes with high annual deductibles; designing all job descriptions to include physical activity; and offering benefits, such as education credits, that "appeal to healthy associates."
"It will be far easier to attract and retain a healthier workforce than it will be to change behavior in an existing one," the Chambers memo says.
10-27-2005, 05:03 AM
#2
Thread Starter
More fodder for the Wal-Mart furnace: (YAY, GERMANY)
Wal-Mart: Struggling In Germany
With discounters already dominating the market, the American giant is in the unaccustomed role of pipsqueak
To American eyes, the new ethics manual is standard stuff. But when Wal-Mart Stores Inc. (WMT ) distributed the newly translated code to German employees a few weeks ago, it caused a furor. They read a caution against supervisor-employee relationships as a puritanical ban on interoffice romance, while a call to report improper behavior was taken as an invitation to rat on co-workers. "They have to communicate better," says Ulrich Dalibor, an official at the ver.di service-workers union, which represents German employees of the Bentonville (Arkansas)-based retailer. No kidding. Seemingly surprised Wal-Mart officials said they have nothing against romance -- plenty of Wal-Mart co-workers have married, the company notes. And reporting lawbreaking is just good citizenship, it said. But to no avail.
The ethics-code flap, which has prompted a flurry of negative headlines in the local press, is another sign that Wal-Mart doesn't quite get the $370 billion German retail market. Since entering the country in late 1997, Wal-Mart has captured just 2% of German food sales, or $3.2 billion annually, estimates Columbus (Ohio)-based market watcher Retail Forward Inc. "They are really just a secondary player here," says Sirko Siemssen, a retail specialist at Mercer Management Consulting (MMC ) in Munich.
Wal-Mart a secondary player? To Americans accustomed to the chain's relentlessly successful expansion, that's hard to believe. But in Germany the store count has slipped from 95 Supercenters in 2002 to 91, a fifth the number of rival Kaufland. Wal-Mart has recently made headway in upgrading store interiors and paring losses once estimated in the hundreds of millions of dollars. The German operations are closer to being profitable after achieving positive cash flow in 2004, according to Wal-Mart. "We are pushing ahead in a turmoil-shaken market where overall consumer spending is on the decline," Kay Hafner, president and managing director of Wal-Mart Germany, says in an e-mail. But the company is still a long way from reaching the critical mass it needs to be significantly profitable in Germany, analysts say. (Wal-Mart does not break out financial performance by country).
CHASING ALDI
The chain to beat is Aldi, which features a limited selection of high-quality but very inexpensive products. It boasts a 19% share of the market through its network of some 4,000 stores, which are much smaller than Wal-Mart's. Even when Wal-Mart can undercut Aldi on price, the differences are often too slight to motivate consumers to travel the extra distance to a Supercenter, analysts say. Both Wal-Mart and Aldi recently ran specials on kids' inline skates, for example, but Aldi's were more than $6 cheaper. "In the U.S., Wal-Mart has the image of being the price leader, but Aldi owns that territory in Germany," says Wolfgang Twardawa, director of consumer research at Nuremberg-based market researcher GfK.
No doubt, Wal-Mart's mind-boggling annual turnover of $285 billion gives it a scale advantage on globally sourced products such as Chinese-made toys and clothing. But that purchasing clout does not extend to regional brands of bratwurst and beer. "Food is primarily local, and even in nonfood the assortment is different," says Andreas W. Bauer, a partner at Roland Berger Strategy Consultants in Munich. Wal-Mart's German selection is dominated by European brands, from Fischer bicycles to Vernel fabric softener.
The American company has been showing more savvy about the local market since installing a German chief. Under Hafner, it caters to local tastes better -- for example, recently offering a special on fresh carp, an Easter specialty, for $7.54 per kilo. It's also introducing private labels such as Cosies baby products and Equate cosmetics. Company officials say the plan is to concentrate on improving distribution efficiency and building relationships with local suppliers, then to consider expanding.
But the ethics-code fiasco shows that Wal-Mart is still prone to do things the Wal-Mart way without enough consideration to local customs. Rivals continue to chuckle about the customer reaction when, initially, Wal-Mart offered services such as grocery bagging. It turned out that Germans didn't want strangers handling their groceries. And when clerks followed orders to smile at shoppers, male customers took it as a come-on. Also, German companies are used to dealing with workers' councils, which are easy to organize under German law. Some even say the co-determination system improves communication with employees. That's likely to be a tough sell in Bentonville, though. Indeed, Wal-Mart clashes regularly with the ver.di union, which says it has organized every Supercenter in Germany. According to the union, Wal-Mart repeatedly ignores German co-determination rules, which give employees a say in corporate decisions that affect working conditions. The union also complains that Wal-Mart has not kept it adequately informed about store closings. Company officials say they comply with labor laws.
