Bloomberg vs. Wal-Mart

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Bloomberg’s recent coverage of Wal-Mart Stores Inc. and its problems with keeping stock on the shelves has the retail giant on the defensive. But Wal-Mart customers aren’t buying the company’s denials that there are problems.

Bloomberg reporter Renee Dudley received more than 1,000 responses to her March 26 story.

Let’s take a look at the story, which ran with the headline “Customers Flee Wal-Mart Empty Shelves for Costco, Target.”

Margaret Hancock has long considered the local Wal-Mart Stores Inc. (WMT) superstore her one- stop shopping destination. No longer.

During recent visits, the retired accountant from Newark, Delaware, says she failed to find more than a dozen basic items, including certain types of face cream, cold medicine, bandages, mouthwash, hangers, lamps and fabrics.

The cosmetics section “looked like someone raided it,” said Hancock, 63.

Wal-Mart’s loss was a gain for Kohl’s Corp. (KSS)Safeway Inc. (SWY)Target Corp. (TGT) and Walgreen Co. (WAG) – the chains Hancock hit for the items she couldn’t find at Wal-Mart.

“If it’s not on the shelf, I can’t buy it,” she said. “You hate to see a company self-destruct, but there are other places to go.”

It’s not as though the merchandise isn’t there. It’s piling up in aisles and in the back of stores because Wal-Mart doesn’t have enough bodies to restock the shelves, according to interviews with store workers. In the past five years, the world’s largest retailer added 455 U.S. Wal-Mart stores, a 13 percent increase, according to filings and the company’s website. In the same period, its total U.S. workforce, which includes Sam’s Club employees, dropped by about 20,000, or 1.4 percent. Wal-Mart employs about 1.4 million U.S. workers.

A thinly spread workforce has other consequences: Longer check-out lines, less help with electronics and jewelry and more disorganized stores, according to Hancock, other shoppers and store workers. Last month, Wal-Mart placed last among department and discount stores in the American Customer Satisfaction Index, the sixth year in a row the company had either tied or taken the last spot. The dwindling level of customer service comes as Wal- Mart (WMT) has touted its in-store experience to lure shoppers and counter rival Amazon.com Inc.

Obviously, Wal-Mart wasn’t pleased with the coverage. Here’s the company’s statement in the March 26 piece.

“Our in stock levels are up significantly in the last few years, so the premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country,” Brooke Buchanan, a Wal-Mart spokeswoman, said in an e-mailed statement. “Two-thirds of Americans shop in our stores each month because they know they can find the products they are looking for at low prices.”

But Bloomberg wasn’t convinced after reporting on an officers’ meeting.

Last month, Bloomberg News reported that Wal-Mart was “getting worse” at stocking shelves, according to minutes of an officers’ meeting. An executive vice president had been appointed to work on the restocking issue, according to the document.

Wal-Mart’s restocking challenge coincides with slowing sales growth. Same-store sales in the U.S. for the 13 weeks ending April 26 will be little changed, Bill Simon, the company’s U.S. chief executive officer, said in a Feb. 21 earnings call.

While Wal-Mart was enraged, Bloomberg was inundated with emails from across the country saying the story lined up with shoppers’ experiences, according to a follow-up published April 2.

More than 1,000 e-mailed complaints signal that Wal-Mart Stores Inc.’s (WMT) restocking challenges are more widespread than the world’s largest retailer has said.

Wal-Mart customers from Hawaii to Florida and from Texas to Vermont wrote to express their frustration after Bloomberg News reported March 26 that there aren’t enough workers in the stores to keep shelves stocked, cash registers manned and shoppers’ questions answered. In response to the original article, Brooke Buchanan, a Wal-Mart spokeswoman, said in part: “The premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country.”

The e-mails began arriving shortly after the article was published and were still coming a week later. Most were from previously loyal Wal-Mart customers befuddled by what had happened to service at a company they’d once admired for its low prices and wide assortment. Many said they were paying more and driving farther to avoid the local Wal-Mart. Some had developed shopping strategies, including waiting until the last minute to grab ice cream, lest it melt in the lengthy checkout lines.

Wal-Mart founder “Sam Walton must be rolling over in his grave to see what has become of his business,” said Tony Martin, a 54-year-old forklift driver who once frequented a Wal- Mart store in Glen Carbon, Illinois.

Wal-Mart’s restocking challenges stem from a thinly spread labor force struggling to keep up with all the work that needs to be done, said Colin McGranahan, an analyst at Sanford C. Bernstein & Co. in New York. The Bentonville, Arkansas-based retailer’s workforce at its namesake and Sam’s Club warehouse chains in the U.S. fell by about 120,000 employees between 2008 and Jan. 31, according to a securities filing on March 26. The company now has about 1.3 million U.S. workers. In the same period, it has added about 455 U.S. Wal-Mart stores, bringing its total to 4,005.

Dudley should be commended for her work. This is an excellent example of company coverage and reporting. As any former journalist knows, it can be difficult finding the right anecdote to illustrate a point.

I can’t imagine shifting through 1,000 emails. But she obviously got the story right, despite what the company is saying. It’s important to hold a company accountable for their mistakes, especially when it could cost them customers.