California Apparel News

Wal-Mart Stores Inc. has gotten so much bad ink in recent years, particularly in Los Angeles, that the retail chain’s chief executive came to town to turn around the company’s image.

H. Lee Scott Jr., the company’s president and chief executive, spoke before hundreds of business bigwigs gathered on Feb. 23 at the monthly luncheon held by Town Hall Los Angeles.

Scott’s message to the group was this: Wal-Mart isn’t really that bad.

He emphasized that in California, where 63,000 people have full-time jobs with the discounter, the average hourly wage is $10.16. About 75 percent of Wal-Mart’s employees work full time and have health insurance, a 401k plan and merchandise discounts, he said.

“I trust these facts show you that Wal-Mart is nothing remotely like the horror story out of Dickens that critics are peddling,” he told the crowd at the Omni Hotel Los Angeles. “It is true, however, as fair-minded observers point out, that retailing generally pays lower frontline wages than other industries that require more specialized education or skills.”

He noted that retail wages over the past 15 years have been 25 percent lower than economy-wide wages. In contrast, auto wages traditionally have been 40 percent to 50 percent higher than economy-wide wages, he said. And Wal-Mart, he noted, is not turning high-wage jobs into low-wage jobs.

“The fallacy of the critics is to argue as if Wal-Mart’s growth has somehow come at the expense of better-paying jobs elsewhere in the economy,” he said. “The truth is that retailing as a sector has consistently accounted for about one of every seven jobs in the U.S. for the last 30 years.”

He said that in California, Wal-Mart generates $771 million in local and state sales, property and income taxes.

The company, which last year had $285 billion in revenue, buys $15.2 billion in goods and services from more than 4,200 California suppliers and $137.5 billion from 68,000 U.S. suppliers, according to Scott.

Defeated in Inglewood

Scott admitted that Wal-Mart should have conducted its bid to set up a store in Inglewood, Calif., differently.

Last year, that city’s residents rejected by a 2-to-1 margin a ballot measure that would have allowed Wal-Mart to build a supercenter in the working-class neighborhood. City officials were against the store because it would have put local mom-and-pop stores out of business and paid lower wages to employees. Wal-Mart maintained the opposition was driven by labor unions. “We’ve learned from that experience, and we’re engaging with communities in a better way,” Scott said.

He said he doesn’t know if Wal-Mart will ever try to go back to Inglewood. “I would only reapply if I was sure it was going to work,” he said.

With Wal-Mart out of Inglewood, he said, retailers can charge customers higher prices in a community that can’t afford it.

Global economy

He noted that about 20 percent of Wal-Mart goods directly purchased by the company come from overseas sources. That does not include goods purchased from such suppliers as Hewlett-Packard Co. or Panasonic Corp. of North America.

Recently he met with a group of non-governmental agencies to talk about Wal-Mart’s retailing and purchasing practices. A nun asked if he felt guilty about building Wal-Mart’s profits on the back of abused workers. He said the retailer does not do this.

“We do inspect our factories,” he explained, noting that the factories may not be as luxurious as U.S. factories. “But for them, it is a life that is a step up from the life they were leading.”

Wal-Mart plans to open stores in 25 California towns. The company also is expanding internationally and will soon build 15 to 20 major stores in China. —Deborah Belgum