What Wal-Mart really needs is more stores so that it can advertise more efficiently and exert more purchasing power. Yet building new Supercenters, which in Germany average 12,960 square meters, is a laborious process because of restrictive building codes and a dearth of locations. Buying a competitor would build critical mass fast, but there's no sign of that yet. Wal-Mart watchers don't expect the company to leave the country, but unless it can figure out the Germans, it won't be a local success story, either.
[From April 2005 BusinessWeek] (note: my apologies if this is a repeat post)
Wal-Mart: Struggling In Germany
With discounters already dominating the market, the American giant is in the unaccustomed role of pipsqueak
To American eyes, the new ethics manual is standard stuff. But when Wal-Mart Stores Inc. (WMT ) distributed the newly translated code to German employees a few weeks ago, it caused a furor. They read a caution against supervisor-employee relationships as a puritanical ban on interoffice romance, while a call to report improper behavior was taken as an invitation to rat on co-workers. "They have to communicate better," says Ulrich Dalibor, an official at the ver.di service-workers union, which represents German employees of the Bentonville (Arkansas)-based retailer. No kidding. Seemingly surprised Wal-Mart officials said they have nothing against romance -- plenty of Wal-Mart co-workers have married, the company notes. And reporting lawbreaking is just good citizenship, it said. But to no avail.
The ethics-code flap, which has prompted a flurry of negative headlines in the local press, is another sign that Wal-Mart doesn't quite get the $370 billion German retail market. Since entering the country in late 1997, Wal-Mart has captured just 2% of German food sales, or $3.2 billion annually, estimates Columbus (Ohio)-based market watcher Retail Forward Inc. "They are really just a secondary player here," says Sirko Siemssen, a retail specialist at Mercer Management Consulting (MMC ) in Munich.
Wal-Mart a secondary player? To Americans accustomed to the chain's relentlessly successful expansion, that's hard to believe. But in Germany the store count has slipped from 95 Supercenters in 2002 to 91, a fifth the number of rival Kaufland. Wal-Mart has recently made headway in upgrading store interiors and paring losses once estimated in the hundreds of millions of dollars. The German operations are closer to being profitable after achieving positive cash flow in 2004, according to Wal-Mart. "We are pushing ahead in a turmoil-shaken market where overall consumer spending is on the decline," Kay Hafner, president and managing director of Wal-Mart Germany, says in an e-mail. But the company is still a long way from reaching the critical mass it needs to be significantly profitable in Germany, analysts say. (Wal-Mart does not break out financial performance by country).
CHASING ALDI
The chain to beat is Aldi, which features a limited selection of high-quality but very inexpensive products. It boasts a 19% share of the market through its network of some 4,000 stores, which are much smaller than Wal-Mart's. Even when Wal-Mart can undercut Aldi on price, the differences are often too slight to motivate consumers to travel the extra distance to a Supercenter, analysts say. Both Wal-Mart and Aldi recently ran specials on kids' inline skates, for example, but Aldi's were more than $6 cheaper. "In the U.S., Wal-Mart has the image of being the price leader, but Aldi owns that territory in Germany," says Wolfgang Twardawa, director of consumer research at Nuremberg-based market researcher GfK.
No doubt, Wal-Mart's mind-boggling annual turnover of $285 billion gives it a scale advantage on globally sourced products such as Chinese-made toys and clothing. But that purchasing clout does not extend to regional brands of bratwurst and beer. "Food is primarily local, and even in nonfood the assortment is different," says Andreas W. Bauer, a partner at Roland Berger Strategy Consultants in Munich. Wal-Mart's German selection is dominated by European brands, from Fischer bicycles to Vernel fabric softener.
The American company has been showing more savvy about the local market since installing a German chief. Under Hafner, it caters to local tastes better -- for example, recently offering a special on fresh carp, an Easter specialty, for $7.54 per kilo. It's also introducing private labels such as Cosies baby products and Equate cosmetics. Company officials say the plan is to concentrate on improving distribution efficiency and building relationships with local suppliers, then to consider expanding.
But the ethics-code fiasco shows that Wal-Mart is still prone to do things the Wal-Mart way without enough consideration to local customs. Rivals continue to chuckle about the customer reaction when, initially, Wal-Mart offered services such as grocery bagging. It turned out that Germans didn't want strangers handling their groceries. And when clerks followed orders to smile at shoppers, male customers took it as a come-on. Also, German companies are used to dealing with workers' councils, which are easy to organize under German law. Some even say the co-determination system improves communication with employees. That's likely to be a tough sell in Bentonville, though. Indeed, Wal-Mart clashes regularly with the ver.di union, which says it has organized every Supercenter in Germany. According to the union, Wal-Mart repeatedly ignores German co-determination rules, which give employees a say in corporate decisions that affect working conditions. The union also complains that Wal-Mart has not kept it adequately informed about store closings. Company officials say they comply with labor laws.
