Home News Finance Wal-Mart CEO Credits Consumers' "Negotiating Power" In Creating Savings That Are Improving Lives

Wal-Mart CEO Credits Consumers' "Negotiating Power" In Creating Savings That Are Improving Lives

Setting the Record Straight, Lee Scott Dispels ‘Confusion’ About Wal-Mart

LOS ANGELES (February 23, 2005) – In a speech to business leaders today, Wal-Mart Chief Executive Officer H. Lee Scott touted the “negotiating power” of millions of Wal-Mart shoppers for reshaping the retail landscape to create the savings that are improving lives.

At the same time, Scott criticized leaders of the United Food and Commercial Workers Union and others for spreading confusion about Wal-Mart to advance “financial and political interests’’ that are out of touch. Only an honest debate, Scott said, will shape public policy solutions that promote economic growth and acknowledge the contributions retailers like Wal-Mart deliver for consumers, workers and communities.

“Our critics are framing the debate about Wal-Mart’s role in society in ways that would actually harm the people whose interests they claim to represent,’’ Scott told business leaders at Town Hall Los Angeles. “I believe that if you look at the facts with an open mind, you’ll agree that Wal-Mart is good for America.”

In remarks extending company efforts to set the record straight about Wal-Mart, Scott noted that consumers nationally save up to $100 billion a year because the company can leverage the interests of the 270 million shoppers who entered Wal-Mart’s more than 3,500 stores last year.

“These savings are a lifeline for millions of middle and lower-income families who live from payday to payday,’’ Scott said. “In effect, it gives them a raise every time they shop with us. Seen another way, Wal-Mart acts as a bargaining agent for these families – achieving on their behalf a power a ‘negotiating power’ they would never have on their own.’’

The impact, he said, is measured in a family’s ability at $1.86 to buy two loaves of bread instead of just one. On a broader scale, Scott estimated that if given the chance, Wal-Mart could help save the average family in Southern California between $500 and $600 a year at the grocery checkout alone.

While some critics have focused on employee pay and benefits in a sector that lags behind other industries, Scott noted that the average wage for Wal-Mart’s 1.2 million associates is about $10 an hour – nearly double the federal minimum wage. Scott said demand is heavy for Wal-Mart jobs where advancement is not only possible, but likely, and includes the kind of health care, retirement, profit-sharing and other benefits that smaller retailers could never afford.

Unlike the automotive sector, where wages are 40 percent to 50 percent higher than economy-wide scales, Scott said the labor-intensive retail industry can never set the pace for wages and benefits within the overall U.S. economy, much as critics contend it should.

“Auto manufacturing is a highly capital intensive industry, where enormous sums are invested in machines and technology that make the output per worker very high. Retailing is the opposite,’’ Scott said. “A single Ford worker might operate dozens of computer-controlled robots that assemble a car. In a Wal-Mart store, hundreds of associates are helping customers find what they need and check-out fast.

“Due to these differences in the nature of the business, sales and profit per employee – which go far to explain what levels of wages are sustainable in any business – are much lower in retail than auto-making,’’ Scott said.

Scott added that Wal-Mart contributes to the welfare of all Americans in other ways. Among the benefits:

  • Last year, Wal-Mart collected $10.2 billion in state and local sales taxes, money that went back to communities for such services as police, fire protection and schools.
  •  In 2005, an estimated 100,000 new jobs in the United States will be created – compared with 83,000 last year.
  • Wal-Mart purchases good from more than 68,000 U.S. suppliers and supports more than 3.5 million supplier jobs. In 2004, the company spent $137.5 billion with U.S. suppliers.

In his remarks, Scott acknowledged that Wal-Mart is a target for critics because of its size and impact. Fair criticism and mistakes have helped the company improve, Scott said.
“To be honest, most of us at Wal-Mart have been so busy minding the store that the way our critics have tried to turn us into a political symbol has taken us by surprise,’’ Scott told the Town Hall Los Angeles audience. “It’s also easy, at some level to empathize with our critics’ fears – after all, the economic change Wal-Mart represents creates a handful of losers even as the vast majority of ordinary Americans gain.

“But at the end of the day, when someone builds a better mousetrap, it’s not the American way to deny average folks the chance to use it to improve their lives,’’ Scott said. “The horse and buggy industry wasn’t permitted to crush the car. The candle lobby wasn’t allowed to stop electric lights. Ultimately, that’s what this debate is about.’’

Wal-Mart Stores, Inc. operates Wal-Mart Stores, Supercenters, Neighborhood Markets and SAM’S CLUBS in the United States. Internationally, the company operates in Puerto Rico, Canada, China, Mexico, Brazil, Germany, United Kingdom, Argentina and South Korea. The company’s securities are listed on the New York and Pacific stock exchanges under the symbol WMT. Last year, Wal-Mart Stores, Inc., contributed more than $170 million to support communities and local non-profit organizations. For more information, log on to www.walmartfacts.com

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