When Business Week - that bastion of American capitalism - runs a cover story asking whether Wal-Mart has got too powerful, it does make you sit up and take note. Unfortunately, the magazine lets what it calls ‘the beast of Bentonville’ off the hook by failing to answer its own question. But I do know from attending this year’s Wal-Mart shareholders’ convention that the directors of the world’s biggest company are clearly worried about the way it is perceived and received, both at home and abroad. Even in the States there is a growing Wal-Mart backlash, with critics lining up to attack everything from its record on wages to the amount it ships in from China (about 10% of what the US imports from that country).
CEO Lee Scott recognises the company needs to shout much louder about the way he believes it leverages its scale to benefit the economies in which it operates. And I remember him rallying his troops at the convention with slogans like “Wal-Mart improves communities wherever it goes” and “Wal-Mart raises the standards of living of people around the world”.
But while Scott may be looking to finetune the way Wal-Mart presents its message, don’t think for a minute it will mean any changes to the way Wal-Mart focuses completely on stripping costs from its supply chain in order to drive down prices for consumers.
As one consultant told Business Week, the second-worst thing any manufacturer can do is sign a contract with Wal-Mart. And the worst? Not sign one!
It’s good to see common sense did prevail in the Safeway auction, with Morrisons the only supermarket retailer allowed to bid for its bigger rival. As we have said all along, if there must be further consolidation, then having four big players rather than three is the best outcome.
But I’m not sure the Competition Commission has done us any favours with its complicted plan to control the way Safeway stores are sold off - the industry was rightly hoping for a clear set of rules that could be applied for all future store deals.
Whatever. The key thing now is that we see an end to the months of uncertainty endured by Safeway and the industry. Over to you, Sir Ken.
The beast of bentonville