CSR management

Back in April, we wrote how 'Wal-Mart is coming', after the behemoth ran a series of advertorials in the US press promising to get fully involved in the CSR debate. So Lee Scott's proclamations come as no surprise. Scott has been finding it increasingly difficult to keep investors happy. Wal-Mart stock is down nearly 20% from its April 2004 peak, as sales growth shows sign of slowing and shareholders cut their exposure to the perceived 'headline risk' of the ongoing class-action lawsuit, whereby women workers allege the company discriminated against them.

There is one reason more than any why Wal-Mart appears to be finally 'getting' CSR. To continue to be the world's most successful retailer, it must extend its customer base beyond low-income consumers to the growing middle classes. Christine Augustine, an analyst at investment bank Bear Stearns says these low-income consumers have seen their disposable incomes eroded by factors such as rising energy prices. To convince middle-income shoppers, who traditionally buy groceries at the store, but go elsewhere for clothing and electronics, Wal-Mart needs a radical facelift. What better than conversions to a caring, sharing firm, with commitments on climate change, better healthcare, organic products and waterless urinals (at the experimentation phase)? Zogby's poll shows the extent of the damage. No matter what economic benefits a company provides - and Wal-Mart has based a lot of its traditionally "defensive posture" on the 'economic good' of its operations - it means little without a positive reputation. The documentary Wal-Mart: The High Cost of Low Price portrays this dilemma, charting an instance in which the well-off, predominantly black Los Angeles neighbourhood of Inglewood slammed the door on Wal-Mart, voting down a proposal to build a superstore in their community despite a lengthy and costly corporate campaign. For Wal-Mart to convince us that it is 'doing CSR', it must step out of its secretive Bentonville citadel (where it has reportedly set up a war room with PR firm Edelman) and produce the numbers to prove it. Otherwise it will be back to square one - the "Beast of Bentonville" versus the campaign groups.