business news in context, analysis with attitude

Today, MNB concludes its exclusive two-part e-interview with Al Norman, who has created a second career out of documenting the negative implications for American business and culture of Wal-Mart’s unbridled growth, and helping community activists develop action plans.

In his book, “The Case Against Wal-Mart,” Norman constructs a multi-layered case against allowing the retailer to grow unfettered, suggesting the numerous ways in which Wal-Mart’s “sprawl” is a phenomenon worth examining.

You can read Part One of this interview by going to:

http://mnb.grocerywebsite.com/archives/2004/04/26.html#MNB1


MNB: What do you make of Wal-Mart’s continued interest in the financial services business?

Al Norman: Before he opened Wal-Mart, Sam Walton bought a bank in Arkansas. That banking investment has now grown into a multi-state chain called Arvest, and is run by son Jim Walton. I think Sam Walton wanted a ready source of cash as his business grew and needed to borrow money cheaply. Arvest is now a very potent banking force in its communities. I think Walton also wanted a repository for his stores' earnings--better to invest it in yourself than to let it sit in some local bank. Wal-Mart actively markets its credit cards, and I believe sees financial services as just one more way to bring people of limited incomes into the store to shop. They recently signed a deal with another banking firm to open up "Wal-Mart Money Centers" inside the store, where people can cash their checks. Banking to Wal-Mart is just another potential profit center, but for the consumer, the firewall that separates retailers from banking is a helpful protection. Can you imagine a Wal-Mart bank wanting to give a major loan to its competitors?

MNB: The bottom line seems to be that Wal-Mart appeals to consumers, that shoppers simply don’t care about the means to the end. How do you do battle with an entity with such sway over consumer consciousness?

Al Norman: You have to educate people before you activate them. The fact is, more and more Americans are starting to "get" Wal-Mart's impact. Wal-Mart has the highest negative ratings of any retailer in the U.S. They rank right up their with Enron. That's where we start. With the unions, the churches, the community groups, and spread information about what kind of a corporate citizen they really are.

The battle against Wal-Mart will be won in the aisles. If we can convince shopppers to stay out of Wal-Mart aisles, we will gum up the works. Wal-Mart's engine runs on one thing, and one thing only: expanding sales. If we can slow the growth in sales, we can impact their stock performance, and alter their corporate behavior. That's the only way we can impact Wal-Mart--by impacting Wal-Mart shoppers.

The focus needs to shift from Wal-Mart to its customers. As Sam Walton said, without customers, Wal-Mart workers would be looking for other work. So we write books, we speak at public forums, we talk to the media. The more we talk about the "other side of the WAL", the more we help shoppers to clear the aisles.

MNB: There seems to be a sense out there that Wal-Mart is a different company than it would be if Sam Walton were still alive? Do you think that’s true?

Al Norman: No. I think that's part of the iconography of Wal-Mart. They deify the Founder, but he really had the same down-and-dirty philosophy that the current managers have. Walton used to secretly tape his competitors prices, encouraged his workers to rummage through dumpsters looking for price tags, etc. One of Walton's sweetest memories was putting out of business the people who once forced him out of his first store in Arkansas. It was a moment of revenge, and that moment seems to be burned into the corporate conduct of the company since then.

The new bureaucrats at Wal-Mart are simply more technologically proficient than Mr. Sam, which means they can do more damage in less time. But the basic goal and intent of Sam Walton has not changed. Walton said if a town didn't want Wal-Mart, the company wouldn't go in and create a fuss. That was not true when Walton said it, and it’s certainly a stretch today.

MNB: Forget the consumer perspective…if you were a retailer competing with Wal-Mart, what would you do to fight off the overwhelming odds against you?

Al Norman: There are dozens of consultants who go round the country telling smaller merchants they can "survive and thrive" in the shadow of a Wal-Mart.

I know all the techniques they proffer, but I don't subscribe to any of them.

I would tell local merchants to pull out their town's zoning code and land use plan, and talk with a land use attorney about updating the community's zoning to restrict the size and frequency of big box stores.

I would begin lobbying for a cap on the size of stores, and I would write a Major Development Review ordinance that required any big project to underwrite the cost of independent economic, environmental and traffic impact studies.

I would emphasize that competing with Wal-Mart does not begin with the ribbon cutting on the superstore, it begins proactively with changing your local zoning code to minimize the damage they can do. It's the only way to begin to level the playing field.

MNB: So what do you believe is the short-term and long-term prognosis – realistically – for Wal-Mart?

Al Norman: In the short-run, thousands of retailers are going to lose market share, and many of them will die off. This will continue to happen up and down the food chain of retailing, from small to big. In the long run, Wal-Mart is going to suffer the same fate that Kmart, Montgomery Wards, and A&P met: they will fall from their own weight and mistakes.

If Wal-Mart continues with its 'in-your-face' development style, they will amass more enemies, and antagonize people who will stop shopping with Mr. Smiley. It is only when consumers go on a "megastore diet" that we will begin to see the change. But it will happen, just as it did to the great Atlantic & Pacific. It will happen to Wal-Mart also, from coast to coast. The only difference is that Wal-Mart will make a louder sound when it falls.

You can order a copy of “The Case Against Wal-Mart” by going to:

http://raphel.com/
KC's View:
As might be expected, we’re getting a number of emails on this subject, which we plan to pull together and post with commentary later this week.

We would, however, make one point about the issues raised in this e-interview.

MNB does not necessarily agree with every conclusion and strategy espoused by Al Norman – but we do think that the concerns he highlights are worth attention, if for no other reason that they are of concern to communities around the country. He is providing the kind of ammunition that communities like Contra Costa, Inglewood, White Plains, New Rochelle and others are or may be considering as they look at zoning and building proposals made by Wal-Mart and other big box stores.

At the same time, we may begin to see communities looking at other kinds of development with a jaundiced eye. After all, we’ve seen communities where much smaller retail formats – McDonald’s and Starbucks, for example – have been greeted with hostility and derision.

Sometimes, we get the sense that people who disagree with a guy like Al Norman think that because he preaches a gospel that they consider heresy, he ought not have any kind of pulpit, that he is somehow dangerous.

We would not subscribe to that point of view. We think that the kind of zealotry that they perceive and despise in Norman’s words and attitudes is the same kind of zealotry practiced by some of his critics.

If you disagree with Norman, that’s precisely why you should read his book.