Wal-Mart Jobs and Opportunity Zones

by: Karl-Thomas Musselman

Fri Apr 07, 2006 at 04:15 PM CDT

Walmart stores, whose voracious, all-in-one retailing model has crippled thousands of competitors over the last 40 years, is turning to an unusual business plan: helping its rivals.

The giant discount retailer, under assault as never before by critics, announced a wide-ranging effort today to support small business near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.

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With that in mind, Wal-Mart executives created the Wal-Mart Jobs and Opportunity Zones, to be set up in 50 metropolitan areas where the chain wants to build stores.

In the zones, which Wal-Mart said are marked by high crime and unemployment, the company will identify local businesses to spotlight in newspaper advertisements and to feature on Wal-Mart's in-store radio network, which plays throughout the day.

The retailer will hold seminars that coach the businesses on how to compete with the giant discount stores — by, for example, intensifying customer service, for which Wal-Mart receives low marks. An annual report on trends in Wal-Mart's business will be distributed exclusively to those companies.

At the same time, Wal-Mart will invest $500,000 in local chambers of commerce, to be used for small business Web sites and business improvement seminars.

There's something a little bit sick about that. At the same time, it's a marvel of what our capitalit economy can create. But should we hear expect cries of Big Government Wal-Mart anytime soon?

A study conducted by several economists, and presented at a conference held by Wal-Mart, found that after the company's arrival in a county, total earnings per worker, retail and nonretail, fell 2.5 percent to 4.8 percent. One reason is that Wal-Mart pressures its suppliers to cut their costs and that may lead to lower wages for the suppliers' workers.

The policy also has to do with public drain on the company, including groups like Wake Up Wal-Mart.

And there is growing evidence that the negative publicity is hurting the company. An internal Wal-Mart report, prepared in 2004, found that 2 percent to 8 percent of Wal-Mart consumers surveyed have ceased shopping at the chain because of "negative press they have heard."