A Wal-Mart charm offensive opens HQ to a rare peek inside

Wal-Mart executive Mike Duke learned the hard way this week that journalists don't tend to applaud the subjects of their reportage.

Pacing the stage Tuesday at Wal-Mart's first-ever reception for the print media, Mr. Duke seemed a bit out of place. He didn't wear a necktie, just a blazer and his Wal-Mart name tag. Many listeners wore suits. Duke was greeted with faint clapping when he took the stage. At Wal-Mart meetings, workers generally get to their feet and cheer several times.

Duke opened with a joke about a basketball game from the previous night and seemed knocked off balance when it fell flat. In an apparent effort to recover, he began to elaborate on the joke. After awhile, someone near the front of the crowd said loudly: "blah, blah, blah."

Finally, Wal-Mart's chief spokeswoman Mona Williams intervened. "They don't applaud. They don't play basketball," she called out to Duke with a laugh. "We'll keep working."

Such were the first interactions at an event that afforded the world with a rare glimpse inside one of the world's most influential corporations - one whose $285 billion in annual sales nearly match the gross domestic product of Saudi Arabia. It's also a sign of stepped up efforts by the company to burnish an image tainted by criticism over everything from labor practices to the retailer's impact on communities where it operates.

Wal-Mart opens an average of one store every day nationwide. But when it comes to public relations, Wal-Mart has room to expand.

Despite being the world's biggest retailer - and the largest employer in the US - the company has a staff of just 17 full-time public relations employees to handle press inquiries from around the globe. All other employees are barred from talking to the media without the media department's consent. That means each Wal-Mart spokesperson represents about 76,000 employees in the United States.

The low-key approach to public relations has allowed critics to define Wal-Mart for people that aren't familiar with it, says chief spokeswoman Williams.

So Wal-Mart is trying to change its tune. In January it launched a nationwide media campaign, buying pro-Wal-Mart advertisements in more than 100 newspapers and sending Chief Executive Officer H. Lee Scott to make the rounds on television talk shows.

This week's media reception at the Embassy Suites hotel in Rogers, near its Bentonville headquarters in northwest Arkansas, took Wal-Mart's image campaign to a new level. Reporters toured Wal-Mart's headquarters, stores, and a distribution center. They watched presentations by Mr. Scott, Duke and other senior officers and quizzed them afterward about the company's plans and business practices.

Wal-Mart did not roll out the red carpet out of simple Southern hospitality. Criticism of the company has affected its expansion plans in recent months. In April, citizens of Inglewood, Calif., voted down plans to build a Wal-Mart "supercenter" in the city that would have sold groceries and general merchandise. In February, developers scrapped plans to build a Wal-Mart in the New York City borough of Queens because of public opposition.

Earlier this month Wal-Mart agreed to pay $11 million to the U.S. Immigration and Customs Enforcement Agency to settle an illegal immigrant labor investigation. Federal officials raided 60 Wal-Mart stores in 2003 and arrested 245 alleged illegal immigrants hired by third-party contractors to clean Wal-Mart's floors.

Even Wal-Mart's media gala didn't escape a touch of controversy. An activist group traveled from Inglewood to hold a press conference in a ballroom just upstairs from the area Wal-Mart cordoned off for its event.

The Rev. William Jarvis Johnson said during the conference that Wal-Mart's treatment of workers was nothing less than a civil-rights issue.

"It hit me that [Martin Luther] King would be here in Bentonville, saying to Wal-Mart that you can't continue to pay workers poverty-level wages," Johnson said.

Downstairs, Wal-Mart CEO Scott argued his case with a more subdued demeanor.

A former logistics executive, he gave a statistics-laden slideshow that outlined Wal-Mart's pay and benefits. The numbers told a story Scott has been sharing on television and in open letters to the media in recent months, including the fact that 86 percent of Wal-Mart employees have health insurance, while 74 percent of Wal-Mart's jobs are full-time.

One of Scott's earliest slides showed a candle turning into an electric light bulb and a horse-drawn buggy turning into an automobile. Wal-Mart, Scott said, was simply another case of American society evolving.

"If it wasn't Wal-Mart, it would be someone else," Scott said. "I know that change isn't necessarily fun, but I also know that change isn't necessarily anyone's fault."

Scott's address and the following question and answer session were an extraordinary act for a Wal-Mart CEO. Company founder Sam Walton rarely gave interviews to the media and spent most of his time minding the store before he died in 1992.

"I don't remember him ever saying very much about the press at all," says retired Wal-Mart senior manager Ed Clifford, who worked with Walton in Bentonville for eight years.

"He was always about the best stores and the best associates," Clifford says, using Wal-Mart's term for employees. "Its like politics. He gave $1,000 to one side and $1,000 to the other, so no matter who won you were OK."

Walton's pragmatism guides Wal-Mart's leadership to this day. The discount chain has literally enshrined his focus on cutting costs in an effort to keep prices low. The beat-up red pickup truck that Walton drove to work is on display at a company museum in Bentonville. Executives take out their own trash and work in offices not much larger than their receptionists' cubicles.

The cost-cutting ethic was on display as reporters toured Wal-Mart's headquarters in Bentonville. The so-called "home office" is located in a former company warehouse, and the inside resembles a Wal-Mart store with shiny tile hallways and low ceilings. Scott's small office, which used to be Walton's, has a ground-level view of the front parking lot.

Japanese newspaper journalist Tomoji Watanabe says he is impressed.

"The customer for Wal-Mart is trying to save a penny every day," Watanabe says. "So [Wal-Mart] cannot spend a needless penny for their headquarters."

Indeed, customers keep shopping, and revenues keep rising - although Wal-Mart's stock price has stagnated in recent years.

It remains to be seen how effective Wal-Mart's media campaign will be with the public. Spokeswoman Sarah Clark says Wal-Mart will survey customers, employees, and outside decisionmakers to gauge their perceptions of the retailer.

Retail consultant George Whalin isn't optimistic about the impact the campaign might have on public opinion.

"It's not about talking to the media. It's about doing," says Whalin, president of Retail Management Consultants in San Marcos, Calif. "Things that they have done in recent years have caught up with them. They need to do things to change that."

Williams, of the company's media department, promises there will be more to come in Wal-Mart's effort to tell its story.

"Stay tuned," she says.