What Wal-Mart really needs is more stores so that it can advertise more efficiently and exert more purchasing power. Yet building new Supercenters, which in Germany average 12,960 square meters, is a laborious process because of restrictive building codes and a dearth of locations. Buying a competitor would build critical mass fast, but there's no sign of that yet. Wal-Mart watchers don't expect the company to leave the country, but unless it can figure out the Germans, it won't be a local success story, either.
[From April 2005 BusinessWeek] (note: my apologies if this is a repeat post)
10-27-2005, 05:33 AM
#3
The business practices of Wal Mart and the way they treat employees has spread to too many companies who now want only part time employees so they too don't have to provide benefits and then they can be more competitive with Wal-mart.
I do my best to avoid Wal Mart. My last purchase (about four months ago) was a map of local streets that I could not find elsewhere.
Years ago I bought some Wal-Mart shares for my IRA. I sold them recently on principle.
The less I have to do with them, the better I feel.
I do my best to avoid Wal Mart. My last purchase (about four months ago) was a map of local streets that I could not find elsewhere.
Years ago I bought some Wal-Mart shares for my IRA. I sold them recently on principle.
The less I have to do with them, the better I feel.
10-27-2005, 06:43 AM
#4
Originally Posted by Lainey8484,Oct 27 2005, 08:33 AM
The business practices of Wal Mart and the way they treat employees has spread to too many companies who now want only part time employees so they too don't have to provide benefits and then they can be more competitive with Wal-mart.
10-27-2005, 08:41 AM
#5
Wal-mart isn't perfect but dominating markets has been the cornerstone of most highly successful corporate people in the past (trains, oil, steel, pc's, etc.) so we should not find it all that surprising. A corporation must always be looking for ways to control or cut costs - that's business 101. While I might not agree with all the logic that boarders on greed, I at the same time would like to see a lot of the good business practices transferred over into local, state, and federal governments which dearly IMHO need it.
10-27-2005, 10:38 AM
#6
Thread Starter
I agree with you Dlq, however, Wal-Mart's strategies are contributing to the total deterioration of quality in any brand of merchandise that they sell. I noticed a particular brand of product that I normally purchased from a small store in my neighborhood was being sold at Wal-Mart for a cheaper price and mentioned it to the store's owner. He said Wal-Mart goes in to manufacturers, tells them how much the product has to sell for, regardless of quality. The manufacturers then reduce the quality in order to get their products in Wal-Mart. They don't just reduce the quality of the merchandise that Wal-Mart sells, they reduce the quality across the board. You, therefore, may as well buy the product at Wal-Mart for the lower price because you won't get the quality even if you pay more. I try to buy quality products wherever possible and preferably brands not sold by Wal-Mart. I cannot bring myself to believe this is a good business tactic. I do know, however, its definitely working for the Waltons.
10-27-2005, 01:42 PM
#7
I probably haven't bought 5 things in my lifetime from Wal-Mart and we have a super store here. Price has always been secondary to quality for me. But, I know people who love the store and its values - my daughter-in-law is one of them. I have heard some very bad tales of how they bully their suppliers...... but so does GM and the other big dogs.
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10-27-2005, 02:16 PM
#8
All of retail is a cycle. Wal-mart too will have is day. Wal-mart is not forever. Retail never is.
10-27-2005, 03:06 PM
#9
Our small town has a lot invested in our local Wal-Mart. I'm fairly neutral in the debate about whether they're "good" or "evil." They pay their taxes, and they contribute to the town's projects. I do understand the pressure they put on suppliers, and I guess I just feel that's capitalism at work. My opinion is that if quality truly sucks, people will go elsewhere and other suppliers will provide other stores with goods. I haven't seen any serious changes in quality in our store, but that could be a local thing.
Regarding the employees, I've seen no indication that there's discrimination going on. I would say quite the opposite. There are people from all walks of life working at our store.
Regarding the employees, I've seen no indication that there's discrimination going on. I would say quite the opposite. There are people from all walks of life working at our store.
10-27-2005, 03:35 PM
#10
Originally Posted by Chazmo,Oct 27 2005, 07:06 PM
Regarding the employees, I've seen no indication that there's discrimination going on. I would say quite the opposite. There are people from all walks of life working at our store.
Their way of doing business is forcing everyone to change the way they do business.
In the good old days, there were actually holidays where stores closed and employees could be with their families.
Now most retail and grocery stores feel the need to be open 362 days a year or more.
My son and daughter in law both work for Shaw's supermarket. For years they closed their stores on Christmas Eve at 6:00 P.M. That should be more than late enough for people to get their shopping done. Everyone knows Christmas is coming. It comes the same time every year, the employees want to be home with their families too.
Their last contract specified that Christmas Eve closing would depend on the local competition. Translation if Wal-Mart and their super store stays open until 10:00 on Xmas Eve, the the grocery store may just do the same.