Wednesday, April 05, 2006

Spider Offers Flies Some Help

Wal-Mart announces program to aid small urban retailers with money, advice, free advertising


BENTONVILLE, Ark. - Wal-Mart Stores Inc. has announced a wide-ranging effort to support small businesses near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.

Wal-Mart, which has in the past been accused of driving these independent retailers out of business, said it would offer them financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store.

The retail giant is in the process of opening 50 stores in urban neighborhoods in the next two years, and speculation is that the not-entirely-altruistic program to aid small businesses could help build support in cities like Los Angeles and New York where it has met strong resistance.

"We see we can be better for communities than we have been in the past if we are willing to stretch ourselves and our resources," said ceo Lee Scott in a conference call with reporters from Chicago, where Wal-Mart plans to open its first urban store.

According to a report in this morning's New York Times, there is growing evidence that negative publicity is hurting Wal-Mart. An internal company report, prepared in 2004, found that 2 - 8 percent of consumers surveyed had stopped shopping at the chain because of "negative press they have heard." On a confidential company web site, Scott recently wrote that criticism of the chain had slowed its expansion. Community opposition has foiled efforts to build stores in Chicago, Los Angeles and New York, which are crowded with small businesses.

The Wal-Mart jobs and opportunity zones are to be set up in 10 metropolitan areas where the chain wants to build stores. Wal-Mart said it would choose sites traditionally overlooked by retailers -- urban neighborhoods with high unemployment, contaminated land and old shopping centers in need of revitalization. The first zone will be on the West Side of Chicago. The company would not say what other cities it was considering. In the zones, the company will identify local businesses to spotlight in newspaper advertisements and to feature on Wal-Mart's in-store radio network, which plays throughout the day. Wal-Mart will hold seminars to coach the businesses on how to compete with the giant discount stores -- by, for example, intensifying customer service, for which Wal-Mart often receives low marks. An annual report on trends in Wal-Mart's business will be distributed exclusively to those companies.

At the same time, Wal-Mart will invest $500,000 in local chambers of commerce, to be used for small-business web sites and business improvement seminars. "This is a commitment to reach beyond our stores," Scott said. He felt Wal-Mart would not lose money on the program because urban stores were expected to attract more shoppers than suburban and rural outlets.


  1. I bought "The Wal-Mart Effect" at my local bookstore last night and read the first 100 pages. It's a compelling read.

    From a business standpoint, what Wal-Mart is doing here doesn't make any sense. From a PR standpoint, it seems a mere palative. I don't think it will do much harm, but it won't do much good.

    If someone's in a Wal-Mart, will seeing or hearing an ad for a local small business cause him or her to turn around, leave, and go to the (higher priced) competition? No.

    It remains to be seen whether Wal-Mart will be good for "urban" areas.

  2. Sounds like a good book. I'll have to check it out sometime.

    This is yet another part of Wal-Mart's PR machine gone haywire. Like you said, it makes almost no sense. But from the crap i've seen fly out of Bentonville of late, it's par for the course,

    I don't trust it, but there will be some blighted urban areas that will take them on. Hopefully somebody can actually benefit from this misguided 'help,' though the odds are slim to none.