Wal-Mart Pushes to Soften Its Image

Wal-Mart is responding. The company's outside public relations firm, Edelman, which has six people each in Washington and at Wal-Mart's Bentonville, Ark., headquarters, sent reporters a press kit last week attacking claims made in the film's trailer, along with negative reviews of Greenwald's previous work. Wal-Mart is also promoting a competing documentary about the company, directed by Ron Galloway, titled "Why Wal-Mart Works & Why That Drives Some People Crazy."

Paul A. Argenti, a professor of corporate communication at Dartmouth College's Tuck School of Business, said that the company is "reacting to the world around them" and that it is "in a bind."

Wal-Mart's public relations problems, and the rising costs and threats to its rapid expansion, have dragged down the company's stock price and frustrated investors. The stock price is down nearly 14 percent this year. John P. Waterman, chief investment officer at Rittenhouse Asset Management Inc., which owns about 4.7 million Wal-Mart shares, according to Bloomberg, praised the company's efforts to aggressively respond to critics. "The negative PR has not helped them," he said. "I think they realize they have to play offense a little bit."

Bernard Sosnick, a retail analyst at Oppenheimer & Co., described the company's response to critics as a two-step process that began a year ago. He said the first step was to hire scores of lawyers to respond to lawsuits and improve the company's compliance with laws and regulations. The second step, just getting started, is to reshape the company's image to allow expansion into major urban areas while also attracting more affluent customers who might not shop at a company with a poor labor and environmental image.

"There's little question that Wal-Mart isn't so much initiating as responding," said Harley Shaiken, a labor professor at the University of California at Berkeley. "Economists call this the union threat effect. It's not that Wal-Mart fears it's going to be unionized soon, but a major PR campaign is out there, raising the labor issues."

Robert Slater, author of "The Wal-Mart Decade," said the recent initiatives are part of the company's natural, if halting, evolution from a profit-making machine singularly focused on internal issues such as supply-chain management and cost cutting to a seasoned global company sensitive to its public image. "Wal-Mart already knew how to sell things to people. But it didn't know how to put its best foot forward," Slater said. "For a long time, that didn't hurt them. Now they realize that down the road it can really hurt them."

Staff researcher Richard Drezen contributed to this report.