A Nov. 5 article in the Business section about the economic impact of Wal-Mart Stores Inc. misstated a finding by the economic research firm Global Insight Inc. The firm found that Wal-Mart created $263 billion in direct and indirect savings to consumers in 2004, not over a 19-year period. (Published 11/8/2005)
One of the world's most private of public companies went public in an unusual way yesterday when it hosted a presentation of nine academic papers on Wal-Mart's impact on the economy, the retailer's latest move to repair its image.
The embattled retailer commissioned the independent economic research firm Global Insight Inc. to do a study and invite academics to present their own research at the conference. The presentations were made yesterday for an audience of about 150 in the District.
The event was a strange hybrid of academics and public relations at which attendees toted around registration information in plastic Wal-Mart shopping bags. A room full of people asking questions was reminded -- after a journalist asked about a statistic in a paper -- that reporters were not allowed to take part in the Q&A.
Outside, Wal-Mart critics greeted attendees. About a dozen demonstrators with the United Food and Commercial Workers union and its Wake Up Wal-Mart organization gathered outside the J.W. Marriott to protest the conference, some arrayed behind a large Wake Up Wal-Mart banner. A few others handed out fliers headlined "Research Confirms: Wal-Mart Needs to Change" that touted some of the more critical findings of the academic papers.
Security guards checked attendees' identification before allowing them to the registration table.
The conference's sessions featured statistics, charts and econometric models. The papers focused on different aspects of the world's largest retailer, finding positive and negative impacts. Academics and economists were rapt during the most arcane portions of the presentations; reporters, less so.
The conference comes at a time when Wal-Mart is battling critics over its image. Dueling movies about Wal-Mart are being released, and chief executive H. Lee Scott recently asked Congress to raise the minimum wage, a move that appeared to be part of an approach outlined for Wal-Mart by a consulting company to counter negative public perceptions.
"It's pretty interesting that something this banal could be this interesting" to journalists and the public, said Paul Argenti, professor of corporate communications at Dartmouth's Tuck School of Business. He said he thinks the conference is a smart public relations move. "That you would set up a conference to discuss how Wal-Mart effects the economy -- it totally takes away from everything going on.""
Wal-Mart's conference was a year in the making, according to Bob McAdam, the company's vice president of corporate affairs. It was designed in part to counter anti-Wal-Mart sentiment, which McAdam said has resulted in studies with misguided statistics and conclusions. Labor unions and community groups argue that the company does not provide decent wages or health care to its workers and that it crushes small business.
"We thought it was time to do a definitive study. . . . We thought it would add credibility," said McAdam, who noted there was a risk in what might come out of the studies.
"There are a lot of people who hate Wal-Mart. In the absence of data, they have a visceral reaction," said David Neumark, a senior fellow with the San Francisco-based Public Policy Institute of California who presented a paper yesterday. Wal-Mart is "opening it up," he said. "They are gambling."
A handful of the papers presented at the conference were at least partly critical. But the Global Insight study, paid for by Wal-Mart, painted the company in a positive light. Neither Wal-Mart nor Global Insight would disclose how much Global Insight was paid. The other presenters, many of whom have been studying Wal-Mart for some time, received no compensation. Global Insight solicited papers, which it then selected "for relevance, methodology and academic rigor," regardless of papers' conclusions, the economic forecasting firm said.
Other researchers included Michael J. Hicks, assistant professor of economics at the Air Force Institute of Technology and Marshall University, who included a disclosure in his paper: "In short, except for roughly $1,500 purchases of diapers annual since 1999 I have no financial relationship with Wal-Mart or any affiliate that I am aware of."
Hicks said between presentations that though the company's effect is good and bad, none of its issues "rise to the magnitude that we ought to be facing [a change in] state or federal policy" related to the company. The New York City Council recently passed a law that would force grocers of a certain size to pay a portion of employee health care costs.
The Global Insight analysis found that Wal-Mart saved consumers $263 billion during a 19-year period. It also found that by 2004, the company created 210,000 net new jobs. The firm's methodology was reviewed by an outside advisory board of economic experts.
Among the findings in other presentations: that the average state spends about $898 per Wal-Mart worker in Medicaid expenditures; that items typically sold in drugstores, such as aspirin and shampoo, decline in price when Wal-Mart enters a market; and that Wal-Mart stores had an adverse effect on retail employment, total employment and total payroll per person in the South, where Wal-Mart stores are numerous and where they have been open the longest.
Staff writer Ylan Mui contributed to this report.