Luckily, for now, Linda's just a rudimentary cardboard cutout that Wal-Mart Canada executives haul around to meetings to remind them -- as if anyone should need reminding -- not to put the Playtex beside the PlayStations. And judging by Wal-Mart's depiction of her as a stressed-out soccer mom in sensible shoes, she's not exactly a dead ringer for her namesake Evangelista.
This is precisely what's wrong with the Wal-Mart model and why its stores, at least its 4,000 U.S. outlets, are being increasingly bypassed by consumers who don't think you need to swallow vanity for value. Blah and boring doesn't even work for banks any more; how can you expect it to boost sales in the most ego-driven business of them all? After all, unless you live in abject poverty, you almost never buy things just because you need them.
Wal-Mart's October results were miserable, with U.S. sales at stores open at least a year rising a sickly 0.5 per cent, compared with 3.9 per cent at Target, 8.1 per cent at J.C. Penney and 7.7 per cent at Federated Department Stores. Wal-Mart blamed the slump partly on clothes that were too trendy for its customers. But instead of trying to woo the kind of shoppers who buy skinny jeans, it simply got rid of the skinny jeans -- giving them another reason to go to Target.
It's not just shoppers who are bailing; shareholders are, too. In fact, Wal-Mart's stock has been a dog for years and is down one-quarter since 2001.
Wal-Mart is now predicting zero same-store sales growth for November, which would be its worst performance in a decade. To avert a truly catastrophic Christmas season, it has slashed prices on 100 toys and 100 electronic items, hoping these promotions spur traffic into other departments, too.
Relying on this kind of logic to boost the bottom line forces Wal-Mart to resort to almost any tactic to reduce costs, from (knowingly or not) sourcing clothes made by children in a Bangladesh sweatshop (as a Radio-Canada investigation revealed this year) to letting "pricey" workers know they need not apply.
Beginning in January, new Wal-Mart employees in the United States will be offered a health-insurance plan with low premiums but a whopping $1,000 (U.S) deductible. Critics allege the plan, which would become the standard Wal-Mart insurance given high employee turnover, is meant to discourage any job applicant apt to actually need regular health care. The Wal-Mart move inevitably puts pressure on other retailers to follow suit.
Wal-Mart has discovered other tactics to root out costly employees, according to internal company memos obtained by Wake Up Wal-Mart, a group sponsored by the United Food and Commercial Workers (UFCW) union. The Beast of Bentonville -- as Arkansas-based Wal-Mart is known -- is implementing pay caps and demanding that all existing employees, regardless of seniority, make themselves available to work night shifts. (Almost half of Wal-Mart's U.S. stores are open 24 hours.) Many workers who have refused have found their overall hours slashed. The shift to using more part-timers -- Wal-Mart reportedly aims to increase their numbers to 40 per cent of its 1.3 million U.S. workers from 25 per cent -- also lowers health insurance costs.
"Given the impact of tenure on wages and benefits, the cost of an associate with seven years of tenure is almost 55 per cent more than the cost of an associate with one year of tenure, yet there is no difference in his or her productivity," Wal-Mart senior executive Susan Chambers last year told the company's directors in a memo obtained by Wake Up Wal-Mart. ". . . The shift to more part-time associates will lower Wal-Mart's health care enrolment."
Unionization, of course, would constitute a cog in Wal-Mart's cost-cutting wheel. This may explain why the world's second-biggest corporation, with annual sales that surpass the gross domestic product of Quebec, has still not signed a collective agreement with the workers at its Saint-Hyacinthe store east of Montreal almost two years after their union was accredited by the province's Commission des relations du travail.
Wal-Mart finally seems to have exhausted every legal recourse it could come up with to prevent the union from taking hold, its latest bid to challenge the definition of the store's bargaining unit having been rejected by Quebec's Superior Court. So the parties are headed to arbitration and the Quebec wing of the UFCW suggests a contract is imminent. Could we really live to see a Wal-Mart store in North America successfully unionize?
The last time the UFCW got anywhere near this far -- in Jonquière, Que., in early 2005 -- Wal-Mart closed the store, arguing it was a money-loser even without a union. Resorting to the same tactic if an arbitrator imposes a contact in Saint-Hyacinthe would, to say the least, be a bit too transparent and amount to strangling all the warm fuzzies Wal-Mart has nurtured in the province with a slick "Buy Quebec" advertising campaign.
Still, unless Wal-Mart starts realizing that Linda sometimes wants to feel like Raquel, the squeeze on costs is only going to get more intense. And guess who'll pay for that?
